Dave Power took a calculated risk in 1973 when he sent out a press release about a report that pointed out flaws in Mazda Motors of America's new rotary engine.

Power's research company, J.D. Power and Associates, compiled its findings from Mazda customers.

The notice received massive media coverage. Mazda ripped the results. For a time it seemed Power and his fledgling firm were out on a limb that was about to snap.

But soon the limb turned into a solid branch, Power told IBD.

"Even when Mazda criticized our research, we stood fast and eventually we were proven to be correct, which helped our image with the press and it got our message to the top of the automotive corporations," said Power, 76, now a company consultant. "That's how we got started, and it just kept growing."

Power's report sent Mazda back to the drawing board.

For J.D. Power, the report was a watershed event. The company that Power mapped out on his kitchen table only five years earlier became an indelible part of the automotive landscape, says Jeremy Anwyl, chief executive of Edmunds.com, a leading online information source for car shoppers.

"That was the first time an external quality study had put real pressure on a manufacturer, and Mazda had to discontinue the rotary engine and go back to piston engines in all but the RX-7 sports cars," said Anwyl. "Prior to that, Mazda was a 100% rotary engine company."

Now in its 39th year, J.D. Power is known for its customer satisfaction surveys on everything from cars to credit cards. And it's a big business.

In 2004, J.D. Power reported revenue of $150 million. It had 640 employees. A year later, McGraw-Hill Cos., (MHP) a leading publisher, purchased the firm. Terms were not disclosed.

Filling Power Vacuum

Over the years, J.D. Power's data collection service has filled a niche that had largely been unmet, says George Hoffer, a professor of economics at Virginia Commonwealth University.

"What made it so successful was that it filled a vacuum," he said. "Before, there was really a dearth of information, and over the last 40 years they raised the bar because the data are so superior."

James David Power was born on May 30, 1931, in Worcester, Mass. Power's father was a high school teacher. His mother was a homemaker. Power grew up during the Great Depression. Back then it was common for unemployed people to knock on a family's front door requesting a hot meal. On these occasions, Power's parents invited them in without question.

"My parents believed in supporting the underdog," Power said. "I learned from them that you share with somebody that needs it."

Power graduated with a liberal arts degree from the College of the Holy Cross in 1953. With the Korean War still on, he joined the Coast Guard. In 1959 he graduated from the University of Pennsylvania's Wharton School with an MBA degree.

The auto industry seemed a natural fit for an MBA grad, says Power.

"At the time the auto industry was the backbone of the U.S. economy, and the economy was good in 1959," he said.

Power joined Ford Motor (F) as a financial analyst doing budgeting and cost analysis for its tractor division.

After two years he joined the Interpublic Group of Companies, a marketing services firm. His clients included car companies, plus financial services, utilities and food firms. The work helped broaden Power's experience.

"My program at this time was to get exposure in other categories," he said.

In 1966, Power did a study for McCulloch Motors Corp. The report showed the firm had missed the emerging consumer market for chain saws. McCulloch later recruited Power as its director of corporate planning.

Power stayed for a year. He decided to start his own firm after getting advice from two former Wharton classmates. The pair had quit their jobs to start their own company.

"One of them said the biggest problem people have is staying in a job too long and then they become captive of the corporation they are working for," said Power.

So Power struck out on his own — and collected clients fast. First was McCulloch, and he liked it. "I got to keep my secretary and a little office, and that allowed me a little more breathing time," he said.

Power started out doing customer surveys for firms. He organized feedback on their products and services.

At first Power recruited his wife, kids and a neighbor to help produce the surveys.

"The kids had to fold the cover letters and stuff the envelopes, and I had a neighbor who did all my typing for me up until 2 or 3 o'clock in the morning," he said.

Power was careful to include 25 cents in each envelope as an incentive for the consumer to fill out and send back the survey. It worked.

"We got over a 50% response in those days," he said.

In 1968 Power signed up Toyota, (TM) which was re-entering the car market. Other carmakers followed.

Power opened his first office in 1970. The following year, Power changed the firm's strategy. Companies had been paying him for surveys about their own products and services. Now J.D. Power began sponsoring its own surveys. It then sold the results to companies.

Power's first study sold for $1,800. Seven automakers bought it. Today similar surveys sell for $10,000 to $250,000.

Sponsoring the research made the results completely unbiased. It also gave J.D. Power more control of the data. The report on Mazda's rotary engine is one example, says Power.

"As long as we owned the data, we could talk about it and release key findings to the press," he said.

Another advantage, said Anwyl, was this: "The company became a lot more profitable because you can sell the same research to several car companies."

J.D. Power has become known for its customer satisfaction awards. The winners are the top vote getters in its survey results.

The Licensing Bowl

While watching the Super Bowl in 1983, Power was stunned to see that a client, Subaru of America, used J.D. Power survey results in a TV ad. At the time, Subaru ranked second in a customer satisfaction survey behind Mercedes-Benz.

Soon after, J.D. Power began charging companies a licensing fee to use survey results in an ad.

Charging the fee was a proprietary issue, says Chris Denove, a J.D. Power vice president. "We did not want to become the Good Housekeeping Seal of approval for companies, so the licensing fees really came about as a way to control the use of our name," he said.

J.D. Power's licensing fees range from $25,000 to $250,000. Power says licensing is a small portion of the company's revenue.

Still, it's another way to leverage the same research, says Anwyl.

"They have been very good at extracting the maximum possible revenue out of this study business they have built up," he said.

Of J.D. Power's revenue, 70% comes from car companies.

BY PETE BARLAS