Paul Millman of Chroma Technology Corp.

Apr 1 2004
Joyce Marcel

Paul Millman's life raises some interesting questions. Like how did a Red-diaper baby from Brooklyn find himself running a $15 million technology company in Bellows Falls? Or, how did a man whose favorite job was tending bar, who was fired from almost every job he ever had, and who was described in a national magazine as "abrasive and opinionated," end up being an "icon" in the high-tech optics industry. Or, why is moving your business from Vermont to New Hampshire like having an affair?

Taking that last question first, Millman, vice president of sales and CEO of Chroma Technology Corp, developed the analogy when it was clear that Chroma had outgrown its Brattleboro facility. As it started looking around for a new home, it was actively courted by New Hampshire. Instead, last year it opened a $3.5 million, 28,000-square-foot, state-of-the-art manufacturing facility in Rockingham.

Why? For Millman, it was like deciding whether to cheat on your spouse. "Imagine you're in a relationship and you have all the responsibilities," Millman said. "Kids, mortgages, taxes, car payments, school and clothes, all that stuff. Out there is a person who's very attractive who you can have an affair with. No responsibilities. When you're with that person, you're free, right? At least you think you are. It's the same thing as thinking about moving to New Hampshire. New Hampshire promotes itself as free: no taxes, no constraints, no nothing. Just come to us. It's just like the affair. It's the same illusion. And like the affair, it's not free."

At some point there will be a price to pay, he said. "The difference between an affair and moving to New Hampshire is one letter," Millman said. "In one situation, you want to get serviced for free. And in the other, you want to get services for free. New Hampshire has no income taxes, but there are huge property taxes, a business profits tax that is a real killer for manufacturers, and the dividends tax, which Vermont is going to have now too, but New Hampshire has had it for a longer time."

Then there are the services that New Hampshire does not provide. "There's no statewide kindergarten," Millman said. "They have yet to figure out how to fund their schools, and their schools suffer because of that."

Prospective employees don't ask about permitting and taxes, Millman said. They ask about schools and health care. "These are the big questions to a prospective employee," Millman said. "Either you provide the services and you figure out how to pay for them, or you don't provide the services. And what you've got over there in New Hampshire is an attempt, especially by Governor Craig Benson, to provide fewer and fewer services."

The outspoken Millman accuses New Hampshire of practicing "hidden socialism." "New Hampshire is the only state in the nation, as far as I can tell, that runs a business," he said. "They own all the liquor stores. Vermont used to, but it doesn't any more. New Hampshire has socialism – state ownership – to pay for their reactionary politics. I love that contradiction. If you print this and I go to New Hampshire they'll shoot me, but seems to me that its state motto is actually a contract. Live free or die. And if they're complaining about not living free, they have an obligation to kill themselves. The Vermont state motto is 'Freedom and Unity,' which is ever so much more wonderful."

Talking about socialism comes naturally to Millman, 57, whose father was a history teacher and antiquarian bookseller, and whose mother was a "rabble-rousing" community activist. That made Millman and his younger brother Red-diaper babies. (A term used to describe children of social activists in the 1930s and 1940s.) At Antioch College in Yellow Springs, OH, Millman was a member of Students for a Democratic Society. Then he wandered from job to job, having a lot of fun but never lasting more than three years at any of them, and frequently getting fired for insubordination. During the wild 1980s he flourished as a bartender in New York City. In his 40s he came to Vermont and took a job at Omega Optical in Brattleboro. There he started to settle down, but he was fired again – for insubordination – three years later.

"Until we started Chroma, I never kept a job over three years," Millman said. "The reason generally was the same: an inability to accept the authority of someone who knew less than I did. And the converse in the restaurant business – the inability of a boss to accept somebody who was working for them who was perceived as being more competent than them."

In the summer of 1991, Millman and six former Omega co-workers founded Chroma with $180,000. The move plunged Millman head-first into capitalism, and the immersion took. The company he helped found now has 67 employees and expects to see between $15.5- and $16 million in sales this year. About 37 percent of its products are exported overseas to Japan, China, Singapore, Germany and England.

Chroma makes high-tech fluorescent microscope filters, or lenses. Fluorescence is an essential research tool in many branches of the life sciences. As Dr Dan Pinkel, a cancer researcher and professor at the University of California San Francisco, explains it, it uses the same principal as turning a black light on clothes to make them glow.

"The value of this in scientific work is that you can take particular molecules, and by attaching them to other molecules which are not fluorescent, you can label them and see where they are," Pinkel said. "In lots of areas, and biology is one of them, you can attach these fluorescent molecules to structures in cells, or to DNA, or to antibodies, and then perform chemical reactions. You look at where the fluorescent molecules have ended up. You can also make new molecules which are fluorescent and compatible with living cells. You can watch in live cells where these molecules are located and see how those distributions change as different life processes occur."

As the public face of Chroma, Millman has become an international star. "Paul is an icon in the industry," said Ron Seubert of Applied Precision, a Seattle company that makes high-end microscopy equipment. "He knows everyone and everyone knows Paul. He's internationally recognized. He has a unique ability to understand what people are asking for and translate that to filters specifications." Millman has created an international life-sciences community, Pinkel said. "Paul has a personality which brings people together," Pinkel said. "He works very hard and is very open in helping people. He'll introduce people who he thinks would have things in common that would be beneficial in their research. He's put a great deal of effort in building a community. But you should know that at Chroma picnics, he cheats at tug-of-wars. He ties the rope to some big thing so your side can't win."

The lenses made by Chroma are "probably the best in the world for microscopes and biology research," said Seubert. "We're entering this wonderful world where you can see glowing proteins in live cells," Seubert said. "The ability to see life on a molecular level is rapidly advancing. And Chroma Tech is at the forefront of that advance. The company's understanding of life science and research, and their contacts in the research community, far and away surpasses any of their competitors."

From the beginning, Chroma has competed with Omega; in fact, it outbid Omega and several other optical companies to get its very first customer. In 1995, Omega retaliated by filing a $20-million lawsuit against Chroma, accusing it of stealing trade secrets. Chroma successfully defended itself, but not until it had spent more than $2.5 million in legal fees.

Chroma is a quirky company. Chroma's president, Dick Stewart, is in charge of production, while Millman holds the titles of both vice president and CEO. The company is employee-owned, and it has a casual and friendly working atmosphere. Irreverence seems to be appreciated. At one point, giving a tour of the plant, Millman pointed to some old equipment and said, "Some day, despite some people's best efforts, these will be museum pieces." From the back of the room came a shout, "And so will you."

Despite – or because of – its casual approach, for the past five years Chroma has been one of the fastest growing technology companies in the state. It plans to continue this growth in the optical filter market, plus expanding past the microscope and bio-medical instrument market into other areas, including astronomy, testing for biological and chemical agents, and possibly even small-instrument development and manufacture.

Early Jobs

Millman was born in 1947 and grew up in New York City housing. His first jobs were the urban equivalents of a newspaper route: delivering groceries and pizza. Back then New York City routinely gave schoolchildren passbooks and taught them about saving accounts and compound interest. Millman loved to save. "It wasn't like I saved a lot of money, but I saved," Millman said. "I loved the end of the day, after delivering groceries, and having change in my pocket. It was a great feeling. It occurred later on when I was a bartender. I'd go home at night with dollar bills in my pocket, and it was a great feeling. Those are two very memorable moments that were the same." Later, at Antioch, Millman spent four years flipping burgers at the school grill for spending money. "It was great," Millman said. "It was the social hub of the school. Also, I was hyperactive and I couldn't stand being in my room. So it was a great place to be. Hyperactivity does good things as well as bad things." Millman left Antioch before getting his degree and went to New York. In January of 1968, he was part of the group that founded the underground newspaper Rat. "For what it's worth, I interviewed John and Yoko when they were bedding in for peace in some hotel in Montreal," Millman said. "Then I moved to the Liberation News Service." In 1969, he got a BA in interdisciplinary studies in the social sciences at the New School for Social Research in New York. But when he left school, he had no idea of what he wanted to do.

Checkered Career

In 1970, Millman found himself tending bar in Portland, OR, and sharing a house with three roommates and a girlfriend. When it became clear that his housemates were moving on, he "decided to be an adult" – for the first of many times – and returned East to earn a graduate degree in teaching from Antioch in Harrisville, NH. "I thought it may be a sign that I ought to do something and get a real job," Millman said. "Teaching was the only thing I could think of doing. But I didn't plan on staying in New England. I was intending to go back to Oregon. I applied for a license in Oregon and they said, 'You just think the degree's reciprocal, but you have to take all these courses in Oregon history.' I never went back." Millman moved back to New York and started waiting on tables while he waited for a teaching job to open up. The restaurant, the Horn of Plenty in Greenwich Village, featured "upscale soul food with a white wait staff." They trained him to be a bartender and it was love at first sight. "My first day working was Mother's Day 1974, the busiest day of the year in the restaurant business," Millman said. "It was insane and I loved it. Bartenders have control in ways that almost nobody else does. When you're working, you're the master of that world. All sorts of interesting people come in, and you're multi-tasking, mixing drinks and talking and all at high speed. For me, it was wonderful."

He eventually lost that job for "covering up for another employee," then taught in a day care center, then moved on to Public School 147 in Williamsburg. "There had just been a court ruling and they had to provide educational programs for emotionally handicapped children," Millman said. "They went on a hiring binge. I had no training in that area, but I got hired. Unfortunately, the next year New York City went broke so we all got laid off. That was the last time I taught."
Then friends who had started importing Indian wall hangings made him their salesman. When that business failed, he started selling for a brass bed company. When he was fired from that, he sold imported knickknacks for a while. Then friends from SDS (Students for a Democratic Society) offered him a job at a new start-up. "We were switching into capitalism because we needed to earn money," he said. "We needed to live."

While waiting for the company to open, Millman got a job tending bar at the Sky Dive, a restaurant and bar on the 44th floor of the World Trade Center. Once again, he loved the work.
"It was great," he said. "I came home every week with $600 or $700 in cash. Once again I have this pocket full of change, I have three-day weekends, AIDS has not yet become apparent to the heterosexual community, I'm 33 years old and I'm a bartender and I'm having a fabulous time." In due course Millman again was fired. "And the business we were going to start never emerged," he said. "At this point I'm 37. So I went from bartending jobs to waiting jobs to bartending jobs for the next three years. Every year a new crop of actors come to New York, and so a new crop of waiters comes to New York – because actors wait on tables. Every year the waiters were getting younger and I was getting older. They would take me to freaky little places in the East Village filled with people who had pierced things and stuff like that. And I would say, 'I don't belong here any more. I'm getting too old’."

His last job was managing the famous Blue Note jazz club. "It was awful," Millman said. "More often than not it wasn't jazz but fusion or pop jazz like Billy Eckstein or Phyllis Heymans. All of them were great, but after the second night of hearing the exact same words? Rest his soul, he's now dead, but Mr Eckstein would say the same thing about Mel Torme every night. Every night he called him the 'velvet frog' because he hated him. He thought he should have gotten the fame that Mel Torme got. After the second night of two sets, you'd heard it all. It was sort of a dead end."

Vermont

In 1987 Millman was 40. His father had been diagnosed with Parkinson's Disease, and afraid of becoming a full-time caretaker, Millman decided to leave the city. But he wanted to relocate close enough to help his parents, so he drew a circle on a map. He explored Raleigh, NC, Chicago and Louisville, KY. Then he went up to Brattleboro because his cousin lived in Newfane. "I said, 'I know this place’," Millman said. "'It's like Yellow Springs. I'll stay here.' I started looking for restaurant jobs but the good ones were taken."

As a last resort he went to the state employment office. "Nobody I ever knew had found a job at the state employment office," Millman said. "But I talked to this guy, and I'm literally walking out the door when he said, 'I see you have sales experience. Have you ever sold a product you thought was worthwhile?' I said 'No.' He said, 'Would you like to try?' I said, 'I'll take any job.' He said, 'Call these people at Omega Optical’." When Millman called for an interview, he apologized because he didn't have business clothes. They told him to just "look neat," so he ironed his jeans.

"I went to this church and got escorted to a choir loft by these hippies who weren't wearing shoes," Millman said. "And I'm worried about not having a tie? So I get interviewed by everybody, and it was Memorial Day weekend, my brother was visiting, we were all at my cousin's, and I get a call saying, 'We'd like you to come and work with us for $8 hour.' I said 'Huh?' I never heard of a sales job that was hourly, and I hadn't made $8 an hour since graduate school. I said, 'I don't think I can do this’."

Millman's brother pointed out that Omega was offering to pay him to spend a summer in Vermont; he could go back to New York in the fall. Then Robert Johnson, the founder and owner of Omega, called and offered him $9 an hour.
"No one had ever been offered $9 an hour to start," Millman said. "I said, 'Fine.' My attitude was I was going to stay until the fall and then move on. I didn't know where, but I was going to move on."

It took Millman time to learn the business. "I started answering telephones and talking to customers and not understanding what they were talking about, and asking questions and relaying answers and probably giving terrible advice, who knows?" Millman said. "Around Labor Day I went back to New York for a visit. And I was driving back north and all of a sudden I said, 'Vermont feels like home.' That's when I decided to stay."

Slowly, as he began to understand the optical business, he become a great salesman. "I began to understand what their customers wanted," Millman said. "My attitude towards sales was customer service. I never felt comfortable saying, 'Would you like to buy this?' You make it so you have something that somebody needs, and you service it properly. Then they'll buy it."

About three years later, Millman was fired once again. "Bob Johnson hired somebody to be our boss who had no experience in the industry," Millman said. "And he paid him exorbitantly more than he was paying the rest of us. It created a difficult work situation because we were doing the work and he was getting the money for it. Ultimately, the conflict was too big and Bob Johnson fired me." When asked about it, Johnson said he believed Millman was trying to get fired.
"He was terminated for disobedience of his sales manager," Johnson said. "But it was pretty clear that it was an intentional act. He tried to get fired. There were repeated acts of not following the direction of his supervisor."

Starting Chroma

Millman decided to move to Burlington and apply for a job as "director of euphoria" for Ben & Jerry's Homemade Ice Cream. "It was a job I could do," he said. But then production manager Dick Stewart resigned from Omega, partly to protest Millman's firing. Soon there were seven Omega employees talking about starting their own company. "One of us didn't last very long," Millman said. "He wasn't participating, and he was asked to leave. Then there were six of us."

Besides Millman and Stewart there were Wendy Cross from customer service, machinery manager Frank Kebbell and filter designers Jay Reichman and Wim Auer. "Five men and one woman," Millman said. "One of the original ideas for a name of this company, which was a joke but I think we should have done it, was Peter Pan Optical, for Wendy and five boys who refused to grow up."

All six partners are still working at Chroma; Cross and Millman are now domestic partners as well; Cross's son works at Chroma, and Millman and Cross have two grandchildren. Millman has finally settled down. "We started Chroma sort of agreeing that we would give it a try for a few months," Millman said. "And a few months is now 13 years."

They started with $180,000 and 2,800 square feet at Cotton Mill Hill, Brattleboro's business incubator. "Nobody had money, but I had savings," Millman said. "I said I'll rent the space for five months, and if it doesn't work, then I lose the money. Big deal. We were going to make optical filters. Omega made optical filters. We thought we could make them better, and we did. I knew the business, I knew the customers, I had been the only salesman there. It wasn't my fault I got fired. I didn't want to be fired. So we started gathering equipment and building the space. There wasn't even a door from the outside to the building, we had to build the door. We bought used equipment."

Following in the footsteps of Omega, from the beginning Chroma was employee-owned. "We didn't know what it meant, so we developed it along the way," Millman said. "We are, what I guess in legal terms, is called a stock bonus plan. Every year the employees are bonused money to buy shares in the company, and every year each employee buys as the same number of shares as every other employee in the company. So the longer you're here, the more shares you have. All the stock is privately owned by employees. We are 100 percent-owned by ourselves."

That first summer, they competed with Omega and other New England filter companies for a contract with what was then called Amoco Technology. "They had purchased a process by which DNA was stained with fluorescent compounds, and they were in the process of developing both research tools and clinical testing," Millman said. "They wanted a filter company that they could get proprietary product from, and could be sure they were going to get it on-going, because it was a crucial part of their procedure. We won the competition. I like to think we won because we were better, but the guy who headed up the competition on the other side was also from Brooklyn and also was Jewish. So how much did that have to do with it? I don't know. But he and I became great friends." Winning the contract gave the partners the "psychological capital" to continue. Since then, they have never had a losing month, Millman said.

The Lawsuit

In 1995, Johnson filed a $20 million suit against Chroma for stealing everything from Omega's customer lists to its manufacturing methods. "Paul's a great salesman," Johnson said. "He's a very effective promoter of product. I believe Omega did a very good job of developing the product, and he saw the opportunity to capitalize on that." According to Johnson, Omega suffered a loss of over $10 million in lost earnings and misappropriated technology.

"There have been at least 10 companies that have started from Omega's employees, but in all but this case, I considered that they honorably took the general experience and applied it in new and different areas," Johnson said. "Therefore I had no problem with them learning the business at Omega. Chroma took very specific information and applied it directly to customers that had been Omega's customers."

From the beginning, this had been an important concern to Millman and his partners. "We went to George Nostrand of Salmon & Nostrand here in Bellows Falls and said 'George, we're thinking about setting up our own company, what do we do?'" Millman said. "And he said, 'You walk out with your pockets turned inside out and your hands in the air. You couldn't take anything. What's already in your head is there, nothing you can do about that. As long as you didn't use proprietary knowledge, you could go and do anything’."

The question then becomes, what is proprietary knowledge and what is not? "The court found that they had taken information, and the information was proprietary information," Johnson said. "The law is pretty clear that only general knowledge can be taken in your head. Any specific knowledge can't be. And it was very well shown that they did take a lot of specific knowledge. Their product line is exactly equal to what Omega was producing for the same customers. No question that the suit was valid."

Millman disagrees that Chroma stole trade secrets. "First of all, there are no trade secrets," he said. "There's nothing that Bob Johnson knew that nobody else knew. And we had a professor of thin films from the University of Arizona, who is the great god of thin films, testify to this at the trial."

In the end, the court found for Chroma because Omega had not taken steps to protect its proprietary information. "The softness was that the court felt we needed to tell people in advance what information was proprietary," Johnson said. "Which is a unique interpretation of the law, because constantly, in a technological activity, new proprietary information is being developed. But we didn't go to enough detail." An appeal to the Vermont Supreme Court was settled in Chroma's favor. The suit cost Chroma $2.5 million and Omega "in excess of $1 million," Johnson said.

Brand Vermont

As Chroma continued to grow, it needed a home of its own. After being wooed by New Hampshire, the company decided to remain in Vermont because of the attractiveness of the Vermont "brand." Last year it opened a $3.5 million, 28,000-square-foot state-of-the-art manufacturing plant next to Sonnax Industries in Bellows Falls.

Vermont is known and admired all over the world, Millman said. After Senator James Jeffords jumped from the Republican Party to become an Independent, Millman found himself welcomed as a hero in Germany. "Everybody knows Vermont," he said. "Civil unions is a big deal. Our company exists in a rarefied community of scientists and manufacturers of high-level instrumentation. I'll walk around being proud of being from Vermont and getting the kudos for it. What's the state next to us? Not everyone knows. It's mind-boggling how important Vermont is in people's minds."

Worldwide, the Vermont brand sells. "Vermont Gringo Salsa, Ben & Jerry's," Millman said. "If you were a New Hampshire company, what would you call yourself? New Hampshire Gringo Salsa doesn't make it. There's no soul in that name. I can't think of one brand, even the one that's there, Stonybrook, that makes an effort to brand itself as a New Hampshire company. But we all make an effort to brand ourselves as Vermont companies. We are now putting labels on all our products, ‘Crafted in Vermont.’ It works."

Millman, a member of the Vermont Business Roundtable, argues convincingly for progressive policies. For example, to him it makes no sense for a business to pass on its health insurance costs to its employees. "On the surface, it's a good idea," Millman said. "But think about it. The first thing that's going to happen is upward pressure on wages. They're already living within their means, and we're adding an additional cost. They can go out and get another job, their partner can go to work, they can cut back someplace – and most people don't have a lot of discretionary income – or they can start putting pressure on the company to raise their wages. And that's mostly what happens."
Millman frequently disagrees with Governor James Douglas. For example, Douglas wants to eliminate community rating, where insurance companies have to insure everyone in a given pool at the same rate. Millman argues that eliminating it will hurt employers.

"If you do away with it, supposedly, more insurance companies will come into the state, because then they can cherry-pick," Millman said. "They can have higher insurance rates for older people and lower ones for younger people. What is that going to do? Among other things, it's going to encourage companies to get rid of their more experienced personnel, because their insurance rates are going to be very high. So they're going to cut their nose off to spite their faces. They're going to get lower insurance rates and lose the experience of that worker. They're going to hire someone new who doesn't cost that much to insure, but doesn't know how to do the job."
State programs like Dr Dynasaur help keep businesses afloat, Millman said.

"Dr Dynasaur is crucial," Millman said. "What's interesting is there are a lot of companies in this state who don't give health insurance, or who give it to the employee and not the family, and are dependent on Dr Dynasaur. So those same people who criticize Dr Dynasaur for its cost are dependent on it to help with their costs."

Millman is a strong supporter of Act 250 and believes communities must have a say in local development. As an example, he points out that right after Chroma built its new plant, the Bellows Falls select board was presented with a plan to build a nearby waste management facility. "We spent all this money, and someone is now planning to build a dump upriver from us," Millman said. "Should we not have the right to be involved in that decision-making process? You bet we should have the right. I'm not going to argue the probability that there needed to be changes in some of the laws. As people get experience, they change. What you say in 1976 is not necessarily the same as 2004. But this whole idea that somehow, the permitting process is a great discouragement of business, to my mind is nonsensical."

Vermont is anything but anti-business, Millman said. In 1997, the state commissioned a report by the O'Neal Group which indicated that 63 percent of Vermont businesses, in general, found it difficult to do business in the state. That figure reversed itself with high-tech businesses. There, 64 percent found it "very or somewhat easy" to do business here. With "Vermont-type" industries like food, apparel and wood products, 53 percent liked doing business here. Millman believes the study's negative findings are quoted endlessly while its positive findings are ignored. "It says that 63 percent of the high-tech companies in Vermont plan on expanding in Vermont," Millman said. "The businesses that provide the highest compensation for their employees intend to expand in Vermont. But they never talk about that. For my mind, there was more good in that report than bad. The Republicans spinned it."

Vermont attracts creative people who will find each other and do creative things, Millman said. "Chroma was started by six people," Millman said. "Yes, we had experience. But none of us had been trained in the industry. Only two had college degrees and neither was relevant to the industry. People think of economic health as being able to attract another Bombardier. That's not it. Economic health is seeing another Sonnax or Chroma get started here and stay here. Vermont is a place where you can go and do something, and no idea is too crazy. Like ice cream in a gas station, no idea is too crazy to be pursued in Vermont."

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