The following is excerpted from the New Mexico Business Weekly, November 3-9, 2006.
No one ever said entrepreneurship was easy. The owners of SolutionWerx, Inc. have learned that the hard way. The web and software
development firm launched in 1999 as a spin-off from Sandia National Laboratories and Los Alamos National Laboratories.
Its intellectual property management software caught the attention of a California tech company with a lot of venture capital
money. Aurigin Systems acquired the firm in 2000. By late 2001, it filed for bankruptcy and laid off all 12 employees in New
Mexico. Founder George Longmire resurrected the original company from his living room. His wife, Lisa Adkins, eventually joined
him and became president. SolutionWerx now has eight employees and is on track to make $900,000 this year, a 25 percent increase
from 2005.
But once again, it is facing challenges as it weathers the management change and budget problems at Los Alamos National
Laboratory (LANL), one of its key clients.
Longmire created an application called PartnerWorks while at Sandia and licensed it to SolutionWerx, which he started with
Ron Trujillo from LANL in 1999. PartnerWorks tracks the invention lifecycle from the initial disclosure of an invention to
licensing and royalty payments. The application was installed in seven national laboratories and caught the attention of Aurigin,
based in Cupertino, Calif., which was riding the wave of the tech boom with about $75 million in venture capital money, Longmire
says.
Aurigin had software that was supposed to provide competitive intelligence on what other companies were developing, he says,
while SolutionWerx's software was the back office piece for managing the process. Aurigin was marketing to very high-end
customers -- Fortune 100 companies.
Because of the intricacies of Aurigin's system, which involved updating the more than 5,000 patents issued every week, the fee
per month for a company to run the program was large. It cost about $1 million to buy plus several hundred thousand dollars a
year for updates. "Not many people can afford that kind of investment," Longmire says. "Once you've gone through the Fortune 100
one time, the people who believe in it bought it and the rest aren't going to."
So Longmire oversaw a crew of 15 responsible for designing and running a hosted solution that would allow clients who couldn't
fork over $1 million to instead rent time on the system. Longmire was vice president of IT, responsible for fixing delivery
problems with existing clients; then he was vice president of engineering. But he was based in Cupertino and wasn't really able
to spend time commercializing SolutionWerx's side of the equation. After introducing the hosted solution, they got 43 subscriptions
around the world in the first quarter, but it was too little too late, Longmire says.
Aurigin also turned over the relationships with the national labs to a professional services group and lost much of that business,
Longmire says.
In 2001, Aurigin filed for bankruptcy and laid off all the New Mexico employees. Longmire re-established SolutionWerx (although
he had to call it GeoWerx until he could get back the rights to the first name) in his home. His partners went their separate ways,
including Trujillo, who went back to LANL. Longmire took a job in Chicago at an intellectual property law firm, commuting back to
Albuquerque to support SolutionWerx on weekends.
Adkins, who is now president and majority owner of SolutionWerx, worked with him, but took a day job at Sandia doing desktop
support. They kept small contracts at Oakridge National Laboratory and at Sandia to support PartnerWorks.
Longmire, who is now the firm's chief technology officer, had taken out a $350,000 loan to start up the first incarnation of
SolutionWerx. The company has been in the black since 2002, he says. Sandia eventually decided to take its IP management in-house,
but Adkins and Longmire continued to look for custom software opportunities. They landed a contract with a California firm to
create a color recognition software system. Gradually they got more work, including a contract with LANL's tech support division.
…
"It was risky for both of us -- to leave secure jobs after all that we'd been through," Adkins says.
Adkins says the firm is currently considering a long-term plan to give more employees ownership, even if it means re-certifying
for 8 (a). The company is certified under the Small Business Administration's 8 (a) program, which was created to help small,
disadvantaged businesses access the federal procurement market. Becoming 8(a)- and SDB-certified was important to the firm's
strategic planning, Adkins says.
"Working with the federal government is hard enough, but having 8(a) and SDB status helps even more," she says. "Many contracts
with the laboratories are specifically set aside for 8(a) and small businesses and those are the contracts we try to target."
Longmire went to work updating systems based on the original PartnerWorks concept of intellectual property management, such as a
"cradle-to-grave" Internet tool that tracks a company's IP from disclosure to patenting and licensing. They also created
applications to streamline purchase orders and track worker qualifications and authorizations.
Their Invention Disclosure Electronic Application System (IDEAS) is a web-based questionnaire for creating, tracking and reviewing
invention disclosures. The idea is to make it easier for inventors at the national labs to disclose their inventions, which will
be key if a proposed change to the patent law takes place that favors those who file first for a patent, Longmire says.
"It used to take 170 to 180 days to get one of these things completely through the process," he says. That's down to about 17 days
with IDEAS. It has tripled the amount of invention disclosures generated, from 104 to 370 so far this year at LANL, confirm lab
officials. This gets the inventions to the lab's external Web site quickly and it gives the facility more choices in terms of
what it will seek to patent, Longmire says.
LANL also hired SolutionWerx on a three-year, $4.4 million contract to teach software developers there best practices for Web
applications. However, Adkins and Longmire say the lab has not given them much in new task orders since the change in management
in June. A private firm, Los Alamos National Security formed by Bechtel and the University of California, took over lab management
for the U.S. Department of Energy, and is now facing a $175 million shortfall due to several causes, according to a joint news
release from Senators Jeff Bingaman, D-NM, and Pete Domenici, R-NM. The release says LANL now owes gross receipts taxes because
of its change in management to a limited liability corporation. As well, the cost of the changes to its pension plan and the
increased management fee that was part of the new contract proposed by the DOE and the National Nuclear Security Administration
contributed to the shortfall.
Longmire, however, sees it only as a temporary setback and anticipates more work from LANL will be forthcoming. If the work needs
to be done and LANL doesn't have the skills in-house, it can issue a task order and get it done quickly, he says.
And SolutionWerx is not solely dependent on Los Alamos. It also has a long-standing relationship with the Oakridge National
Laboratory, where it provides programming support, software and Web site development, training and management of the intellectual
property management database.
"Their quality customer support and professional dedication has left nothing to be desired," says Bert F. Callahan Jr.,
IT/PartnerWorks system manager in the IT services division at Oakridge.
They are quick to respond to service requests, even after hours, he says, and they provide competitive pricing and cost savings.
And they provided the lab with custom applications that were not readily available on the commercial market.
Additionally, about 25 percent of the firm's business comes from services it provides to small businesses, such as Essential
Financial Planning, where it acts as the company's outsourced IT department.
"It's very difficult to find people who are reliable and people who are really competent," says owner Donna Skeels Cygan. "That's
why they are a critical part of our business."