Sunday, October 16, 2005
They Made the Internet - Now They Want to Make Money
BBN Technologies built the forerunner of today's Internet , employed the @ sign to send the first e-mail, and even designed the acoustics for the UN General Assembly Hall in Manhattan. But the company didn't get rich off of any of those milestones. Now a recapitalized BBN is scrambling to make sure history doesn't repeat itself. With new ownership and a new strategy, BBN wants to profit off the new century's next big thing: the war on terror. The company hopes to benefit financially from the speech recognition , network security , and wireless mobile technologies it is pioneering for use in Iraq and elsewhere.
To do that, the 57-year-old company originally known as Bolt, Beranek & Newman must make the transition from a contract research house still heavily dependent on Pentagon contracts to a nimbler and more entrepreneurial concern focused on turning out rapid prototypes, spinning off businesses, and broadening its customer base. The company is growing its core research operations faster than it had previously, said Robert G. "Tad" Elmer, the president and chief executive of BBN. At the same time, it is moving to line up more work for U.S. intelligence agencies and to tap new revenue sources by licensing more of its technology to corporations and start-ups. "We believe there is great applicability in commercial areas for some of the things we're really good at," Elmer said. "Right now these commercial areas are not that big a part of our revenue. However, if we do it right, they could be a very profitable part of our business. And unlike the go-go days of the late '90s, profit really matters now." That's been especially so since March 2004, when a team of senior executives and private equity investors purchased the BBN research business from Verizon Communications for an undisclosed sum. The new owners, led by General Catalyst Partners of Cambridge, Mass. and Accel Partners of Palo Alto, Calif., reconstituted the once-public BBN as an independent company after seven years under the corporate umbrella first of GTE, then Bell Atlantic, and finally Verizon. While the strategy is set, the chase after civilian business won't be easy.
BBN has excellent technology in the speech and language fields, said Bill Meisel, president of TMA Associates, a speech technology consulting firm in Los Angeles. But he said it faces stiff competition in those areas from rivals such as Microsoft, IBM, and ScanSoft, all with more marketing experience. "The history of BBN is it's been very inventive, yet it's never been a commercial marketing organization," he said. "Now that it has outside investors, it's trying to reach the commercial markets." Indeed, there have been many chapters in BBN's storied history, but few have involved technologies that landed in consumers' hands. In addition to the company's acoustics work in 1949 at the UN, BBN also invented the Arpanet, precursor to the Internet, in 1969. Two years later, BBN engineer Ray Tomlinson employed the @ sign to send the first e-mail message. In 1978, its chief scientist, James Barger, analyzed the tapes of the John F. Kennedy assassination and suggested the possibility there were two shooters.
The speech processing research it began in the mid-1970s is one key to the future of BBN and its 650 employees. Next month the company expects to land a contract from the Pentagon's research arm, the Defense Advanced Research Projects Agency, to lead an effort to develop technology that immediately translates spoken languages, such as Arabic or Mandarin Chinese, into searchable English text. That contract will be for a Darpa program known as GALE, for global autonomous language exploitation. Valued at more than US$15 million for its first year, it will be one of BBN's largest contracts ever. At the same time, company representatives have been marketing related technologies --speech recognition, search-to-text, and media search -- to Silicon Valley search and Internet companies, though they have yet to announce a deal. "We need to be continually moving into new areas, which feeds the vitality of the organization," said Stephen D. Milligan, BBN vice president and chief technologist.
But military research still represents more than 80 percent of BBN's revenue, and most of the cutting-edge technologies coming out of its labs today, from distributed software to artificial intelligence , are focused on aiding the US armed forces fighting in Iraq and Afghanistan.
"Over the past five years, because of what's going on in the world, their technologies have become ever more relevant," said David Fialkow, the General Catalyst managing director who sits on the BBN board.
One research effort is dubbed Ambush, a multiplayer military training program for personal computers that simulates a convoy moving on a desert highway. The software and artificial intelligence agents create a series of virtual scenarios (sniper fire, improvised explosive devices, car bombs, rocket-propelled grenades) requiring quick decision-making by troops in the convoy.
"It throws you into situations," said Bruce Roberts, scientist at BBN's distributed systems and logistics division. "The goal is to make day one like day three, to make sure that when you go on a convoy you're up to speed with the environment and the skills you need." The program, part of the computer-based training initiative funded by Darpa, was tested at the Pentagon's Joint Readiness Training Center in Louisiana as a supplement to physical training. It was fielded by the Army's 1st Stryker Brigade, 25th Infantry Division, which was deployed to Iraq from Fort Lewis, Wash.
Another program is Boomerang, a detection system featuring multiple microphones mounted on armored vehicles that can quickly identify the direction of mobile shooters and enable soldiers to respond. Like Ambush, Boomerang became a "rapid development" program after the Defense Department approached the company in November 2003. "We were given 60 days to build the system from scratch," said program manager David Schmitt. Ambush, meanwhile, began in March 2004; BBN readied a prototype by June and it was deployed in September.
Elmer said the company is becoming adept at the kind of rapid prototyping required in wartime, and that skill has become an important part of BBN's new culture. Bringing products to market quickly will also be critical as BBN officials peddle their technologies to Internet, consumer electronics, and life sciences companies. "We need to preserve and build on BBN's exceptional long-term technical culture while at the same time taking some of its best technology into high-growth commercial markets," said Jim Breyer, an Accel Partners managing partner and a director of BBN.
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To do that, the 57-year-old company originally known as Bolt, Beranek & Newman must make the transition from a contract research house still heavily dependent on Pentagon contracts to a nimbler and more entrepreneurial concern focused on turning out rapid prototypes, spinning off businesses, and broadening its customer base. The company is growing its core research operations faster than it had previously, said Robert G. "Tad" Elmer, the president and chief executive of BBN. At the same time, it is moving to line up more work for U.S. intelligence agencies and to tap new revenue sources by licensing more of its technology to corporations and start-ups. "We believe there is great applicability in commercial areas for some of the things we're really good at," Elmer said. "Right now these commercial areas are not that big a part of our revenue. However, if we do it right, they could be a very profitable part of our business. And unlike the go-go days of the late '90s, profit really matters now." That's been especially so since March 2004, when a team of senior executives and private equity investors purchased the BBN research business from Verizon Communications for an undisclosed sum. The new owners, led by General Catalyst Partners of Cambridge, Mass. and Accel Partners of Palo Alto, Calif., reconstituted the once-public BBN as an independent company after seven years under the corporate umbrella first of GTE, then Bell Atlantic, and finally Verizon. While the strategy is set, the chase after civilian business won't be easy.
BBN has excellent technology in the speech and language fields, said Bill Meisel, president of TMA Associates, a speech technology consulting firm in Los Angeles. But he said it faces stiff competition in those areas from rivals such as Microsoft, IBM, and ScanSoft, all with more marketing experience. "The history of BBN is it's been very inventive, yet it's never been a commercial marketing organization," he said. "Now that it has outside investors, it's trying to reach the commercial markets." Indeed, there have been many chapters in BBN's storied history, but few have involved technologies that landed in consumers' hands. In addition to the company's acoustics work in 1949 at the UN, BBN also invented the Arpanet, precursor to the Internet, in 1969. Two years later, BBN engineer Ray Tomlinson employed the @ sign to send the first e-mail message. In 1978, its chief scientist, James Barger, analyzed the tapes of the John F. Kennedy assassination and suggested the possibility there were two shooters.
The speech processing research it began in the mid-1970s is one key to the future of BBN and its 650 employees. Next month the company expects to land a contract from the Pentagon's research arm, the Defense Advanced Research Projects Agency, to lead an effort to develop technology that immediately translates spoken languages, such as Arabic or Mandarin Chinese, into searchable English text. That contract will be for a Darpa program known as GALE, for global autonomous language exploitation. Valued at more than US$15 million for its first year, it will be one of BBN's largest contracts ever. At the same time, company representatives have been marketing related technologies --speech recognition, search-to-text, and media search -- to Silicon Valley search and Internet companies, though they have yet to announce a deal. "We need to be continually moving into new areas, which feeds the vitality of the organization," said Stephen D. Milligan, BBN vice president and chief technologist.
But military research still represents more than 80 percent of BBN's revenue, and most of the cutting-edge technologies coming out of its labs today, from distributed software to artificial intelligence , are focused on aiding the US armed forces fighting in Iraq and Afghanistan.
"Over the past five years, because of what's going on in the world, their technologies have become ever more relevant," said David Fialkow, the General Catalyst managing director who sits on the BBN board.
One research effort is dubbed Ambush, a multiplayer military training program for personal computers that simulates a convoy moving on a desert highway. The software and artificial intelligence agents create a series of virtual scenarios (sniper fire, improvised explosive devices, car bombs, rocket-propelled grenades) requiring quick decision-making by troops in the convoy.
"It throws you into situations," said Bruce Roberts, scientist at BBN's distributed systems and logistics division. "The goal is to make day one like day three, to make sure that when you go on a convoy you're up to speed with the environment and the skills you need." The program, part of the computer-based training initiative funded by Darpa, was tested at the Pentagon's Joint Readiness Training Center in Louisiana as a supplement to physical training. It was fielded by the Army's 1st Stryker Brigade, 25th Infantry Division, which was deployed to Iraq from Fort Lewis, Wash.
Another program is Boomerang, a detection system featuring multiple microphones mounted on armored vehicles that can quickly identify the direction of mobile shooters and enable soldiers to respond. Like Ambush, Boomerang became a "rapid development" program after the Defense Department approached the company in November 2003. "We were given 60 days to build the system from scratch," said program manager David Schmitt. Ambush, meanwhile, began in March 2004; BBN readied a prototype by June and it was deployed in September.
Elmer said the company is becoming adept at the kind of rapid prototyping required in wartime, and that skill has become an important part of BBN's new culture. Bringing products to market quickly will also be critical as BBN officials peddle their technologies to Internet, consumer electronics, and life sciences companies. "We need to preserve and build on BBN's exceptional long-term technical culture while at the same time taking some of its best technology into high-growth commercial markets," said Jim Breyer, an Accel Partners managing partner and a director of BBN.
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