EastBanc Technologies sells one of its homegrown start-ups to Microsoft


EastBanc Technologies chief executive Wolf Ruzicka. The Georgetown company encourages employees to create their own ventures. (Jeffrey MacMillan/For The Washington Post)
November 10, 2013

When employees at Georgetown-based EastBanc Technologies have an idea for a viable new software product or services business, they have to follow the same steps as every other entrepreneur: find an office, hire a staff and raise seed money.

Unlike other entrepreneurs, they don’t have to look very far for any of it. Their employer will provide them with the necessary resources to start a business, as well as maintain their salaries, health benefits and the other perks of working inside an established firm.

“None of the product ideas would be successful if that idea generator wouldn’t be willing to step outside of EastBanc Tech and do it themselves,” chief executive Wolf Ruzicka said.

“I want that type of attitude and my task as a company is to give them that pathway without them ultimately leaving,” he added.

That’s a challenge that companies in technology and other sectors are grappling with as they aim to hold onto their most innovative employees, and profit from the new ventures they create should they prove successful.

Indeed, the pathway Ruzicka created is starting to pay off. Last week, EastBanc Technologies announced the sale of Apiphany, a subsidiary founded by an EastBanc Technologies employee, to Microsoft for an undisclosed sum.

Companies use Apiphany to manage every time a mobile app pings their servers for data through an application programming interface, commonly known as an API.

Imagine, for example, a smartphone app that constantly pulls fresh data about Metro train arrival times from the Washington Metro Area Transit Authority’s computers. Apiphany would help to ensure the data is transmitted from WMATA’s servers to the app quickly and frequently without glitches.

Not every idea gets the green light.

“For EastBanc Technologies it was quite an investment, and as a service company, you don’t want to jump on the first idea that came to someone’s mind,” said Evgeny Popov, Apiphany’s creator. “They looked at the market opportunity and when the opportunity was feasible, and they saw that this is a good idea to invest in, they invested.”

Ruzicka said that EastBanc Technologies poured more than $1 million into Apiphany before it spun out on its own in June 2012. EastBanc Technologies remained its largest shareholder. George Moore, the founder of TargusInfo, joined as an investor and adviser.

Ruzicka said profits from the sale will be used to invest in additional homegrown start-ups — the firm is currently incubating four or five new ventures right now— as well as a fund used to guarantee employees their jobs even in tough economic times.

Ruzicka said EastBanc Technologies has made its incubator program more formal over the years, with the idea that some of the new ventures will follow Apiphany’s footsteps and become standalone subsidiaries.

For example, each incubated venture is treated as a separate profit and loss statement on the firm’s balance sheet.

“As you look at your company, you understand what investment, time and team members you put into potential product ideas,” Ruzicka said. “We do it in a very religious manner, which also prepares us to ultimately spin them out.”

Steven Overly covers the business of technology, biotechnology and venture capital in the Washington region for The Washington Post and its weekly Capital Business publication. In that capacity, he has written about start-up struggles, investment trends and major drug discoveries.
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