Strive to explain, market neuristics

ESOTERIC ENTERPRISE 2

July 21, 1993|By Michael Dresser | Michael Dresser,Staff Writer

Douglas McCrea and Andrew Krause are sure they have a good product. The problem is explaining just what it is.

The two Baltimore-area entrepreneurs, founders of Neuristics Corp. of Columbia, are operating on a frontier of information analysis that is all but incomprehensible to the layman.

Put simply, Neuristics is an "artificial intelligence" company. But that vague term doesn't tell half of its story.

Neuristics does statistical analysis, but it goes far beyond mere number-crunching. It attempts to merge the pure information-processing power of a supercomputer with the intuitive abilities of the human mind. The goal: to forecast the future and analyze the consequences of different actions.

To achieve that goal, Neuristics combines diverse analytical methods to surround a problem and overwhelm it rather than pursue a single, linear approach. The problem can be anything from the best site for a Taco Bell to the behavior of markets to the best tactics to use in a political campaign. Neuristics weighs hundreds of variables to try to find patterns that aren't obvious.

"We're finding that Dalmatian in a spotted background," Mr. Krause says.

Think of it as a software recipe that includes such exotic mathematical ingredients as statistical pattern recognition, neural networks, fuzzy logic, genetic algorithms, fractal analysis and chaos theory.

Metaphorically, Neuristics puts its clients' data through a grist mill, adds the milk of human experience and the seasoning of mathematical theory, pounds it and kneads it, then adds the yeast of intuition and watches it rise to the point where it's something their clients can sink their teeth into.

In the process, Mr. McCrea and Mr. Krause expect to make a lot of dough. Since its founding last spring, the company has attracted three clients and taken in about $1 million, Mr. McCrea says, but he predicts that sales could reach sales of $100 million in two to five years.

Neuristics represents a marriage of Mr. McCrea's marketing skills and Mr. Krause's cutting-edge science. The two are a bit of an odd couple.

Mr. McCrea, 47, is a high-energy evangelist for a product that even he struggles to understand. A diver, skier and tennis player, he is the kind of person who is named most popular in his high school class.

Mr. Krause, 32, is a big, friendly biophysicist who inhabits a world of ideas far beyond the grasp of most of us. He tries mightily yet patiently to communicate his ideas to people who don't understand half his terms. In high school, he would have been the guy all the girls wanted -- for a physics lab partner.

The two came together last year to create Neuristics as way of commercializing the statistical models devised by Mr. Krause's small Sparks-based company, Biophysica Technologies Inc.

Mr. Krause said Biophysica grew out of the work he was doing at a Johns Hopkins University laboratory run by Dr. Terrence J. Sejnowski, who has since departed for the Salk Institute in San Diego. Dr. Sejnowski is widely acclaimed as the inventor of the neural-network computer, which mimics the trial-and-error learning processes of the human brain.

Mr. Krause concedes that he ran Biophysica more as a research lab than as a business. The company was profitable, he says, but not because it went looking for customers.

Mr. Krause says he realized about two years ago that clients might not continue to beat a path to his door indefinitely. He was already looking for a partner in February 1992, when he and Mr. McCrea met at the recommendation of a friend of Mr. McCrea, who headed his own firm,McCrea Marketing, in Columbia.

Mr. Krause says he was worried that his forecasting methods could be abused but found that Mr. McCrea shared those concerns.

"When we're forecasting, we want to make sure we don't hurt people," Mr. McCrea says. While they might consider applying their analytical methods to a political campaign, they wouldn't work for just anyone, they say.

Within a few months of that first meeting, Mr. McCrea and Mr. Krause decided to meld their two companies and form Neuristics, with Mr. McCrea as president and Mr. Krause as senior vice president. It wasn't a merger exactly, but Neuristics has absorbed about 80 percent of the business conducted by its founders' firms. Neuristics now employs 12, half drawn from Biophysica and half from McCrea Marketing. Each of those companies has a staff of six who work on non-Neuristics projects.

Mr. Krause says he's not the least bit unhappy about shifting his efforts to more commercial pursuits.

"I love problems," Mr. Krause says. "It doesn't matter whether it's a Taco Bell problem or something about the nature of the universe."

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