Tech firm adds retail services, litigation campaign to drive revenue


ObjectVideo has three streams of growing revenue thanks to the firm’s entrance into the business intelligence space and its new patent enforcement program. (ObjectVideo)

Now more than ever, business owners can benefit by building a second stream of revenue into their companies, which can lift their bottom lines and provide a lifeline if one source runs dry.

But why stop at two revenue streams?

One Reston technology firm has transitioned from government contractor to commercial dealer to litigation specialist over the course of a decade, adding new profit lines at each step along the way. Originally, though, ObjectVideo was merely an offspring of a Defense Department research program hunting for ways to extract data from surveillance videos.

“The government has long been interested in helping analysts get information out of videos, and as more video becomes available through UAVs [unmanned aerial vehicles] and still image sources, you can’t simply scale that analysis by adding humans,” Raul Fernandez, ObjectVideo’s chief executive, said in an interview. “So the government looks for software that can turn video into actionable data, which can be used to make informed decisions or alert someone of a problem.”

The company, which now employs about 60 people, started by building software that can automatically detect from a live video feed when someone crosses a threshold. During the process, the firm began building an extensive portfolio of intellectual property, which now includes more than 40 video analytics patents.

ObjectVideo landed its first government work in 2002, installing security software at unmanned checkpoints along the border between the United States and Canada. One year later, the company released its first commercial product to address those same security needs for nongovernmental entities.

While the technology at that stage remained largely the same, the transition from public sector clients to private sector clients required a number of changes within the company.

“Government and commercial sales are really night and day,” Fernandez said. “Commercial customers are looking for differentiation in the market, whereas the government is looking for the best price, best value. And when you work with the government, they tell you what they want, so you’re responding. But when you take your products out to commercial prospects, there’s more evangelizing about unique features and functions.”

The company was thus forced to bring in new sales personnel, new product development teams and new market analysts. Fernandez said his team had to learn new strategies like how to create low-end and high-end service packages and when to include maintenance with their products.

Meanwhile, ObjectVideo continued to improve its technology and pursue additional patents, and in 2007, the company branched into an entirely new market: business intelligence solutions. The company started to hear from retailers who wanted more insight into buying decisions.

“Retailers fear that they will become showrooms as shoppers stop in to browse but make purchases on their computers and mobile devices,” Fernandez said.

So ObjectVideo began selling software packages that could extract even more complex information from security cameras, like how many customers were waiting in a checkout line and how long shoppers lingered in front of a marketing display.

A new revenue stream was born.

Not long afterward, a phone call from another video surveillance firm presented another opportunity for Fernandez. The other company wanted to use some patented technology, noting that it had no interest in buying the software but wanted to avoid a lawsuit. The firms eventually signed a licensing agreement, prompting a monumental “aha” moment for the folks in Reston.

“When somebody calls you to buy something you’re not currently selling, that should make you look and see just how valuable that something is,” Fernandez said.

ObjectVideo launched a sweeping patent enforcement campaign late last year after identifying several firms it believed infringed on its patented video technology. That meant hiring about a half-dozen legal professionals and working with another dozen outside the company, but that’s already proved a wise investment.

The company started by filing lawsuits against technology juggernauts Bosch, Samsung and Sony — the last of which has since settled on agreement to license the technology from ObjectVideo. Litigation against the other two companies is ongoing, however, Fernandez’s firm has also struck a deal to share its technology with American Dynamics, another video surveillance company and a subsidiary of Tyco International.

The patent enforcement program gives the company a third stream of revenue in addition to the firm’s security services and software licensing arms, and it has given Fernandez an even greater sense of security concerning the future of the company.

“Businesses have to try to differentiate their revenue,” Fernandez said. “Something can happen to one sector or another just like something can happen to one customer, so when possible, you want to avoid having your business rely entirely on one source.”

Follow On Small Business and J.D. Harrison .

This story is part of our small business success series. Read some of the others here:

Three services that aim to change start-up financing

After war, some veterans turn to franchising

J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he manages the Post's On Small Business blog.
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