Corrections or additions?
These stories by Peter J. Mladineo and Barbara Fox were published in U.S. 1 Newspaper on May 6, 1998. All rights
reserved.
Life in the Fast Lane
Voxware said goodbye to its chief financial officer
last week, and it had also cut its head count by 30 percent —
all in response to seeing its stock drop from $7.50 to just under
$3 in 18 months. Company executives predict that cost cutting, new
personnel, and a new business plan will help improve Voxware’s market
position, but an analyst insists that only time will heal the growing
pains of the young firm.
Just before it went public in October, 1996, Voxware changed its business
plan from focusing on consumer CD-ROM products to concentrating on
Internet telephones. To its chagrin it found that, though other concepts
on the Internet have prospered, the growth of Internet telephony lagged
far behind expectations. So at the rate Voxware was going — burning
money at $1 million per quarter — the $20 million raised by the
IPO would soon be gone.
In November of last year Bathsheba Malsheen replaced co-founder Michael
Goldstein as CEO of the College Road-based company. “We changed
the strategic direction strictly toward OEMs (original equipment manufacturers),
to not do end-user applications,” says Malsheen, formerly Voxware’s
chief operating officer (U.S. 1, July 16, 1997). “Now we sell
compression technology to be included in other people’s products.
We broadened the target market to four markets instead of one. And
we cut expenses significantly.”
Two dozen people were laid off in January, reportedly with less than
optimum severance packages. Voxware at one point had employed 92 people,
but now it has 56 workers worldwide, including 47 on College Road.
Last week CFO Kenny Traub left, so technology inventor Gerard Aguilar,
chief technical officer, is the only co-founder remaining. Top researchers
Juin-Hwey Chen, Robert McAulay, and Craig Watkins are still with the
firm, though Kevin Erler, former manager of voice modeling research,
has left. An eight-member board has been reduced to five: Malsheen,
Aguilar, venture capitalist Andrew Fillat, Richard Schell (of Netscape),
plus a choice of Malsheen’s — Dave Levi, formerly president of
National Microsystems and COO of Voice Control Systems.
Nick Narlis, formerly Voxware’s vice president, treasurer, and acting
vice president of sales, is now chief financial officer. A search
is on for a new vice president of sales, but Jeff Hill is now marketing
director and Chuck Hart is vice president of international sales.
Based in Seattle, he works mostly in the Far East, and the firm also
has sales offices in Tokyo, the United Kingdom, Boston, and the San
Francisco Bay Area.
Narlis grew up in Hamilton, where his father worked for the railroad
and his mother for the casino control commission. An accounting major
at Rider, Class of 1982, he worked at KPMG Peat Marwick for nine years
but was also an officer in the U.S. Army Reserves and enjoyed the
operations side of business and the military.
“I decided that rather than be a partner in a large firm, it was
better to be an entrepreneur,” says Narlis. He moved to Dendrite
International, where he was director of finance, and then joined Voxware
in 1996.
Malsheen calls Narlis a “Renaissance man” and
attributes that and his “unemotional and effective approach”
to his military background. “He has done a tremendous job as vice
president of sales, he gets involved in market research, and he has
been running finance, human resources, and MIS,” she says. “I
have been working in technology companies for 16 years, and I don’t
think I have met anyone with the level of flexibility that Nick has.”
Not only is Malsheen optimistic about what Narlis can do for Voxware,
she also praises Voxware’s latest business plan — to broaden the
target markets from just Internet telephony to also include consumer
devices, wireless, and Internet/multimedia software. She announced
last month that Franklin Electronic Publishers has licensed Voxware’s
speech technology for its handheld translators and bilingual dictionaries
which will be marketed next Christmas. Based in Burlington, Franklin
manufactures personal productivity devices and publishes more than
200 electronic handheld books (https://www.franklin.com.
She also cut cash flow. “We need time to grow the company and
we need to preserve the cash while we do that,” says Malsheen.
The firm has $14.7 million in cash remaining. Asked to encourage comparisons
to older and now successful OEM companies, she cites component hardware
firms such as Dialogic in Parsippany and National Microsystems in
Framingham, plus speech technology firms such as DSP Group in Santa
Clara and Learnout & Hauspie, based in Belgium.
One analyst traces Voxware’s troubles not to its leadership, but to
its market. When Goldstein left, the market “didn’t hiccup one
way or another,” says Bruce Carlsmith of Montgomery Securities,
the San Francisco-based firm that underwrote Voxware’s IPO. He has
been covering Voxware for 14 months.
“Kenny has been a competent CFO in so far as any CFO could have
an influence on Voxware’s position,” says Carlsmith. “People
cognizant of the story know that the issues the company faces are
more endemic to the industry and what they are trying to do than issues
of leadership.”
“The IP telephony market has not yet taken off, and where it has,
they haven’t yet used Voxware’s technology,” Carlsmith says. Voxware’s
digital speech software products are based on Aguilar’s original “MetaVoice”
technology that offers “unmatched” speech quality at very
high compression ratios. Digital speech compression identifies and
eliminates redundancies in the speech signal so that good quality
speech can be produced with less digital data.
“There are so many uncertainties associated with IP telephony
that the optimum selection of a codec (voice technology) is like deciding
on the color of the bridle when you are breaking a new horse,”
says Carlsmith. “So far, IP has hinged on other issues, such as
regulatory, and the choice of a codec is basically too small to bother
with right now.”
“I think we had our particular challenges because we went public
as a very early stage company,” says Traub, who had been interviewed
by U.S. 1 in the context of speaking on a New Jersey Technology Council
panel set for Thursday, May 14, at 4:30 p.m. “Our business model
was not well defined, so communicating those expectations to analysts
was more challenging than for a company that had more operating history.”
“When we went public we had only $1.6 million of revenues so we
were able to go public based on high expectations of how the industry
would develop,” says Traub. “After we went public, the industry
changed so rapidly we had to work with analysts to help them understand
new business models as we developed them.”
“Co-founding and building Voxware was one of the most exciting
experiences of my life,” says Traub, a 36-year-old Harvard MBA,
“and I am going to stay in this area and hope to build another
entrepreneurial company.”
Did Voxware grow too fast? Or is it just another Internet company
ahead of its time?
“If Michael Goldstein were here, he would say the public market
gave Voxware $20 million to grow a large business, and one of the
prerequisites for that is to have the infrastructure and talent to
grow proactively rather than reactively,” says Malsheen. “There
is no heinous crime about being proactive or about putting your infrastructure
in place.”
Says Malsheen: “Nobody really understood the multimedia software
market because it was quite chaotic, and it turned out to not grow
as quickly as anticipated. We did a wonderful job attracting talent
to New Jersey.”
— Barbara Fox
Voxware Inc., 305 College Road East, Princeton08540. Bathsheba J. Malsheen, president and CEO. 609-514-4100; fax,609-514-4101. Home page: https://www.voxware.com. Nasdaq:VOXW.Top Of PageA New Nassau InnBy sometime early in the next decade, Palmer Squarecould have a vastly different look to it. It might be a lot bigger,with more retail and more residential, and with an expanded NassauInn.The Palmer Square plan — unveiled to the public last week –won’t face its final approvals for another six to nine months, andif successful, construction would begin in March, 1999. The NassauInn’s expansion, however, is on a fast track and could be done byfall of next year.The proposed changes for the Nassau Inn include the expansion of itsballroom from 3,150 to 7,500 square feet, a new lobby and a ballroomterrace, new bathrooms, a storage facility, and 40 new guest roomson the third and fourth floors. On the street level there will beapproximately 2,500 square feet of new retail space fronting HulfishStreet.The main impetus for Nassau Inn’s expansion is to get a chunk of thelarge business and social event market, which it currently must deferto places like the Marriott and the Hyatt. Lori Shelton, the NassauInn’s general manager, concedes that the inn is pushing this proposalprimarily “because of the number of social affairs that we arelosing due to the size of our current ballroom.”The Nassau Inn now makes it a practice to turn down requests for weddingsand social affairs for large events. “We’re limited to 175 peoplein our current ballroom,” says Shelton. “It also preventsus from hosting any of the charity events.” The inn’s expansion”will absolutely strengthen our financial position and there willbe no market that we won’t tap into,” she adds.The competition for galas and weddings is heating up. Next Monday,May 11, at 11 a.m. Forsgate Country Club in Jamesburg will break groundfor its 13,000-square-foot domed grand ballroom, replacing its 7,000-square-footopen air tent. Tom Grant, Forsgate’s general manager, explains thatthe new facility, between the 18th hole and first tee of Forsgate’sBanks Course, will include two ballrooms, and a 4,000-square-footglass atrium. “In the ballroom we’ll be able to do a sit-downdance for 500.” The new atrium will be able to facilitate cocktailparties for 500 in addition, he adds.Grant maintains that Forsgate is a country club and has private clientsand thus isn’t in direct competition with any of the hotels in thePrinceton area. “We do not compete, we complement,” he says.”We have our niche in the market and they have their niche andI don’t think we’re competitive with each other.” Nevertheless,he estimates that a quarter of its $5 million-a-year food and beveragebusiness is derived from weddings and banquets. And Forsgate alsohas a steady stream of clients that hold business meetings there.There is a sense that all of the new inventory coming onto the marketwill exceed a critical mass in the ballroom business in the Princetonarea. “There’s not going to be nearly enough business to go around,”predicts Tom Logan, director of marketing for the Princeton Marriott.Currently the Marriott, with a 10,000-square-foot ballroom that itoften subdivides into eight mini-meeting rooms, capitalizes on thebusiness meeting segment — but has to look far and wide for clients.”The market right now is relatively tight,” says Logan. “Wespend a lot of resources trying to get business from anywhere we canoutside of the area, because the area is already pretty saturated.There are a lot of hotels going up and the amount of business isn’tgrowing as fast as the number of hotels.”John Kroll, general manager of the Hyatt, which also has a 10,000-square-footgrand ballroom, agrees with Logan. “Any new competition is goingto hurt,” he says. “Any time there’s an increase in inventoryyou hope there is an increase in demand.” For the Hyatt, ballroomevents comprise 25 percent of its revenues, and out of that, 65 percentof the events are social in nature (weddings or galas), whereas 35percent are business-related.The Nassau Inn’s expansion is “probably a smart idea,” Krolladds. “I can see them doing that. It seems like it would work.”However, he adds, it won’t change the Hyatt’s marketing strategy.”You’ve got to have the fine service and food,” he says. “Ithink that’s what people come to appreciate.”If the additions to Palmer Square pass, the center of Princeton Boroughwill get denser. The library at the corner of Witherspoon and Wigginswould be demolished and a new 55,000-square-foot library would bebuilt in the space fronting Hulfish Street (behind Mediterra). Inthe old library’s place at the corner of Witherspoon and Wiggins wouldbe a new retail and office building. Next door, where the edge ofthe municipal lot is now, would be another retail strip lining Witherspoon.The plan also calls for 140,000 square feet of residential space –new townhouses would sit east and west of the new library. Also, acrossfrom the Arts Council on Paul Robeson Place and behind the row ofretailers across from the present library could be the site of a new16,000-square-foot commercial structure.David Newton, vice president of Palmer Square Management LLC, saysthe inn’s success is “very, very important” to the square.”I hasten to say that 10 to 15 percent of the retail businesson the square is derived from people staying or doing business atthe Nassau Inn,” he says. “It’s a great symbiotic relationship.If the Inn succeeds, Palmer Square succeeds and vice versa. The wholeis greater than the sum of its parts, and the two need each othervery much. That’s the nature of mixed use, that was Edgar Palmer’svision.”– Peter J. MladineoTop Of PageMike Kranzler’s BootstrapsAfter spending his entire career at Base Ten Systems,Mike Kranzler has started over again at age 69 and is “bootstrapping.”With a consulting practice in Pennington he aims to help companiesin general business management and in finding money in the investmentcommunity.”I’m having more fun than I have ever had in my life,” saysKranzler. A graduate of Purdue, Class of 1949, he has a master’s degreefrom Stevens Institute and was for 30 years the chairman and CEO ofBase Ten. “If I can work with young companies that need to lookout for some problems that they don’t know — if I can help themget on their way, I have enough contacts with the investment communitythat I can help them find some money.Traded as BASEA, Base Ten had made its name doing weapons controlsystems and custom electronic systems for data handling but had recentlybroadened its focus to include health care and manufacturing executionsystems (U.S. 1, November 12, 1997).In an employee buyout, the cash-producing military half of the businesspaid $5.5 million to separate itself from the main company, whichnow devotes itself to commercial software. Thomas E. Gardner succeededKranzler as CEO of the software firm, and the military part of thebusiness is privately owned, is named Strategic Technologies, andis led by Ed Klinsport.Says Kranzler: “I had made every mistake you can possibly makeand I know where the dogs are all buried.”Bootstrap Partners LLC, 114 West Franklin Avenue,Suite K1, Pennington 08534. Mike Kranzler. 609-818-1525; fax, 609-818-1526.E-mail: bootstrp@bellatlantic.com.Top Of PageManagement Moves: EnvirogenEnvirogen, 4100 Quakerbridge Road, Princeton ResearchCenter, Lawrenceville 08648. Robert S. Hillas, CEO. 609-936-9300;fax, 609-936-9221. URL: https://www.envirogen.com.Robert S. Hillas — formerly a venture capitalistwith Mort Collins at DSV Partners on Nassau Street — is the newCEO at the environmental firm founded by venture capitalist RobertJohnston. A graduate of Dartmouth College, Class of 1970, he had workedat E. M. Warburg Pincus and was then a partner of DSV from 1981 to1992. When that firm started to phase out he rejoined Warburg Pincus.Hillas replaced William C. Smith, Environ’s chairman and interim CEO,last month. Environ was founded by a threesome — venture capitalistRobert Johnston, scientist Ronald Unterman, and David Enegess, andit has had two permanent CEOs — Roger J. Colley (1988 to 1994)and Harcheron Gill (1994 to 1997). When Gill left last year, somesaid that Environ needed a money person rather than a research head.”It’s an exciting company, a broad array of technologies, a stronggroup of people, and a receptive market — and it’s nice to beclose to Princeton,” says Hillas. The firm does toxic and hazardouswaste cleanup, bioremediation technology R&D, vapor extraction systems,and on-site removal of organic contaminants from soils and groundwater.Top Of PageIntegrating Religion and HVACEveryone here is not a Christian, but it is a philosophyof our company to be honest in everything we do,” says MichaelD. Casolari, president of Integrated Building Controls, “and itcomes from the top down. Customers sense it and see in practice thatwe are straightforward. When we can’t do something we are honest abouthow there are some hurdles that need to be overcome to make it happen.”He and his business partner, 34-year-old Scot C. Stickle, furnishand install electronic temperature and energy management controlsmade by Alerton Technologies. The HVAC (heating, ventilation, andair conditioning) firm expanded with a move from 2008 Eastpark Boulevardto 4,000 square feet on 12 Stults Road in mid April and has a newphone and fax. Their territory in northern New Jersey includes Ocean,Middlesex, and Mercer counties, up to Orange & Rockland counties inNew York. Honeywell is their primary competitor, and their clientsinclude New York and Fordham universities, Rockefeller Center, theLiz Claiborne headquarters in North Bergen.”Having satisfied customers is not enough. You need to createraving fans,” says Casolari, who ordered copies of the businessbook Ken Blanchard’s “Raving Fans” for all 15 employees inthe firm. “It’s all about relations and selling and having ethicsand morals. We don’t make excuses and don’t make up excuses.”Casolari recently returned from the missionary field. The son of anengineer (his father met his future bride in Bremerhaven and leftthe U.S. Army to work for Raytheon), he grew up with both technicaland sales ability. From an early age, Casolari says, he was selling;when he was three years old he sold “pretty rocks” to thenext door neighbors.After majoring in engineering and marketing at Drexel, Class of ’88,he worked for a start-up computer company and then for Johnson Controls.He found what he considered to be a superior product at a Washingtonstate-based supplier, Alerton Technologies, and he opened a distributorshipfor southeast Jersey and eastern Pennsylvania. But he had major disagreementswith his older partner: “I got angry about it and prayed aboutit and decided that was not where I wanted to be.”Offered only 20 percent of the company value as a buyout, he quit.That day he had a good job offer from another firm, but later thatweek he went to a church meeting, learned about dire needs in Cambodia,and was offered the opportunity to teach English at a medical schoolthere. He set aside three days to make the decision about what todo with the rest of his life. “I prayed and fasted and came tothe decision that Cambodia was the place for me,” he remembers.Now he lives in Philadelphia and is going to school at night to earnhis master’s degree in third world and inner city economic development.He also plans to open a coffeehouse in a century-old building he purchasednext to an East Falls public housing project (near Manayunk). He belongsto Calvary Temple, an Assembly of God church in Delran, where he methis fiancee.He has hired John Howard, an applications engineer for Omega Engineeringand a recent graduate of Eastern College in St. David’s, to head anew division, Suite Solutions.Creating this division was a situation where his cup, indeed “ranover.” It all started with a phone call from a Manhattan engineerwho was working on a hotel project and needed a handheld bedside controlpanel that could turn off all the lights, change TV channels, raiseand lower temperature, call for the maid, all from the same control.”We didn’t have what he wanted,” says Casolari, “but Ifound a company in Singapore that didn’t have a distributor in theUnited States.” He asked Flecon Multi System Pte. Ltd. (FMS) todistribute the guest room control devices in New York and New Jersey.Instead he got the go-ahead to partner with FMS and cover all of Northand South America.Casolari credits his faith with helping to create some important connections.For example, when he booked a flight to Singapore, the flight justhappened to go through Frankfurt. A week after he bought the ticket,the Manhattan engineer asked him to contact Intercontinental Hotelsregarding the new device, and he found out that Intercontinental’sdirector of engineering happens to live in Frankfurt. Then, when theengineer from Flecon picked him up at the Singapore airport, Casolarispotted a Bible on the dashboard. It turned out that Casolari’s Bibleinstructor at Eastern College was now the pastor of the engineer’schurch. Just a coincidence? Casolari doesn’t think so.– Barbara FoxIntegrated Building Controls Inc., 12 Stults Road,Suite 102, Dayton 08810. Michael D. Casolari, president. 609-860-6600;fax, 609-860-6601. E-Mail: ibcinc@aol.comSuite Solutions, also at 12 Stults Road, 609-409-1770;fax, 609-709-1799. E-Mail: suites2000@aol.comTop Of PageName ChangesLevinson Associates, Realtors, 349 Applegarth Road,First Floor, Cranbury 08512. Bob Levinson, president. 609-655-5535;fax, 609-655-0207.The official address has been changed from 95 Prospect Road, but thecommercial and residential real estate brokers have made no physicalmove.Brandywine Realty Trust, 1009 Lenox Drive, BuildingFour, Lawrenceville 08648. Robert Barone, senior property manager.609-895-9595; fax, 609-895-9899.The Gale & Wentworth staff that administered Lenox Drive buildings2, 3, and 4 will stay on as part of Brandywine Realty Trust, whichpurchased DKM’s Mercer County portfolio early this month. Gale & Wentworthmanaged those buildings.This office will also manage the new Brandywine acquisitions, CapitalCenter at 33 West State Street, Trenton, and 104 Windsor Center, inEast Windsor. The office will also be moving from the west wing toeast wing.Top Of PageDeathsJohn H. Pietrinferno, 52, on April 29. He worked at aResearch Park-based family firm, A.J. Pietrinferno CPA.George Drift, 37, on April 30. A mechanic in Princeton,he co-owned Drift Automotive.Emil G. Slaboda on May 1. Until 1989 he was editor-in-chiefof the Trentonian newspaper.Corrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
