After the dot-com crash, and the wholesale off-shoring of tech jobs, is this the end of technology and engineering in the United States? Have we lost the inventive spirit, good old American engineering – rolling up the sleeves and diligently working away to design and build exciting new products?
There’s certainly still a demand for engineering, as you can see when visiting Best Buy to drool over the latest consumer electronics and portable devices – the amazing variety of products being developed to satisfy insatiable consumer demand.
And there’s still a place for designing and building these kinds of products, even here in central New Jersey. That’s the business, and fun, for Ted Altman and Ilya Kovnatsky, who co-founded Ewing-based Princeton Technology Group in 1997 (www.ptgroupinc.com). Beginning as a contract engineering house, they have grown their company to revenues above $1 million a year, generated by eight employees and a handful of contractors. Beyond product design and prototyping, PTG has expanded into product development, and even manufacturing with its own facility on Fourth Street in Ewing.
Without any sales force, promotion, or even a fancy website, Altman and Kovnatsky have attracted a wide range of customers, from start-ups to international corporations like Honeywell, Siemens, Lucent, Panasonic, and Samsung. They are now in the comfortable position of being able to choose the projects they want to work on. "We’re very diversified as a company," says Kovnatsky. "One of the great things is that we to get to do a lot of really fun stuff, which we would not be able to do if we were working for somebody else."
And New Jersey turns out to be a great location for finding interesting and challenging projects. "This area is a hotbed of technology," Altman says, "about 80 percent of our customers are local."
The next step for Altman and Kovnatsky is to grow further by becoming more deeply involved in developing products and sharing equity. With A-1 Limousine it has developed an automobile data event recorder designed to improve the driving habits of the drivers and reduce accidents. In addition, PTG is expecting to complete a merger in the next few months with Conolog Corporation, a Somerville-based company (and ongoing customer) that specializes in digital security solutions for electric utilities worldwide and electronic products for the military.
The project with A-1 Limousine developed much like other opportunities for PTG. A-1 Limousine had the original concept of developing a data event recorder that would contain cameras, accelerometers and other sensors to monitor driver behavior, including speed, acceleration, and braking (www.a1limo.com).
After discussions with other possible partners, A-1 Limousine came to PTG looking for engineering support to design and develop the concept into a product. While PTG could have simply contracted to do the work, it instead joined with A-1 to form a new company, PrincetonVision, to develop and market the product. A third partner, Mobile West, is a group with experience in commercial vehicle insurance based in Phoenix, Arizona, and is responsible for marketing and sales.
"They hand a very expensive car to the driver," says Kovnatsky, "and you don’t want to get the ‘Hey, it’s not my car’ syndrome." By recording events for later review, "the driving will improve," says Altman, "the accident rates will go down, and the insurance premiums will go down. So the insurance interest industry is interested in this as well." The prototype product is being tested by A-1 Limousine, which has seen improvements in driving performance and accident rates based upon data from their own fleet.
"Eventually this could be a consumer product," says Kovnatsky. "For teenage drivers, Dad could always be in the car. Having somebody else watching in the car ensures that they don’t do crazy stuff."
This kind of partnership is becoming more common in PTG’s business. "One of the things that we’ve learned is that we don’t know everything," says Kovnatsky. "We’ve learned that aligning ourselves with key partners who know their fields of expertise makes us a better team."
With the A-1 Limousine project, says Kovnatsky, "once we got into the details it was a pretty big undertaking. They saw that we’re bringing in not only how to build a widget, but also coming up with ideas on how to improve it. So they thought it would be advantageous for us to be partners. In the same way, we saw the viability of this product, and became partners."
"We tend to invest as part-owner in some of the more interesting projects that we come across," says Altman. "The customer sees that by getting our interest in the product, rather than just doing what the specification says, we can go above and beyond and get them something more competitive in the market." As a partner rather than a contractor, PTG can go beyond the assignment to get a better product. "Because we’ve been involved in designing so many things," says Kovnatsky, "we don’t look at a product the same way as a company that’s been doing widgets all the time."
Other recent projects that Princeton Technology Group has been involved with include an industrial printer that prints labels as products roll by on a manufacturing assembly line, a high-resolution medical X-ray system that combines image data from a 20 x 20 array of digital imagers, digital radio systems, and GPS (global positioning satellite) anti-jamming systems.
But how do a couple of engineers with a small company compete with much larger and better known organizations, particularly for military contracts?
Take the example of an image stabilization system that PTG developed for cameras mounted in aircraft. The system was required to analyze the video feed in real time and reduce the vibration and jitter. PTG assured a military contractor that it could do the work, based on the partner’s previous experience in image processing. But the customer needed reassurance that they really did understand the problem and could provide a solution.
"You have to establish some credibility." says Altman. "So they sent us a tape, and about two weeks later we sent them back a stabilized version. It showed that we understood the algorithms necessary to do the work." PTG won the contract, and delivered the first prototype for flight testing in 11 months. "We did this with a number of customers when we were just starting out," says Kovnatsky, "in order to prove ourselves. That was an issue at first when you’re just a little company taking on projects which typically are given to larger organizations. At this point, we have enough of a reputation that we don’t need to do it. Throwing a large number of engineers at a project is not necessarily the best way to get it done."
"Ilya loves technology," says Altman. "It intrigues him. He has a curiosity about things that is hard to quench. When he sees a challenge, something that might be an interesting technical project, he wants to learn how to do it."
"The part we are still trying to learn is how to make that profitable," he says. "It has to be more than fun."
Apparently both Altman and Kovnatsky were born to be engineers. "When I was a kid," says Altman, "my two favorite subjects were mathematics and physics. I would get math books out of the library when I was eight or ten years old. I want to Bronx Science in New York City, and it further confirmed what I enjoyed doing." But continuing in these sciences for a masters or PhD did not seem to offer much financial opportunity, so he focused on engineering as a practical alternative. "I’ve always been a hands-on person," he says, "and not a theoretical person."
Altman graduated from City College of New York in 1965 and earned a master’s degree from the Polytechnic Institute of Brooklyn in 1968. He then moved to the Princeton area to join the RCA Astroelectronics Division, where he worked for eight years in the TIROS weather satellite and the Apollo space programs. For another eight years he worked at the Squibb Institute for Medical Research in the instrumentation department and product development. In 1979 he returned to RCA as a manager at the David Sarnoff Research Center.
But in 1987 RCA merged with General Electric, and Sarnoff was looking to reduce its staff. Altman saw that he could return to engineering, but as a consultant. "I could do the same work that I was responsible for as a manager," he says. "I walked out one day as a Sarnoff employee, and walked in the next day as a consultant." At a minimum, he thought, the work could keep him going while he looked for his next job, but, "it turned out to be fun," he says. "Technology was a lot more fun than sitting around in meetings all day as a manager."
Initially, "consulting was frightening," says Altman. "You are used to having a nice comfortable job with the consistent paycheck." But after the first six months to a year, "I felt more and more comfortable," he says, "and then I stopped worrying. It was going to work out and I just felt comfortable."
"The first step going from a secure job is a very unnerving experience," he says. "Thankfully I had my wife’s support. She said go for it."
His wife, Renee Altman, actually followed a similar path. "She started out as a public school teacher," he says. "And then she said, ‘I don’t enjoy this. You like engineering; maybe I should become a computer programmer.’" After earning her associate degree in data processing at Mercer County Community College, she worked for the State of New Jersey, and other companies including ETS. But then she too went independent as a computer trainer, and formed Personal Computer Training (www.pctraininginc.com). "Now she’s on her own," he says. "She does classroom and one-on-one training for all the Microsoft products. She’s really good; she has the background of being a teacher and infinite patience, so she can get people to conquer learning quickly and easily."
After Sarnoff, Altman consulted on projects for the Princeton University Computer Science Department, DIRECTV, Samsung, and Intel. He also spent 1992 through 1995 as a regular employee at Princeton Video Image (PVI), again working on video hardware systems.
Altman first met Kovnatsky in 1991 when Kovnatsky was going to Drexel University and working as a co-op at Intel on Enterprise Drive. "I was there as a young engineer," says Kovnatsky. "You really don’t know much. Luckily I bumped into Ted, and he started showing me the way it really is in the practical world. I got to experience what engineers really do. Ted is a great teacher; he loves teaching. We got along pretty well."
Then in late 1995, when Altman was back to consulting and working on a project to play video from computers to televisions, he recruited Kovnatsky to help out, even though, says Altman, "he was out of school and had a real job, and also was married and about ready to have his first baby."
"We worked in my apartment," says Kovnatsky. "We were working hard to make a deadline for the Consumer Electronics Show. My wife was pregnant and the show was coming up, and the thing wasn’t working. We were working and working, and my wife says, ‘I think my water broke,’ and I’m there saying ‘hold on, hold on, it’s not working yet, just a few minutes.’ Literally in the same day we got it to work and went to the hospital. I said, ‘Ted, I’m going to the hospital, goodbye.’"
Kovnatsky’s family emigrated from Russia when he was around 10 years old. "I think I was born an engineer," he says, "It’s always been around me; my mom was an engineer, and my dad was an engineer." In Russia both his parents worked as engineers, and in the United States his mother worked for Lockheed, and his father has been a business owner.
"I knew I was an engineer when I was nine," says Kovnatsky. "I had a hamster, and my sister would always open up the cage and the hamsters would come out and run all over the house. So I built an alarm system so that a buzzer would go off if you opened the cage. My dad taught me; I’d learned how to solder when I was eight."
Kovnatsky bought his first computer and started doing software development when he was 10. His first consulting job was at 14, when he wrote graphical reporting software for a company testing large air-conditioning units. "He’s still our customer," says Kovnatsky, "but now we do hardware." The hardware instrumentation that PTG builds is for non-destructive testing of pipes and coils by measuring electrical fields to detect defects.
After the television project, Altman was consulting for Panasonic in 1996, working on developing a new cable modem. "We were in dire need of a software person," says Altman, "and I knew Ilya could do it. But he said, ‘I have a wife, and a kid, and a regular job, and a house being built.’ But eventually, the opportunity was so good so he joined me at Panasonic as a consultant."
The project was very successful. "Ted and I and two others developed a whole cable modem," says Kovnatsky. It was the first interoperable cable modem for the new DOCSYS standard. "We started getting calls from other people." says Kovnatsky, "so we decided to start a company." Princeton Technology Group was incorporated in December, 1997.
Altman and Kovnatsky then set up shop in Kovnatsky’s basement. "Startups are usually garage companies," says Kovnatsky, "but we were a basement company." However, one of their original customers wanted to visit, and the basement was unfinished. So in a demonstration of how start-ups need to take on many roles, Kovnatsky and another employee (who is still with PTG) spent the weekend finishing the basement. "One day we were there with oscilloscopes," he says, "and the next day with hammers and drywall. When we finished, it looked too immaculate, so we put some footprints on the walls so that it looked like people had been working there."
Princeton Technology Group’s secret weapon is the Field Programmable Gate Array (FPGA), flexible and programmable chips that allow software algorithms and processing to be implemented in hardware, at hardware speeds and with associated cost reductions. PTG’s specialty is designing solutions to hard problems that can be reduced into hardware with this kind of system-on-a-chip approach. Depending on the customer’s needs, PTG then can take the solution all the way to the final product: designing the FPGAs and printed circuit boards (PCB), building and testing prototypes, developing associated software, and then even manufacturing the final products.
"Almost everything we do is based on FPGAs," says Altman. "It’s very powerful technology, and the cost has come down as the power of these chips has gone up. It’s a very nice niche to be in."
PTG’s 3,000 square foot assembly facility includes a full line of surface-mount technology (SMT) production equipment: screen printers to place solder on the bare boards, pick and place assembly robots to mount chips from reels of components, and a reflow oven to melt the solder to the chip wires.
"We started incorporating more and more pieces of the design cycle within our company," says Kovnatsky. "At first we were just engineering design. Then we brought in-house PCB layout and production so that we can better meet our customers’ demands."
And how does a small company come to have a million dollars of assembly equipment? Altman and Kovnatsky acquired their equipment at auction. "We ran into a problem because most of what we do is prototyping," says Kovnatsky. "We could not find manufacturers to build stuff for us because we were running such short production runs." But in the midst of the dot-com crash, equipment was very cheap at auction. "So we bought equipment for pennies on the dollar. We rented huge trucks, and sometimes the auctioneers didn’t know what the equipment was and just told us to just take it." For example, "we bought two Sony robots worth $300,000 each for $400."
The factory is around 20 percent utilized, says Altman, "so we can be responsive. We can turn it on when we need it. We don’t have to keep it running, and it’s a lot less expensive than shutting down somebody else’s line to do our job, when they did spend $1 million on their equipment."
The facility is also used to store the ultralight plane that Kovnatsky is building as an evening and weekend project.
Much of PTG’s business comes through referrals. "We don’t do any advertising," says Kovnatsky. "We have done only about three trade shows in the company’s history. We are like a law firm: all word-of-mouth advertising."
PTG also gets leads though Altera, the supplier of its PLD (programmable logic device) / FPGA / system-on-a-chip systems (www.altera.com). PTG actually designed the development board that Altera sells to its customers to help them get started prototyping new product ideas. PTG manufactures some 1,000 of these boards each year, which Altera sells for around $5,000.
The next step is to decide if the project can be done, and settle on the schedule and price. "We tell our customers they can have the job quick, cheap, or good," says Kovnatsky – "any two of those three. Customers want results quickly, but people understand, and we can negotiate." PTG typically works with fixed-price contracts, beginning with a specification if the project is not well defined. "We charge $150 an hour," says Altman. "A full-time project for six months might be $150,000."
The next stage for Princeton Technology Group is the pending merger with Conolog Corporation (CNLG on Nasdaq, www.conolog.com). "They have a capital base," says Altman, "so we can grow faster if we merge with them. We have grown from two to ten in five years. I don’t want thousands of people here, but we would like to hire some more competent engineers so we can do things faster. Now we have to pick and choose priorities."
PTG has worked for Conolog to design a next-generation digital teleprotection system to help avoid electrical blackouts. The system monitors faults at electric power stations and communicates to surrounding facilities so they can take action to prevent a disturbance from propagating throughout the power grid.
By developing a digital solution, PTG was able to provide Conolog with a significant advancement over competing analog products, and also enhance the product with additional new features. "The original systems did not take advantage of current technology," says Kovnatsky, "and we approached it from a clean slate, without being influenced by traditional approaches in the industry, and came up with a fairly revolutionary system." The initial contract was 4 1/2 years ago, and PTG has been updating and improving, and designing new products, since then.
The merger negotiations started in October, 2004, but both companies have been too busy with work to reach the final agreement. "These things take time," says Altman, who expects the merger to be completed "within a couple of months."
"It took some time to convert our engineering thinking to business owner thinking," says Kovnatsky. "Once you realize that it’s not only a playground for fun in doing the designs that an engineer likes to do. You also have to understand the details of the business. That took us awhile; you learn things like overhead."
And they continue to work well together. "We are compared to a married couple," says Kovnatsky. "I know all of Ted’s stories."
"I would do one project at a time, working on site," says Altman. "Ilya is not happy unless he is doing 10 things at once. Now we can do around six projects at a time, with two or three people working efficiently. Ilya is quick, while I have an even keel and am the moderating influence."
"We want this to be a great place to work," says Altman. "We have no business hours; people come and go as they are needed for the job. We wear jeans, and Thursday is pizza day. It’s shaping up the way we wanted it."
Princeton Technology Group, 1901 North Olden Avenue, Suite 40, Ewing 08618. Ted Altman, principal. 609-434-1066; fax, 609-434-1067. Home page: www.ptgroupinc.com
Also see Doug Dixon’s Manifest Technology website (www.manifest-tech.com).