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EDITOR’S NOTE: This is the third and final installment in a three-part series on the life of Clint Severson, a Minot resident who rose to the top of the business world. To recap, revisit Curt Eriksmoen’s story on Severson’s early days in business, or learn more about how Severson turned several businesses around.
MINOT — Why would an intelligent entrepreneur invest much of his accumulated capital into a company whose flagship product had a serious flaw, causing that company to lose millions of dollars a year?
To compound his decision, the investor’s background and expertise were in sales and business, not in chemistry or engineering, which would be needed to correct the flaw. Clint Severson was a bold investor, but not a reckless-risk taker. When he decided to buy into Abaxis in 1996, he was aware that there was no quick fix to the technical problems the company faced. However, he did detect some marketing issues that needed to be corrected and he believed that with an effective technical team, the flaws in the machines could be fixed.
Abaxis’s major product was a blood-chemistry machine that would analyze and give read-outs on 80 tests from a very small amount of blood. There was no machine on the market that could do all of this in one step. If the defects in the machine could be corrected, Abaxis would have something that virtually every medical and veterinary laboratory and clinic would want. However, Abaxis was not the only healthcare company attempting to build and market this kind of machine. Clint clearly saw the potential of Abaxis and was eager to get actively involved.
In June of 1996, Clint bought into Abaxis and was named chairman, president, and CEO. When he took the reins of the company, the machine was able to perform tests on animals that were largely reliable but lacked the capability to do the more sophisticated tests needed for humans. Clint directed the company’s sales force to veterinarians and then encouraged his research and development staff to focus on improving the machine so that it would be able to perform the tests necessary on humans.
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Eventually, the machine was refined and able to run human tests, but one big obstacle remained: the costs for conducting the tests were too high. The discs in the machine were coated with chemicals that cost $22 each to manufacture. Clint insisted that the cost needed to be brought down to about $4. When the head of manufacturing told him that was impossible, Clint fired him and brought in a chemical engineer from a laser company to rethink the project. Initially, the cost was brought down to under $10 a disc and, with increased volume, it was brought down to a little over $4 per disc.
All of this took valuable time and Abaxis was once again running out of money. A Canadian investment group agreed to invest $5 million in exchange for preferred stock in the company, which could be converted into a fixed dollar amount of common shares. This meant that the lower Abaxis’s stock fell, the more the preferred stockholders could own. Because of this, the Canadian group could eventually be able to acquire enough shares to take over the company.
To prevent this from happening, Clint, at the risk of being fired, refused to schedule a shareholders’ meeting and the investors backed down.
Having dodged that bullet, Abaxis had to try to enter the market where stiff competition now existed. Clint continued to work on getting the costs down for the operation of the company’s machines. In 2003, Abaxis got a big lift when the military ordered hundreds of machines during the war in Iraq. Meanwhile, the company was also introducing new products for the medical and veterinary markets. Suddenly, Abaxis was turning a profit.
Abaxis had spent $100 million to develop their blood-sampling machine, which they named Piccolo. Besides finding funds to keep the company afloat while technicians worked on Piccolo’s defects, Clint also had to handle legal matters, a short supply of cash and operational issues but under his leadership he was able to see Abaxis turn the corner and become a profit-making company. One of the big economic moves that Clint did to save the company money was quite literally moving. During the 1990s, Sunnyvale, Calif. became a major hub for high-tech companies and the rental cost for the Abaxis facilities had shot up from $63,000/month to $200,000/month. In 2000, he had a new facility built in Union City, Calif.
From 2002 to 2007, Abaxis saw sales grow at a rate of 23% per year and its earnings per share grea by 94%. By early 2006, sales of the Piccolo began to take off. This was a major reason that during the fiscal year of 2006 to 2007, Abaxis netted $11 million on sales of $89 million. This growth landed Abaxis in the 11th spot on the Forbes list of the 200 Best Small Companies. It was also a contributing factor in Severson earning the title of Entrepreneur of the Year for 2007 from Forbes.
With Clint as chairman, president, and CEO of Abaxis, sales continued to grow, making it a recognized company in the healthcare market for both physicians and veterinarians. In August of 2018, Clint Severson sold Abaxis for $2 billion to Zoetis, a former subsidiary which produces medicine and vaccinations for animals. Clint then retired from the healthcare industry to spend much of his time devoted to philanthropy and other business interests, such as real estate and his Sonoma County vineyards where he grew grapes that are used for making a variety of wines.
During the 22 years Severson was in charge of Abaxis, he increased worldwide annual revenue growth for the company from just under $3 million to over $290 million and increased operating income from -$6.7 million to $46 million. The margin of improvement went from -50% to 56%. He also introduced several new items and his company came out with improved versions of several other items. Severson was also successful in agreeing to international distribution pacts and raised over $50 million in equity funding.
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Severson got started in real estate when he purchased his first house for his parents in 1975. Whenever he felt the price was right, he continued to add new property and homes, mainly in Silicon Valley. In the later 1980s, his wife, Conni Ahart, began managing their growing real estate enterprise. In 1978 Clint, along with his father, purchased 9.18 acres of grape-growing land near a winery in Sonoma County. Through the years, Clint has expanded his vineyard and, in 2020, he hired his nephew, Eric Severson, to be general manager of the vineyard/wine producing enterprise called Hook and Ladder .
In 2008, Clinton H. Severson was inducted into the Scandinavian-American Hall of Fame. In 2010, he began to look around to find an organization which would be worthy of a philanthropic investment. “Minot State,” his alma mater, “rose to the top,” he said.
On February 9, 2010, he and Ahart donated $1 million to the College of Business at Minot State to create the Severson Entrepreneurship Academy, “aimed at promoting entrepreneurship and building better business leaders for the present and future.” They added another $500,000 in 2014 and, in 2016, made a $2 million gift to the academy to help it continue to expand. This was the largest gift in Minot State’s history. Clint and Conni have also made million-dollar gifts to another Minot facility as well as to Long Island University.
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