At first glance, it seems like a simple idea: a self-dimming rearview mirror that eliminates mirror glare. Just after Fred Bauer graduated from college in the 1960s, friends had challenged him to solve that problem.
Bauer could not resist a good idea. He had inherited the instincts of his father, a 'wild' entrepreneur who operated businesses ranging from a furnace company to an amphibious boat factory.
In 1974, Fred Bauer launched a company called Gentex in Holland, Michigan, to produce smoke detectors. Eventually he realized that the device's sensor - which could detect very faint light - might be used to activate a self-dimming mirror.
But Fred's bright idea was only the first step. After spending $300,000 on research, Bauer fought off pressure to cancel the project. He launched volume production in 1987. It was a nerve-wracking time. When he decided to produce the new mirror, Bauer discontinued an older mirror which was profitable, but less effective. The new mirror was a gamble. 'We scaled up production on something that we really didn't know how to build,' Bauer said. 'So it was a time of tremendous anxiety.'
Although annual sales are only $300 million, Gentex is a stock market superstar. Sales are rising 24 percent a year, and earnings are growing 32 percent annually.
'There is no supplier out there that has anything approaching that kind of internal growth,' says Dan Donovan, an American Express Financial vice president who manages pension funds that own 1.8 million Gentex shares. 'It's the one true legitimate growth story in the auto parts business today.'
Electrochromic mirrors have only 10 percent penetration in the global auto market, and Gentex controls 80 percent of that business. The company estimates the segment may reach $2.5 billion.
How will the 58-year-old executive capitalize on his success? 'If you're a little scared and humble and think ahead, things will take care of themselves.'