Washington Post

Changing of the Guard

By Carrie Johnson
Washington Post Staff Writer
Monday , September 11, 2000 ; F16

John Ticer did what he always did when he left his office. He locked it. And got his first lesson in the culture of the company he had recently been hired to run.

When Ticer showed up for his second day as chief executive at BioNetrix Systems Corp. last week, he got a rather frustrating surprise. Nobody at BioNetrix locks their doors. The Vienna company hasn't even made keys for them. Soon, an electrician who happened to be on the premises was dispatched. He knocked out a couple of ceiling tiles and jimmied the lock with a bent clothes hanger, scattering white plaster flecks in front of Ticer's previously pristine doorway.

The episode had its share of ironies. BioNetrix makes security software that helps keep people who don't belong there out of networks. The company's founder spent last week trying to make Ticer's transition into the chief executive spot as comfortable as possible for him and BioNetrix's 70 employees, and a locked door wasn't part of the script.

If it's the worst that happens to Ticer, he'll be lucky. BioNetrix, which agreed to allow a reporter to follow Ticer's second day on the job, has joined a growing number of young technology companies with visionary founders who have made way for seasoned executives--on whose shoulders the success of the ventures now lies. 

All across the country, technology firms are trading in their young founders for more experienced, outside managers. Twenty-one chief executives at Internet firms cleaned out their offices in August alone, according to a recent report by the outplacement firm Challenger, Gray and Christmas Inc.

BioNetrix sought out the 42-year-old executive, wooing him to leave the perpetually sunny climate in San Diego for a gray office park on Gallows Road. Ticer's task: Remake a company lovingly nurtured by its founders and a clique of venture capitalists into the darling of Fortune 500 customers. And along the way, lead the firm through the unsettled financial markets and toward a lucrative initial public offering--or get bought by a competitor in the process.

There's a special category reserved for those sensitive, even ego-wounding, baton passes between founders of Internet start-ups and the professional managers chosen to lead their companies into maturity. The new guys tend to inherit uneven organizations that reflect a founder's personal priorities more than the organizational charts so common in business schools. At times, wresting control of the reins can be difficult not only for founders, but also for the staff that has come to rely on one person as inspirer in chief and institutional memory.

That's what BioNetrix is trying to avoid.

On an overcast morning Sept. 5, two days into his new job, Ticer and outgoing chief executive Peter Bianco, who co-founded BioNetrix, sat down to plan the changing of the guard. Though the pair had met several times in the past few months, they never discussed how they would divide the labor. Bianco, 38, a former executive recruiter, will become vice chairman of the board--a title he says is "cool--if you work at Sun Microsystems." He'll focus most of his time on making deals for BioNetrix and briefing Ticer.

"My expectation is we're going to talk every day, multiple times a day," said Ticer, an energetic figure with a quick sense of humor that belies a few sharp edges. "We have to be glued at the hip on this."

Then he makes a quick checklist.

"We're going to be working together with the board. Internal operations, me. External operations, Pete. I'm going to go out on the road with the sales guys. And I'm going to go out and meet investors with Pete."

Ticer has been here before. His last job involved reinventing Stac Software Inc., a publicly traded California company that battled with the likes of Microsoft Corp. over the legal rights to its data compression technology--and with itself, as voluble founder Gary Clow stepped down after 13 years as chief executive to make way for Ticer. Ticer split the company in two, "right-sized" it by cutting more than 100 jobs and outsourced some of the technology work to Estonia, a country where software developers are less likely to bolt for Silicon Valley start-ups.

"It was a great learning experience and very tough," Ticer said. "I expect this to be much, much smoother."

He arrives at a pivotal time in BioNetrix's lifespan. BioNetrix, founded in 1997 by Bianco and Karl Ware, a former Central Intelligence Agency staffer, allows security systems that scan fingerprints, eyes and facial images to communicate, even if they depend upon different software packages. Using BioNetrix's software, a visiting executive who wants to log on to a computer from his firm's London office, for example, wouldn't have to memorize eight passwords to access the computer system. His face and fingerprint would be enough.

They're ambitious goals, and Ticer nods to them by speaking about the way his new company will "revolutionize the way people use computers." But before changing the nature of how the average office worker signs on each morning, BioNetrix first must find a way to sell its software in bulk.

Companies focused on authentication and biometrics, or the business of using people's biological characteristics as a way for computer networks, automated teller machines and other devices to recognize and authorize them, are competing for a market that reached $1.3 billion in 1999, according to International Data Corp.

Biometrics companies alone reaped $58.4 million in 1999, according to a report by the International Biometric Group, a New York consulting firm. More than 200 firms that crowd the biometrics market are projected to take in $594 million this year, according to Samir Nanavati, a partner at IBG.

"It's almost like trying to evaluate dot-coms several months ago: Do you look at the product, the revenue, the management?" Nanavati said.

Still privately held, BioNetrix declined to provide figures on its revenue. But Steve Walker, a Maryland venture capitalist who has poured more than $500,000 into the firm and stands as one of its biggest cheerleaders, said, "We don't have a lot of revenue right now. We've got to convince major players to take it on and use it on a worldwide basis."

Walker, who sits on BioNetrix's board of directors, said he picked Ticer out from the dozen other candidates for the chief executive post in part because Ticer had experience managing more than 100 people in a publicly traded company. Walker--who made his fortune in firewall and encryption technology before he sold his firm, Trusted Information Systems, to Network Associates in 1998--and other members of the board have set specific goals for their new hire. Chief among them: reel in five premier accounts.

"We've concluded we need to get five nationally recognized users to adopt this process on a widespread basis," Walker said. "[Then] others will say, 'Oh, this is real.' The only way you can convince somebody it's real is to have, say, Fidelity or Schwab use it."

In the past, the company's sales force had pushed so-called StarterKits--BioNetrix software and a limited number of devices allowing a computer to recognize a person's voice, face and fingerprints--for $2,500. This eventually led BioNetrix to customers like DrugEmporium.com and the World Bank. It was a way to "sprinkle the market," said Bianco--but not a foundation for a company with ambitions for a global presence.

Revamping the sales and marketing focus will be Ticer's first priority. He and Bianco are training the sales staff to go after bigger targets, especially in health care and financial services, two industries that gather and retrieve sensitive information in rapid-fire settings--where forgetting passwords can bear costly consequences. They're also forging partnerships with other companies in the biometrics industry and developing a trade group to hammer out a way to make biometric technology work together.

Meanwhile, Ticer is putting out feelers for a new vice president of sales and, after that, he hopes to find a chief financial officer with experience managing a publicly traded company.

Much of the business development work, "understanding what the market really needs, building business partnerships," will fall on Bianco's shoulders, he said. "There's a lot to do."

Yet Bianco, who began his career as a human resources expert scouting for high-tech hiring prospects, seems strangely relaxed about his new role--except in the way he raps his knuckles against his right arm, taps his foot on the floor and shuffles the change in his pockets. Bianco said he recognized more than a year ago, after regional telecommunications company Ameritech Corp. infused $2.3 million into the company's coffers, that he would need to make way for a seasoned manager as BioNetrix grew larger. Few founders of technology enterprises actually remain at the helm of their enterprises for long.

"There are very few Bill Gates[es] or Larry Ellisons in the world," Bianco said. "You gotta know when to fire yourself. I want to be able to start companies and grow them. This is a skill I've got to be able to develop."
Besides, Bianco no longer has to worry about negotiating leases for office space or the nuances of the latest marketing campaign or all the other picayune details that took up his time as chief executive. He jokingly tells Ticer the process of attracting venture capital to the firm, which has already raked in $15 million this year from Walker, Columbia Capital and Carlyle Venture Partners, is now Ticer's job.

"The first $20 million on me, the next $80 million on you," he said.

Bianco is kidding--but not by much. As the largest individual shareholder in the company, Bianco knows that finding Ticer may turn out to be the ultimate executive search in his career as a technology recruiter. He means it when he says, "As long as I can be helpful, I'll be here."

Both men expect there will be disagreements in their future, but they need each other, at least until the company launches its public offering. And Ticer, who evinces his competitiveness by repeatedly slamming a Ping-Pong ball at an underling in the course of a spirited game, says he will be the final arbiter when conflicts arise.

"I'm the boss," he says simply.

Carrie Johnson writes a weekly technology workplace column for The Post. This is her first cover story for Washington Business.
Staff researcher Richard Drezen contributed to this report.
© 2000 The Washington Post Company