Startup Raises Hopes For High-Tech Growth In Buffalo

By Emma Sapong
The Buffalo News, N.Y.

BAK USA, the manufacturer of low-cost tablet PCs and cellphones opening a factory in Buffalo, has its eyes on the fertile African market.

And the attraction appears to be mutual — continent-wide.

The Republic of Chad in Central Africa wants 60,000 tablets for its high school and university students.

In West Africa, the Senegalese government has tapped BAK to fulfill its tablet needs.

Djibouti, the East African nation, is sending representatives to Buffalo in coming weeks to check out samples of BAK’s models.

But the startup, located in the Compass East building on Michigan Avenue, hasn’t even opened yet. Construction of its factory in the former Sheehan Memorial Hospital is nearing completion, and 10 workers are already onboard, but BAK won’t start making devices until December.

“The word has gotten out, and there’s a lot of interest,” said JP Bak, chairman of BAK USA. “It seems we’ve hit the right niche for the educational and government markets in Africa.”

While Africa will be its first port of call, the company’s sleek BAK Carbon, an unlocked 3G Android smartphone with dual SIM card capacity, will also retail in New York State exclusively in the U.S. for $155. But Android tablets will dominate the new business, accounting for 75 percent of production, including the BAK JET, an eight-inch Wi-Fi tablet PC that they are expecting will be available locally for $119 in time for Christmas.

Once production commences, BAK USA will give Buffalo bragging rights as a tech trailblazer, making it one of the first U.S. cities to manufacture tablet PCs and cellphones. And a year from now, plans call for it to employ more than 100 people making up to 40,000 devices that will be sold nationwide as well.

“Who said tablets have to be made in China?” JP Bak said. “We’re going to prove that it can be done here successfully, producing quality devices that are affordable.”

The business plan is not without risk. Many such social endeavors wither for lack of sales and savvy business plans.

But JP Bak and his wife, Ulla, both Danish-born lawyers, aren’t new to the business. They own a similar factory in Haiti that was erected as an economic development response to the devastation caused by the 2010 earthquake that ravaged the island. The Port-au-Prince business employs local workers who assemble economical tablets that are sold on the island around the Caribbean and in Africa.

Business for good

The couple brought their form of social capitalism to Buffalo after qualifying for long-term tax breaks, and they are aiming to be profitable in six months.

“Our main goal is to bring education to the underserved world,” said Ulla Bak, president of the company. “In order to achieve that goal, you need to have a carrier for that education, and that carrier happens to be the tablet.”

To keep them affordable, BAK will mainly produce no-frills devices using the open-source Android operating system, preloaded with educational apps and with access the free and paid apps through the Google Play store. Prices will range from $120 to $180 for tablets with additional features.

JP Bak said tablets are no longer gadgets but tools that are especially needed in developing countries to revolutionize their low-quality education systems. But big-name manufacturers have ignored those markets because of their impoverished conditions.

“We’re talking Third World countries here, where people have a hard time just making it day by day, so an expensive tablet is out of the question,” said Albert Mboyi, who represented the Chadian government earlier this month when he visited Bak USA.

“But a BAK tablet for $100 is more affordable, and just as good as anything Samsung makes,” Mboyi said. “So African governments and educational institutions are interested in buying them for their citizens. Africans want goods that are made in America. That’s a major selling point for Bak.”

BAK USA is part of a growing business movement to social entrepreneurship to address a multitude of social problems, said Erin Worsham, executive director of the Center for the Advancement of Social Entrepreneurship at Duke University’s Fuqua School of Business.

“Social entrepreneurs are very innovative, resourceful, passionate, committed and very opportunity oriented,” she said. “They see an opportunity where a need isn’t being met. Social entrepreneurs are on a mission, a social mission, mostly to fill a social need. In the case of BAK, they saw a lack of access to those products in Africa and have an innovative way to get those products to people who need them most.”

The term “social entrepreneur” was coined in the 1990s. When CASE opened at Duke in 2002, the term was relatively unknown, but today a Google search yields more than 2 million results, Worsham said.

“In order to solve these social problems and continue to grow, these social ventures have to have financial sustainability,” she said. “Some of these social ventures are very challenging but there are many examples that are profitable and successful and are really having an impact.”

Along with education, the Baks said there’s an economic empowerment component to their mission. BAK franchises will emerge where its tablets and cellphones are sold. So as Mboyi travels between Chad and Buffalo firming up the country’s custom order, talks are ongoing about building a factory next year in N’Djamena, Chad’s capital. A site has also been identified in Kenya for a franchise.

Hiring here

In Buffalo, the company is hiring a total of 117 from the area’s hard-to-employ segments — minorities and refugees.

“We want to offer jobs because unemployment is unhealthy for individuals and their communities,” Ulla Bak said. Newly hired workers will begin training Nov. 24 when the 11,000-square-foot factory will be ready. Assembly workers will earn $10 an hour with medical benefits, but wages can increase with commission based on production amounts. The devices will have about 50 components — parts from Chinese suppliers.

“It’s not difficult work, thousands of people do it every day in Asia,” Ulla Bak said. Positions are available and don’t require a college degree or formal training in computers but it does require a sense of geometry, diligence and punctuality, she said.

“So far we’ve received 150 applications,” Ulla Bak said. “We have some quality people who are very excited about what they’ll be doing and the mission of the company. We’re excited that they’re so excited.”

The factory won’t be a mind-numbing assembly line, where workers do repetitive work. Instead each tablet will be assembled from start to finish by the same person, she said.

Starting in Haiti

When the couple immigrated to the U.S., they established several businesses, including EMX Corp., a California firm that developed a way to neutralize electromagnetic radiation emitted by cellphones. When they sold it, they became wealthy and retired.

But in 2010, the earthquake in Haiti called them to act. First they set up a foundation to rebuild homes destroyed in the disaster.

“But four or five houses is nothing when 400,000 homes were lost,” said Ulla Bak. So the couple searched for a way to have a more enduring and widespread impact. With the help of a $200,000 grant from the USAID, $300,000 of their own money and another $300,000 from local partners, they came up with Surtab, a company that opened last year in Haiti’s capital city.

Sixty Haitian women, mostly former market women, who used to hawk goods on the streets, have found gainful employment there, creating devices that sell for as little as $89 wholesale, mainly to schools, universities and the island’s mobile service providers.

“It’s a source of pride for them,” JP Bak said. “On the back it says ‘Made in Haiti,’ ” The factory produces 6,000 devices a month.

UB connection

When the Baks decided to broaden their business model to the States, they considered Detroit, but New York’s Start-Up NY program lured them east to Buffalo. It allows new businesses that work with the state’s universities and colleges to operate virtually tax-free for 10 years.

“It was huge in bringing us here to Buffalo,” JP Bak said. “With the tax breaks we are able to compete with the Chinese manufacturers, it keeps production costs down,” Its pairing with the University at Buffalo will result in a UB-run lab within the factory that will be staffed with interns and graduate students, devoted to research and product development.

The Baks, who were living in Pittsburgh, have settled into a downtown apartment. “We are Buffalonians now,” Ulla Bak said with her Danish accent, citing how the Buffalo Niagara Enterprise business group has acted as a concierge, making the opening of the business seamless.

Their 28-year-old son, Christian, the company’s product and brand manager, has also moved to Buffalo. His older sister, Eva, a college instructor and counselor in Brooklyn, is the company’s employee relations administrator. She flies in on the weekends for her duties. Bilel Neji, a UB graduate with two doctorate degrees, including one in microelectronics and electrical engineering, is in charge of product development. Before BAK came to town, Neji was toiling in Silicon Valley, searching in vain for the ideal job. BAK hired him in August.

“Buffalo is the new Silicon Valley,” Neji said.

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