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This article by Barbara Fox was prepared for the May 14, 2003 edition of U.S. 1 Newspaper. All rights reserved.

E-Z Pass for all Reasons

Scene one: You’re in line for beer at the stadium,

and after you have been waiting impatiently for 10 minutes while people

ahead of you fumble for money and change, you miss seeing your team

take the ball 80 yards for a touchdown.

Scene two: You’re at a crowded bar. Do you want to run a tab?

asks the bartender. Sure. But at the end of the evening, you and the

bartender are arguing over whose drinks are on your tab.

A new young company at 501 Forrestal Road on Princeton University’s

Forrestal campus, Proximities LLC, aims to revolutionize waiting lines

at entertainment venues with a radio frequency identification (RFID)

system that it claims is both simple and inexpensive (609-951-9595;

fax, 646-514-5877, www.proximities.com).

Three 20-something friends — one left Princeton University in

his junior year to start this company — call this "an E-Z

pass for beer." They have a wristband that can be "charged"

by a radio transmitter chip, raised $30,000 from family and friends,

have just gotten $500,000 in first-round funding, and are hiring.

Their patent is pending on a "Proximities GO bracelet" that

disables itself if you take it off your wrist.

Proximities technology serves some of the same purposes as magnetic

strip and barcode technology but is better, claims John Lerch, CEO.

Each Proximities GO bracelet has a wire loop. When this loop is brought

to the reader, the reader transmits radio signals, and it gets a "charge."

The voltage of the charged loop powers a radio transmitter chip, which

sends a stream of unique identifying numbers to the reader.

Unlike magnetic strip cards and barcoding, the Proximities GO reader

needs neither direct contact (as when you swipe a card) nor a direct

line of sight (as with a barcode identifier), so it does not get disabled

by magnets, dirt, or water.

High-speed, reliable cash-free transactions with a card or bracelet

will, says Lerch, increase sales, prevent bartender theft, and provide

promotional opportunities — not to mention encourage the responsible

consumption of alcohol. The bartender preauthorizes the customer,

as with a hotel or car rental bill. Club customers do not need to

carry cash and can buy drinks at any bar at the club throughout the

night.

"The restaurant doesn’t have to be extremely busy for this to

work," Lerch says, "because cash inhibits sales and using

credit cards is slow. Running a tab is a terrible system."

The GO bracelet can prevent minors from buying beer at concerts or

sports events, says Lerch. Would-be drinkers must pass through a turnstyle

that reads their bracelet, automatically subtracts the cost of a beer

from a pre-paid cash account or credit card, and pick up their beer

from an attendant. Minors equipped with a differently coded bracelet

could buy food, soft drinks, and souvenirs.

At amusement parks and water parks, the GO bracelets would go a long

way to improving customer satisfaction, says Lerch. Instead of waiting

two hours for the roller coaster, you would swipe your bracelet to

reserve a place in line and then be free to do something else, such

as spend money. He even envisions a system of message terminals, where

identifying yourself with the RFID technology would let the client

check ride reservations and send video messages to friends and family.

It seems like such a simple idea, yet it’s new. "Josh and I were

waiting in line for a roller coaster at Hershey Park, discussing the

physical inefficiency," says Lerch, "and we got the idea of

using an RFID bracelet to reserve your place in line. Then Josh was

at a Dave Matthews concert and waiting for a beer when he came up

with the idea of applying our solution to that market."

They did their homework, discovering that Disney companies use ticket-based

reservations systems, and Six Flags uses a beeper-like product to

reserve places in line. "So now we are focusing on resorts, concerts,

and night clubs — places where cash is still used and where businesses

want to stimulate impulse purchasing.

Joshua Girvin, the COO, is the 20-year-old who should

be finishing his junior year at Princeton University, but who took

a leave of absence to start this firm. His father, a physics professor

at Yale, is helping the company design the bracelet.

John Lerch, the 24-year-old CEO, is the son of a paper mill manager

and a medical transcriber. He graduated from Princeton’s engineering

department in 2001 and already has significant start-up experience,

helping to found Princeton Power Systems, a company that makes power

conversion devices for efficient motor control and converts electrical

power for alternative energy generation sources (U.S. 1, November

28, 2001). It has had some success — it has a contract with DuPont

for its first installation — but Lerch leapt to this new opportunity.

Dan Williams, the 27-year-old president, met Girvin on the rugby field.

Williams coaches rugby at Princeton, but he is also a successful entrepreneur.

The son of real estate developers in South Africa, he graduated from

Cambridge, where he started a dotcom company that recruited Oxford

and Cambridge alumni for financial services firms. He sold that firm

in March, 2000, five days before NASDAQ’s peak and now is associated

with an alternative investment fund, Middlebury Capital, and the Caydal

Fund, a Connecticut-based investment vehicle for the Daly family.

Through these funds came the $500,000 that Proximities will use to

expand.

But as Lerch says, "it doesn’t take a lot of money to beta test

at nightclubs." They are negotiating with Caribbean resorts

and some concert venues on the east coast.

The trio does have competition. Rivals are trying to install similar

systems in California and Hawaii at water parks, where the logistics

of bathing suits and beach bags put a damper on food and merchandise

sales. "You can’t carry cash in a bathing suit," says Lerch.

The Proximities crew says it measures success not only in terms of

money but also by how it is socially responsible. "We are devoted

to making life better — simpler and safer — for the people

who use our products, partnering with the communities where we do

business, we create strong networks of social support." In other

words, Big Brother might use the RFID technology to collect marketing

data, but it would also make places safer. For instance, children

could have bracelets that restrict access to certain areas and that

would not let them leave the venue without being accompanied by an

adult. Bars could be linked with taxi companies, so that a bartender

could load a drunk client into the taxi and pre-charge the ride home.

And when patrons don’t have to carry cash, there might be less crime.

This could be big? "That’s what we’re hoping," says Lerch.

— Barbara Fox


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