Tiny company with big ideas

Small business: Columbia-based start-up says its technology can lower cost and improve quality of tracking merchandise.

Howard Business

March 12, 2001|By TaNoah Morgan | TaNoah Morgan,SUN STAFF

Simpler is better, if you ask William Bandy of Matrics, Inc.

It's the simplicity of the patents he and partner Michael Arneson have made in radio frequency identification that Bandy thinks will change the way businesses keep track of their merchandise.

The tiny Columbia-based start-up, founded by Bandy and Arneson, both engineers from the National Security Administration, makes paper-thin antennas embedded with silicon chips and readers that can track the location and keep a history of thousands of the antennas at a time.

The concept of radio-frequency identification, or RFID, and its use in helping companies keep track of their merchandise is not new, but Matrics executives boast that its technology - based on the founders' simple patents - improves the quality and lowers the cost of using such a system.

"We call it curve jumping," Bandy said, explaining how every new technology creates a learning curve as scientists build upon the original framework. "With our technology, we're creating a whole new curve."

While competitors such as SCS Corp., Motorola and Texas Instruments have RFID systems that can read up to 50 tags at a time from a distance of a few feet, executives at Matrics say their system can keep track of up to 2,000 tags simultaneously from 10 feet away.

The fledgling company, which completed its first round of funding at $2 million in July, also received a grant from the University of Maryland through its competitive Maryland Industrial Partnerships program last month. Matrics paid $7,700, and the school contributed $77,000 to pay a professor at the school's College Park campus to help research the company's antennae designs. The program seeks to help build and expand companies in the state to create jobs and increase the commercial tax base.

"We're very much impressed with them," said Louis Robinson, director of the MIPS program. "It's a very interesting company with very strong ideas and, hopefully, they'll have a good chance of success."

The RFID market is growing at an annual rate of about 25 percent to 35 percent, according to a report from the Frost & Sullivan market research firm. But if Matrix is successful in lowering the cost of the systems while increasing the power, it could have a dramatic impact on the marketplace, according to a spokeswoman from an industry trade association.

"Right now, no one is doing item level tagging," said Susy L. d'Hont, chairwoman of the market development and communications committee of the Auto Identification Manufacturers Association.

"The retailers have been waiting for RFID suppliers to be able to read many, many tags at once going through a dock door at a low enough cost for each tag," she said. "If [Matrics] could read 2,000 pair of socks, that would be an accomplishment."

The idea behind the technology came from a Discovery Channel program Arneson saw about three years ago that described technology that could identify grocery items and allow customers to go through a scanner that could read every item at once.

Arneson, who worked in electronic design with sensors and integrated circuitry at the NSA, discussed a similar idea with his supervisor Bandy, who worked with semiconductor technology. They began investigating the patents that supported the products on the market, then came up with nine of their own. "For us, it was a clean-sheet approach," Bandy said. "The rest of the industry is starting with a legacy system that's complex. We started off with removing the complexity, which gave us the low cost."

After cutting back their hours to part time at the NSA for six months, the two spent another year setting up the company. Today, workers - most of them Matrics engineers - are still assembling their laboratory, and the company is only in the early stages of transferring its ideas from computer simulation to product, but it has adopted a challenging production schedule that would have it turn a profit within a year.

Company President Laura Neuman has begun seeking a second round of funding for $10 million, which she hopes will carry the company to profitability. Prototypes of the tags and readers are expected by May 1.

The company wants to begin producing in small quantities by the end of the year and go to full-scale production by the first quarter of next year, Neuman said. She also expects to more than triple the company's work force from 16 employees this year to 50.

Neuman said "some very large customers" have asked about testing a prototype, creating a little problem for the start-up, but not one that keeps anyone awake at night.

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