CFO Leaves Voxware

A New Nassau Inn

Mike Kranzler’s Bootstraps

Management Moves: Envirogen

Integrating Religion and HVAC

Name Changes

Deaths

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

Top Of Page
CFO Leaves Voxware

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 (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

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, Princeton

08540. Bathsheba J. Malsheen, president and CEO. 609-514-4100; fax,

609-514-4101. Home page: http://www.voxware.com. Nasdaq:

VOXW.

Top Of Page
A New Nassau Inn

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

Inn.

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

Street.

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

vision."

— Peter J. Mladineo

Top Of Page
Mike Kranzler’s Bootstraps

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

community.

"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."

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 Page
Management Moves: Envirogen

Envirogen, 4100 Quakerbridge Road, Princeton Research

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.

Top Of Page
Integrating Religion and HVAC

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

his fiancee.

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

Integrated 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.com

Suite Solutions, also at 12 Stults Road, 609-409-1770;

fax, 609-709-1799. E-Mail: suites2000@aol.com

Top Of Page
Name Changes

Levinson 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 the

commercial and residential real estate brokers have made no physical

move.

Brandywine Realty Trust, 1009 Lenox Drive, Building

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

east wing.

Top Of Page
Deaths

John H. Pietrinferno, 52, on April 29. He worked at a

Research 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-chief

of the Trentonian newspaper.

Corrections or additions?


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