Boston Globe - June 29, 2004

 

Groove Networks is accidental contractor at Cummings Center
Accidental contractor
Groove Networks unexpectedly lands major customer: US government
By Robert Weisman, Globe Staff

BEVERLY --When he founded Groove Networks in 1997, technologist Ray Ozzie envisioned a target market for its collaboration software: businesses eager to communicate with their partners and suppliers. ''In the founding documents, I don't think there was a single mention of the government," Ozzie admitted.

Today, government represents roughly 40 percent of Groove's sales. Groove software is being deployed by the Pentagon and civilian agencies rebuilding Iraq, and by Department of Homeland Security officials coordinating security for the Democratic and Republican conventions. Defense and security sales are likely to climb in coming years, as collaboration between agencies increases. And with private-sector customers still holding back on technology spending, government sales could represent a growing share of Groove's business mix.

Groove is one of a new breed of accidental defense contractors, companies that changed their business models and marketing strategies to adapt to new realities in the aftermath of the technology bust and the terrorist attacks of Sept. 11. Groove executives found, to their surprise, that interest in collaboration and demand for Groove software ''was happening faster in the government world," Ozzie recalled. At the same time, ''the commercial world, starting with the market drop in March of 2000, was shutting down," he said.

Other companies have responded to these trends in similar ways. Burlington's iRobot Corp., maker of the Roomba vacuum cleaner, developed a reconnaissance robot, called PackBot, that has been used by the Army to search for live ammunition in Afghanistan caves and explosives under abandoned vehicles in Iraq. Viisage Technology Inc. of Littleton, which initially peddled its facial recognition software to prisons and state motor vehicle departments, tripled its presence in Washington last winter to compete for new passport and border control contracts from the Homeland Security Department and other federal agencies.

''There has been a spending bubble around homeland security, and companies are trying to take advantage of it," said Arun Inam, managing director at Mercer Management Consulting in Boston.

Software sales to the US government are projected to grow at a compound annual rate of 8.3 percent to $9.7 billion in 2007, compared to a rate of 6.4 percent for overall US software sales in the same period, according to the Framingham research firm International Data Corp. The faster government growth contrasts with the trend during the 1990s.

The move into defense markets can bring challenges and trade-offs. Inam said it makes sense for start-up companies to tap the government so long as they don't give up on the commercial sector. But he warned that many entrepreneurial companies will find government procurement complicated and weighted in favor of established defense contractors with relationships, know-how, and security clearances.

''The government requires a high level of customization around what they need," Inam said. ''So it tends to be expensive to develop a product, and most of the time you can't sell it to other customers."

In Groove's case, the business virtually fell into its lap. ''The government came to us as opposed to us going to them," said Ozzie. ''It was the compelling need that drove them to us."

Because its Internet-based ''peer-to-peer" software enables disparate parties to work in ''shared spaces" over laptops, without servers or network connections, Groove proved an ideal application for multiple agencies seeking to swap information in a secure environment.

''It answers needs that the military has to collaborate across every time zone asynchronously and securely," said Navy Commander Eric Rasmussen, a physician who used Groove software to coordinate the humanitarian needs assessment during last year's Iraq war.

Groove's passage into defense contracting was propelled by unexpected developments, such as the embrace of Groove's platform by Washington insider John M. Poindexter. And it was marked by some soul-searching, including the resignation of one Groove board member, Lotus Development Corp. founder and civil libertarian Mitchell Kapor, in part because he had qualms about a proposed use of the technology.

But, especially after Sept. 11, ''there was more than a little patriotism going on within the company," Ozzie said. ''We put a lot of effort into going down to Washington and evangelizing the product and trying to connect people within the government."

One Groove executive, Michael Helfrich, vice president of product strategy, even traveled to Iraq for a month last fall to train and assist US officials working on the Groove platform. Helfrich lived in a former Saddam Hussein palace in Baghdad, worked in an office next to US civilian administrator L. Paul Bremer, and survived rocket and mortar attacks. ''We spent 98 percent of the time there working really hard, and 2 percent of the time ducking," Helfrich said.

Ozzie, influenced in the mid-1990s by the decentralizing trend in business, designed Groove as a tool for flattening hierarchies and reaching across boundaries.

''Groove was going to be about the transformation of business," he said. The company was launched on Oct. 15, 1997. In October 2000, it released the first version of its software as a free trial download from its website.

One of those who downloaded the software and became an immediate fan was Poindexter, the retired Navy admiral and former national security adviser. A military consultant and technology buff, Poindexter had been working with government agencies on a server-based collaboration system, but he quickly recognized the benefits of the Groove technology and began building applications with it. Poindexter contacted the company, and Groove executives flew to Washington to meet with him in winter 2001. Soon, officials in the Joint Forces Command, the military services, and other federal agencies were also testing Groove, and the company set up a Washington office.

For many in these agencies, Groove offered a convenient end run around the government's own layers of information technology bureaucracy. ''Responsibility for technology is very stovepiped within the government," said Glen H. Johnson, director of the State Department's Iraq Transition Management Staff, which has used Groove to collaborate with Pentagon and Coalition Provisional Authority personnel working to get the new US embassy up and running in Baghdad. ''As long as all the parties are on Groove, communications can be opened dynamically."

Mitre Corp. in Bedford, which developed an automatic machine translation technology via instant messaging, is integrating it with Groove. The technology, set to be tested in Kona, Hawaii, next month in a military capabilities demonstration called Strong Angel, would enable field officers using Groove to type notes in English and have them translated instantly into Arabic, or vice versa. Mark Maybury, executive director for information technology at Mitre, which evaluates technology for the military, said the peer-to-peer platform is suited to Iraq because it is ''fault tolerant," meaning that destruction of any Groove-loaded laptop doesn't disable the rest of the system.

In the United States, meanwhile, the Homeland Security Operations Center has been deploying Groove to let security agencies and local police departments compare notes before and during events such as the recent G8 summit at Sea Island, Ga. The system will be used again at both the Democratic National Convention in Boston next month and the Republican National Convention in New York in August.

One potential application that proved controversial was Poindexter's proposal to use it in the Total Information Awareness data-mining program that was opposed by civil libertarians and ultimately rejected by Congress last year. That proposal prompted a number of phone conversations between Ozzie and his longtime friend Kapor, a financial backer of Groove who was uncomfortable with Poindexter's plan. Kapor ultimately resigned his directorship but remains an investor.

''It was a contributing factor to Mitch leaving our board," along with Kapor's move to San Francisco and involvement with open-source software development, Ozzie said. ''Mitch has very strong views about personal liberties, and there was a lot of negative buzz going on at that time about that proposal." Kapor, in an e-mail, agreed with Ozzie's characterization of the reasons for his departure but didn't elaborate.

While the Total Information Awareness program was shut down, the use of Groove continues to proliferate within the government, and between US and Iraqi authorities. One reason is to eliminate the need to travel in a dangerous area to share information.

''It's life and death when you have to travel 30 or 35 minutes into a hostile region," said Don Harrison, a former Pentagon special assistant who pioneered the use of Groove to collaborate with Iraqi officials. ''With Groove, you often don't have to make the trip."