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
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
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 (http://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
"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
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
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
08540. Bathsheba J. Malsheen, president and CEO. 609-514-4100; fax,
609-514-4101. Home page: http://www.voxware.com. Nasdaq:
By sometime early in the next decade, Palmer Square
could have a vastly different look to it. It might be a lot bigger,
with more retail and more residential, and with an expanded Nassau
The Palmer Square plan — unveiled to the public last week —
won’t face its final approvals for another six to nine months, and
if successful, construction would begin in March, 1999. The Nassau
Inn’s expansion, however, is on a fast track and could be done by
fall of next year.
The proposed changes for the Nassau Inn include the expansion of its
ballroom from 3,150 to 7,500 square feet, a new lobby and a ballroom
terrace, new bathrooms, a storage facility, and 40 new guest rooms
on the third and fourth floors. On the street level there will be
approximately 2,500 square feet of new retail space fronting Hulfish
The main impetus for Nassau Inn’s expansion is to get a chunk of the
large business and social event market, which it currently must defer
to places like the Marriott and the Hyatt. Lori Shelton, the Nassau
Inn’s general manager, concedes that the inn is pushing this proposal
primarily "because of the number of social affairs that we are
losing due to the size of our current ballroom."
The Nassau Inn now makes it a practice to turn down requests for weddings
and social affairs for large events. "We’re limited to 175 people
in our current ballroom," says Shelton. "It also prevents
us from hosting any of the charity events." The inn’s expansion
"will absolutely strengthen our financial position and there will
be 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 ground
for its 13,000-square-foot domed grand ballroom, replacing its 7,000-square-foot
open air tent. Tom Grant, Forsgate’s general manager, explains that
the new facility, between the 18th hole and first tee of Forsgate’s
Banks Course, will include two ballrooms, and a 4,000-square-foot
glass atrium. "In the ballroom we’ll be able to do a sit-down
dance for 500." The new atrium will be able to facilitate cocktail
parties for 500 in addition, he adds.
Grant maintains that Forsgate is a country club and has private clients
and thus isn’t in direct competition with any of the hotels in the
Princeton area. "We do not compete, we complement," he says.
"We have our niche in the market and they have their niche and
I don’t think we’re competitive with each other." Nevertheless,
he estimates that a quarter of its $5 million-a-year food and beverage
business is derived from weddings and banquets. And Forsgate also
has a steady stream of clients that hold business meetings there.
There is a sense that all of the new inventory coming onto the market
will exceed a critical mass in the ballroom business in the Princeton
area. "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 it
often subdivides into eight mini-meeting rooms, capitalizes on the
business meeting segment — but has to look far and wide for clients.
"The market right now is relatively tight," says Logan. "We
spend a lot of resources trying to get business from anywhere we can
outside of the area, because the area is already pretty saturated.
There are a lot of hotels going up and the amount of business isn’t
growing as fast as the number of hotels."
John Kroll, general manager of the Hyatt, which also has a 10,000-square-foot
grand ballroom, agrees with Logan. "Any new competition is going
to hurt," he says. "Any time there’s an increase in inventory
you hope there is an increase in demand." For the Hyatt, ballroom
events comprise 25 percent of its revenues, and out of that, 65 percent
of the events are social in nature (weddings or galas), whereas 35
percent are business-related.
The Nassau Inn’s expansion is "probably a smart idea," Kroll
adds. "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. "I
think that’s what people come to appreciate."
If the additions to Palmer Square pass, the center of Princeton Borough
will get denser. The library at the corner of Witherspoon and Wiggins
would be demolished and a new 55,000-square-foot library would be
built in the space fronting Hulfish Street (behind Mediterra). In
the old library’s place at the corner of Witherspoon and Wiggins would
be a new retail and office building. Next door, where the edge of
the 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, across
from the Arts Council on Paul Robeson Place and behind the row of
retailers across from the present library could be the site of a new
16,000-square-foot commercial structure.
David Newton, vice president of Palmer Square Management LLC, says
the inn’s success is "very, very important" to the square.
"I hasten to say that 10 to 15 percent of the retail business
on the square is derived from people staying or doing business at
the Nassau Inn," he says. "It’s a great symbiotic relationship.
If the Inn succeeds, Palmer Square succeeds and vice versa. The whole
is greater than the sum of its parts, and the two need each other
very much. That’s the nature of mixed use, that was Edgar Palmer’s
— Peter J. Mladineo
After 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 companies
in general business management and in finding money in the investment
"I’m having more fun than I have ever had in my life," says
Kranzler. A graduate of Purdue, Class of 1949, he has a master’s degree
from Stevens Institute and was for 30 years the chairman and CEO of
Base Ten. "If I can work with young companies that need to look
out for some problems that they don’t know — if I can help them
get on their way, I have enough contacts with the investment community
that I can help them find some money.
Traded as BASEA, Base Ten had made its name doing weapons control
systems and custom electronic systems for data handling but had recently
broadened its focus to include health care and manufacturing execution
systems (U.S. 1, November 12, 1997).
In an employee buyout, the cash-producing military half of the business
paid $5.5 million to separate itself from the main company, which
now devotes itself to commercial software. Thomas E. Gardner succeeded
Kranzler as CEO of the software firm, and the military part of the
business is privately owned, is named Strategic Technologies, and
is led by Ed Klinsport.
Says Kranzler: "I had made every mistake you can possibly make
and I know where the dogs are all buried."
Suite K1, Pennington 08534. Mike Kranzler. 609-818-1525; fax, 609-818-1526.
Center, Lawrenceville 08648. Robert S. Hillas, CEO. 609-936-9300;
fax, 609-936-9221. URL: http://www.envirogen.com.
Robert S. Hillas — formerly a venture capitalist
with Mort Collins at DSV Partners on Nassau Street — is the new
CEO at the environmental firm founded by venture capitalist Robert
Johnston. A graduate of Dartmouth College, Class of 1970, he had worked
at E. M. Warburg Pincus and was then a partner of DSV from 1981 to
1992. 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 capitalist
Robert Johnston, scientist Ronald Unterman, and David Enegess, and
it has had two permanent CEOs — Roger J. Colley (1988 to 1994)
and Harcheron Gill (1994 to 1997). When Gill left last year, some
said that Environ needed a money person rather than a research head.
"It’s an exciting company, a broad array of technologies, a strong
group of people, and a receptive market — and it’s nice to be
close to Princeton," says Hillas. The firm does toxic and hazardous
waste cleanup, bioremediation technology R&D, vapor extraction systems,
and on-site removal of organic contaminants from soils and groundwater.
Everyone here is not a Christian, but it is a philosophy
of our company to be honest in everything we do," says Michael
D. Casolari, president of Integrated Building Controls, "and it
comes from the top down. Customers sense it and see in practice that
we are straightforward. When we can’t do something we are honest about
how there are some hurdles that need to be overcome to make it happen."
He and his business partner, 34-year-old Scot C. Stickle, furnish
and install electronic temperature and energy management controls
made by Alerton Technologies. The HVAC (heating, ventilation, and
air conditioning) firm expanded with a move from 2008 Eastpark Boulevard
to 4,000 square feet on 12 Stults Road in mid April and has a new
phone and fax. Their territory in northern New Jersey includes Ocean,
Middlesex, and Mercer counties, up to Orange & Rockland counties in
New York. Honeywell is their primary competitor, and their clients
include New York and Fordham universities, Rockefeller Center, the
Liz Claiborne headquarters in North Bergen.
"Having satisfied customers is not enough. You need to create
raving fans," says Casolari, who ordered copies of the business
book Ken Blanchard’s "Raving Fans" for all 15 employees in
the firm. "It’s all about relations and selling and having ethics
and morals. We don’t make excuses and don’t make up excuses."
Casolari recently returned from the missionary field. The son of an
engineer (his father met his future bride in Bremerhaven and left
the U.S. Army to work for Raytheon), he grew up with both technical
and sales ability. From an early age, Casolari says, he was selling;
when he was three years old he sold "pretty rocks" to the
next 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 Washington
state-based supplier, Alerton Technologies, and he opened a distributorship
for southeast Jersey and eastern Pennsylvania. But he had major disagreements
with his older partner: "I got angry about it and prayed about
it 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 that
week he went to a church meeting, learned about dire needs in Cambodia,
and was offered the opportunity to teach English at a medical school
there. He set aside three days to make the decision about what to
do with the rest of his life. "I prayed and fasted and came to
the decision that Cambodia was the place for me," he remembers.
Now he lives in Philadelphia and is going to school at night to earn
his master’s degree in third world and inner city economic development.
He also plans to open a coffeehouse in a century-old building he purchased
next to an East Falls public housing project (near Manayunk). He belongs
to Calvary Temple, an Assembly of God church in Delran, where he met
He has hired John Howard, an applications engineer for Omega Engineering
and a recent graduate of Eastern College in St. David’s, to head a
new division, Suite Solutions.
Creating this division was a situation where his cup, indeed "ran
over." It all started with a phone call from a Manhattan engineer
who was working on a hotel project and needed a handheld bedside control
panel that could turn off all the lights, change TV channels, raise
and lower temperature, call for the maid, all from the same control.
"We didn’t have what he wanted," says Casolari, "but I
found a company in Singapore that didn’t have a distributor in the
United States." He asked Flecon Multi System Pte. Ltd. (FMS) to
distribute 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 North
and South America.
Casolari credits his faith with helping to create some important connections.
For example, when he booked a flight to Singapore, the flight just
happened to go through Frankfurt. A week after he bought the ticket,
the Manhattan engineer asked him to contact Intercontinental Hotels
regarding the new device, and he found out that Intercontinental’s
director of engineering happens to live in Frankfurt. Then, when the
engineer from Flecon picked him up at the Singapore airport, Casolari
spotted a Bible on the dashboard. It turned out that Casolari’s Bible
instructor at Eastern College was now the pastor of the engineer’s
church. Just a coincidence? Casolari doesn’t think so.
— Barbara Fox
Suite 102, Dayton 08810. Michael D. Casolari, president. 609-860-6600;
fax, 609-860-6601. E-Mail: firstname.lastname@example.org
fax, 609-709-1799. E-Mail: email@example.com
First Floor, Cranbury 08512. Bob Levinson, president. 609-655-5535;
The official address has been changed from 95 Prospect Road, but the
commercial and residential real estate brokers have made no physical
Four, Lawrenceville 08648. Robert Barone, senior property manager.
609-895-9595; fax, 609-895-9899.
The Gale & Wentworth staff that administered Lenox Drive buildings
2, 3, and 4 will stay on as part of Brandywine Realty Trust, which
purchased DKM’s Mercer County portfolio early this month. Gale & Wentworth
managed those buildings.
This office will also manage the new Brandywine acquisitions, Capital
Center at 33 West State Street, Trenton, and 104 Windsor Center, in
East Windsor. The office will also be moving from the west wing to
Research Park-based family firm, A.J. Pietrinferno CPA.
he co-owned Drift Automotive.
of the Trentonian newspaper.
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