Logical position

Logical position

Why should air-traffic controllers have all the fun? One Gulf Coast-based company has developed software to track almost any global-positioning device anywhere.

ENTREPRENEURS by Jean Gruss | Editor/Lee-Collier

True story: A trucker was hauling $80,000 worth of grapes from California to Florida when he decided to have a little fun on Bourbon Street. The errant trucker told his boss he was rolling on a Texas road, but instead he was letting the good times roll in New Orleans.

It didn't take long for the boss to find out what he was up to thanks to a Gulf Coast-based startup company called Position Logic that was helping track a global-positioning device hidden in the truck. The tech wizards at the small Naples-based company have created software that can track almost any GPS device from a desktop computer.

It's the perfect example of how savvy entrepreneurs can build new businesses on existing technology by creating a missing link.

In this case, founders Felix Lluberes and Hong Long created software that could talk to any GPS device in whatever computer language it communicates.

"They developed software from scratch that is virtually device-agnostic," says Jim O'Reilley, an investor in the company who is also the chief operating officer.

With the broad array of GPS devices on the market today, no single software could communicate with all of them. "Hardware can't be the issue or the bottleneck," says Lluberes, who is the company's chief executive officer.

The applications for this are almost unlimited. Besides tracking trucks, the software could track packages, people or anything that moves. Lluberes says he got a call from a banker in Mexico who wanted to know how it might work with ATM machines, where a vibration might indicate someone trying to break into the machines.

Passively monitoring a GPS device is just the beginning. The goal is giving customers more control from their desktop computers via the Internet.

Position Logic aims to help customers create routes that will alert them if the device deviates off course. For example, a large financial-service firm might want to track a sensitive document an employee is carrying from one floor or building to another to make sure it doesn't fall into the wrong hands.

Better yet, a customer with a fleet of cars may be able to remotely disable a vehicle's ignition if it leaves a pre-defined boundary. Or a parent may want to monitor where their child is driving and at what speeds. Lluberes says all new vehicles in Mexico must be equipped with a GPS device so police can track down stolen cars.

Lluberes and Long, the company's chief technical officer, are working as fast as they can to sell the software, manage new customers and create new applications because competitors are likely to spring up quickly. "We think there's a company in Spain doing this," O'Reilley says.

By 2010, O'Reilley estimates the market for Position Logic's services will be $10 billion. It's already a $6.2 billion market, much of it driven by military use.

O'Reilley can't discuss the software's military applications for security reasons, but it's obvious how military commanders might benefit from knowing exactly where their troops are on the battlefield. Though he won't disclose financial information, O'Reilley estimates Position Logic will sell $1 million worth of software to the military alone in the year ahead.

The company's biggest challenge now is to remain focused. There are so many applications for this technology that Lluberes, Hong and O'Reilley worry they'll get spread too thin. "We don't want to get our focus diverted," O'Reilly says. For now, the three areas it is concentrating on are fleet management, security and getting hardware manufacturers to incorporate their software into their devices.

Fueling growth

Position Logic has benefited from the rapidly growing cost of fuel as companies with large fleets of trucks scramble to control this expense. For example, Position Logic can help fleet managers make sure their drivers are using the most fuel-efficient routes and speeds.

Position Logic now has nine customers since Lluberes and Hong launched the company six months ago, including E.J. Ward. That company is the largest provider of fuel management systems in the U.S.

For a fleet of 50 vehicles, for example, the Position Logic software can reduce operating costs by 20%. Half of the savings come from what the fuel companies save by finding the shortest distances and the other half comes from the lower maintenance and depreciation expenses from mapping the most efficient routes and improving driver behavior.

Customers such as E.J. Ward buy Position Logic's software and brand it as their own. They pay a licensing fee of about $5,000 and a monthly fee that cost about $4 per device that it tracks.

So far, more than half of Position Logic's customers are based outside the U.S. In particular, Lluberes says Latin America presents rich opportunities because of the lack of competition and the adoption of this technology for security purposes. In areas such as Latin America, Position Logic will license the software to resellers, who will in turn manage individual customers, saving the company from having to build a large customer-service department.

Mapping the future

Lluberes became fascinated with live tracking while he was working for a mapping-software company in which he owned a stake. Customers were demanding the company develop ways to track things on maps. But Lluberes' partners in the mapping company didn't think they should wander from their core mapping business and Lluberes struck out with Long, a fellow graduate of the University of Iowa.

The cost of the startup was about $500,000, though when you add in the time to write the software it easily totals $1 million, Lluberes says. But the founders have so far done it without borrowing money. While they won't disclose revenues, they say Position Logic is debt free and cash-flow positive.

Still, the company is looking for another investor to grow the company. The partners are looking for $250,000 so they can hire four more people to manage new accounts. They're looking for a board-level individual who could bring financial or telecom expertise.

One of the areas that could be promising is cell phones, many of which are now being loaded with GPS devices. There are many potential uses to tracking cell phones, ranging from parents who want to find their children's whereabouts to bosses who want to make sure their employees are on the job. For example, Position Logic is currently discussing a joint venture to track ocean vessels using the GPS devices inside satellite phones.

While many device manufacturers have created software, that's not their strong suit. Position Logic hopes to partner with software companies so that they can sell more of their hardware.

All these opportunities could add up to a substantial return for the initial investors when they sell the company as planned in three years. If all goes according to plan, O'Reilley estimates investors could get a return of 10 times their investments in that time frame.

An initial public offering is out of the question, he says, because of the regulatory burdens imposed by government. Instead, the buyout will likely be by the management team itself or outside investors. "Any exit plan is dependent on the economy," O'Reilley cautions.

REVIEW SUMMARY

Company. Position Logic

Industry. Technology

Key. Entrepreneurs can find opportunities that build on existing technology.