June 2007 Archives

In this podcast (watch Quicktime iPod compatible, 149MB; watch Google streaming flash video), Michael Bodner, CIO and Senior Partner of Quantum Information Technologies, and I (Bud Gibson) discuss his background and a new venture he is starting in the online medical information space. As Michael describes in the first part of the interview, he has a unique background. He is an actual rocket scientist with a PhD in astrophysics from St. John's University. He also taught for seven years at SUNY Buffalo and worked for NASA where he was involved in testing the space shuttle.

Michael had been fascinated with personal computers from the start, putting together hobbyist kits with his students in the late 70's and early 80's. As the PC was getting started he decided to make the switch to private industry, starting as a consultant with Computer Land, one of the first major PC retailers. His more recent experience has involved senior stints with Thomson and ProQuest.

Recently, Michael decided to harken back to his physics roots and focus on developing technology startups. In this interview, we discuss his current project, tentatively titled Quantum Medical Informatics, that focuses on the particularly thorny problem of access to patient medical records. The business case is simple. It is estimated that 30% of total US healthcare costs arises from duplication of tests because the doctor ordering the tests does not have online access to patients' medical records. Of course, access to patients' records is surrounded by many privacy issues. Maximizing access, one has no privacy. Maximizing privacy, one has no access. Michael and his venture partners have come up with a way of representing access privileges using a matrix format that allows for graded access between these two absolutes.

The venture is still in its early stages, and Michael sees uses for the underlying security technology across a number of vertical applications including several in the medical industry and even the possibility of providing graded access for Google Apps. The company has proof of concept demonstrations and is seeking seed capital. In the next year, Michael would like to see the company launched as a secure access software service.

Additional Links

• The official federal government page on patient privacy is here.
• Michael is really talking about taking on the health care system to achieve his company's value proposition. This article provides a summary of the major issues facing any attempt at health care reform.

In this podcast (Quicktime ipod compatible, 128MB; Google streaming flash video), Yan Ness, CEO of Online Technologies Corporation, and I (Bud Gibson) discuss a project he has for greening data centers by capitalizing on one of Michigan's most abundant natural resources, water. In a nutshell, the plan is to place data centers on the Northern Coast of Michigan, providing them with underground storage reservoirs. Water would be pumped in to the reservoirs and cooled at night when energy is cheap. During the day, air would be fanned across the cooled water to provide cooling for the data center. In juxtaposition to current data center construction practices, this project is far-reaching and visionary. We spent much of the interview dissecting the underlying market and business model rationales that would justify this project.

Online Technologies Corporation is an Internet infrastructure provider. They provide main data center facilities for start-up companies like Compendia Bioscience that provides genomic data to researchers. At a larger scale, Online Technologies Corporation also provides back-up data centers for large financial and other transaction heavy services, many of which are household names. As a result, Yan is well-versed in the data center business model and the issues having the highest visibility in the market place.

It's no secret that energy costs and, in particular cooling costs, play a significant role in data centers. In Yan's business, energy costs account for 15 to 20% of revenues, of which 5 to 7% are directly related to cooling. This amount is roughly half Online Technologies Corporation profit margin. However, the impacts of the need for cooling go well beyond driving costs. Yan estimates that cooling equipment currently occupies half the floor space in a data center, effectively limiting the productivity of any given location. Given the doubling in data center heat output every 18 months, and the much more gradual 5 to 10% annual increase in cooling efficiency, the situation will only get worse.

Further, there is a general, increasing pressure in the country to consider green solutions as the costs of energy rise and environmental impacts become more apparent. The pressure is such that solutions do not always need to be strictly justified on short-term economics, witness the popularity of hybrid vehicles which are close to a wash economically relative to other vehicles. Yan suspects that some high visibility web companies will show a similar willingness to be early adopters of green technology.

Hence, the willingness to seriously consider visionary solutions of the type Yan is proposing. He has had initial expressions of interest from companies like Yahoo and Google. However, the project is clearly longer term. As Yan himself notes, he needs to sell the Department of Environmental Quality on the idea, and he needs further scientific support.

Additional Links

• The Green Grid Alliance is a computer industry organization with the mission of raising awareness about data center power consumption and developing metrics for measuring how green a data center is. It is populated with high visibility computer equipment manufacturers.
• This analysis of one of Google's data centers in Oregon points to the need for low cost power to supply a center intended to work at web scale.
• As of 2006, Michigan had the 19th highest cost of power in the United States.
• [Update: 8/12/2007]: Yan has provided a link indicating that over 60% of a data center's power goes to cooling.

In this interview (Quicktime ipod compatible, 129MB; Google streaming flash video), Rich Sheridan, CEO of Menlo Innovations, and I (Bud Gibson) discuss Menlo's work with Accuri Cytometers as a case study about innovating in a mature market.

The CEO of Accuri Cytometers is Jennifer Baird. To date, the company has received $5 million in angel investment and $5 million in venture capital complemented by funding from Michigan's 21st Century Jobs Fund.

A cytometer counts cells and is used in medical research facilities. Accuri Cytometers aims to offer a 75% initial cost of savings against a typical market price for cytometers of $200k. Further, the Accuri cytometer is intended to lower the level of expertise required for operation. Both of these factors should put the cytometer within the reach of individual researchers, thereby increasing the number of potential purchasers in the overall market.

Menlo's role has been to develop the software interface for the cytometer that delivers on the proposed value proposition. Rich's word for the process Menlo uses is "high tech anthropology". Essentially, high tech anthropology is an iterative software development approach that involves: (1) creating user personas from interviews; (2) designing mock-ups based on the personas and testing them with the appropriate target users; (3) moving from there to functioning prototypes with more testing; and (4) finally shipping product. Menlo has been working with Accuri for two years, and they expect that initial product shipments will not occur for another 6 to 12 months.

During their iterations, Menlo discovered that cytometers play a central role in the labs where they are used and that errors in utilizing them come with a high cost, potentially delaying research projects for months. As a result, lab directors do not entrust running the cytometer to their assistants. However, managers also find the low-level technical work required to run the cytometer to be a distraction from their usual managerial duties. The opportunity for Accuri lies in getting potential buyers to trust their equipment enough to leave it in the hands of assistants. That way, the market broadens and alters in a way that traditional makers of this equipment are at a disadvantage.

In considering this process, Rich notes that the transition for lab managers cannot be too discontinuous. Otherwise, there will be resistance. Accuri is essentially trying to get the buyers of one product to make a switch to another. Additionally and somewhat specific to medical research, accepted protocols have been established around the use of current cytometer products, and these protocols must be respected.

Rich and I finish by discussing Menlo's relationship with Accuri. It is not purely fee for service. Rather, Menlo has foregone a portion of their fees for a revenue share each time Accuri makes a sales. Rich notes that investors and managers in particular like this model because they feel it better aligns Menlo's incentives with those of the company. We may have the opportunity to revisit this model in a later interview.

Additional links

• Menlo's software development approach falls under 'agile' methodologies as explained in this wikipedia article. Essentially these approaches are designed to limit the business risk inherent in software development.

Diana Wong and I (Bud Gibson) started this site in June, 2007. Over time, we expect the site to become a highly visible repository of stories that showcase the modern, innovative spirit lurking in the Michigan economy. We also expect the site to become a great source of teaching materials for our courses at The College of Business in Eastern Michigan University.