Outside Herman Molina’s cargo container workshop at Sandia National Laboratories, the housing units for an airborne atmosphere analyzer and a dashboard-mounted license plate reader sit on a patch of the gated labs’ secretive desert grounds.
Molina, a technical consultant at the Albuquerque labs, took about 40 hours to build the units. The 25-year veteran of the labs has, in fact, built a lot of high-tech things, sometimes hundreds in a year. He has built satellite parts. Radar dish components. Solar power panels. The nose cone of a rocket.
And in June 2004 Molina built, free of charge, the final of three motorized fishing reel prototypes for Albuquerque entrepreneur Gerald Olona that they estimate could haul in revenues of $1 million a day once mass production and distribution get under way.
Molina’s work on the Olona Auto Reel was done through a $5,000 program offered by the labs. It is one of many programs designed to turn new technology into profitable businesses, a task that people in the tech startup industry say is a challenge that takes a good idea, willing investors and talented executives.
For entrepreneurs like Olona, it’s a challenge that Sandia Labs – running a host of programs designed to bring new technology to the marketplace – helped overcome.
“If it wouldn’t have been for Sandia Labs, I would never be to this point,” Olona said.
It all began with a fishing trip.
Eighteen years ago, Olona and his ex-wife’s mother headed out to the Cochiti spillway, he recounts. It was a cold, pre-dawn morning and, sure enough, she landed a fish. Instead of reeling it in, she asked Olona to do the job.
“I thought she was trying to be nice because I hadn’t caught anything all morning,” Olona said.
But arthritis, not good sportsmanship, was the problem. Olona said the disease prevented her from reeling, and it made him remarkably sad.
“The whole fun of fishing is not sitting there waiting for your line to get a tip,” he said. “It’s the fight. It’s the challenge of reeling it in, landing that fish.”
A button, he thought. He had seen motorized screwdrivers; so why not a motorized reel? Just push the button and zip! – in comes your catch.
It wasn’t until the mid-1990s that Olona began seriously pursuing the idea. He went to fishing conventions, investigating reels and talking to people in the business. He spent $30,000 researching and acquiring a patent. He went to NASA, Phillips Laboratory and chambers of commerce. He needed a prototype, but one company had put the cost at $100,000.
Then he met Herman Molina. The Sandia technical consultant said he could make a prototype. Better yet, using the labs’ small-business assistance program, he could do it for free.
Olona was hooked.
Inside the tackle box
The small-business assistance program is one of many lures in the labs’ tackle box of business development offerings assembled to boost the regional and national economy.
The assistance program offers $5,000 worth of Sandia expertise and labor for businesses in Bernalillo County. Businesses outside of the county can get up to $10,000. In return, New Mexico gives the labs an equivalent credit on its gross receipts tax. From 2001 to 2003, the program helped create 128 new jobs with a mean salary of $25,900. In 2004 it worked with 278 New Mexico small businesses.
Olona used the $5,000 grant several times until Molina completed a final prototype of the reel in June 2004. Olona Inc., although completing manufacturing and distribution deals, is six people strong today.
Vic Chavez, manager of the Sandia’s Office of Advocacy and Small-Business Development, said Sandia’s power lies in its ability to tackle a wide range of technical problems.
“It’s not any specific technology,” Chavez said. “It’s a suite of years and years of expertise and unique equipment that isn’t found anywhere else in the world. It’s applying the combination of that technology, expertise and equipment to solve a problem.”
When the labs do produce a new technology, it customizes licensing fees for small businesses interested in commercializing them to keep the cost bearable, said Kevin McMahon, manager of Sandia’s licensing and intellectual property management.
That can include spreading out fees, waiving some of them in exchange for company equity or waiving the fee in an amount equal to the money invested in developing a prototype with the technology, he said.
“The biggest concern for small business is cash flow,” McMahon said. “We do everything we can to assist them in their cash flow problems short of just giving everything away.”
Sandia has more than 700 active patent and copyright licenses, and fiscal year 2004 brought in $3.2 million in licensing income. The same year saw 114 new commercial licenses.
And if the labs has employees eager to start or nurture a tech business, it has a policy allowing them to go with the option of returning to their jobs later. More than 120 employees have done so in the past 10 years, getting involved with almost 100 businesses.
Additionally, the labs partner with numerous small and large businesses, and the new Entrepreneur-in-Residence program has brought a local business leader into the labs to ease the commercialization of their technology.
More collaboration-friendly facilities are on the way this summer and in 2007. A new Web site – ipal.sandia.gov – lists technology at the labs available for licensing. On top of that, there is grant-writing instruction, management workshops, seminars on launching tech businesses and a mentorship program that teams up a Sandia expert with a small business.
“If it wasn’t for the laboratories, we wouldn’t have the technologies,” said Sherman McCorkle, president and CEO of Technology Ventures Corp., a nonprofit that specializes in technology commercialization. “They’re an absolute essential part of our pie.”
With one of Sandia’s primary missions being national security, the facilities and expertise it offers are an obvious fit for companies such as MesoSystems, an Albuquerque company making sensors that detect biological and chemical agents.
The company used Sandia’s small-business assistance program to help develop one of its sensors.
“They weren’t able to come in and tell us a piece of information that just magically made the thing work spectacularly different, but their expertise certainly helped us get a little further,” said Charles Call, chief technology officer for MesoSystems.
MesoSystems will also be using Sandia’s facilities – another way the labs help out businesses – for tests on a chemical sensor in development.
Call said the labs’ contributions, although small, have helped moved MesoSystems’ product closer to commercialization, a process he likened to a football team’s offensive drive.
“Basically you try to keep pushing the ball up the field,” he said. “Once in a while, you make a big discovery or break through, and you think of that like a 20-yard pass. This (Sandia’s assistance) is more like making a nice three-, four-yard run on first down.”
The big catch
Even with the greatest technology in the world, it still takes consumer demand, management talent and investment money to turn it into a successful business, high-tech business industry veterans say.
“It’s tough,” said McCorkle of Technology Ventures Corp. “Compared with 10 or 12 years ago, we’re in fantastic shape.”
He said there is about $250 million to $500 million in investment money looking for deals in New Mexico and surrounding states, whereas about 10 years ago, it was close to nothing.
Ray Radosevich, general partner with Verge, a firm that invests in startup companies, attributed part of the investment community’s growth to New Mexico investing money from the Severance Tax Permanent Fund into state businesses. Beyond providing money, he said, the state’s presence on the investment scene attracted other investors.
Up to 6 percent of the fund – now worth around $3.8 billion, although its value fluctuates with the stock market – can be invested in companies showing the money will come back to New Mexico, said Charlie Wollmann, spokesman for the State Investment Council.
McCorkle said one challenge to working with Sandia Labs is their primary purpose is not getting technology ready for the marketplace.
“The technology was developed for a military or weapon purpose and it needs a little more maturation to make it ready for commercialization,” he said. “The challenge is that early seed money.”
Regardless of the obstacles, pulling technology from the labs into the marketplace is a process that will continue to evolve, McCorkle said.
“They’ll continue to do their mission,” he said, “but on the fringes all of us are learning, including the laboratories, including the investors and including intermediaries like TVC.”
A couple of more casts
Olona’s 4-ounce, push-button fishing reel still has a ways to go before its tiny engine might be hauling in trout for those unable or unwilling to do so on their own. There’s the cost of manufacturing the reel – manufacturers in China are still calculating – and there’s the question of distribution.
But Olona is confident he has hit upon something people need and want, and he points out again and again that Sandia National Laboratories helped make the Olona Auto Reel a reality.
“Little did I know what they have to offer,” Olona said. “I can’t praise them enough for what they’re doing for the community.”