There are saunas, an exercise room with muscle-building equipment and after-work staff parties with hot dogs sizzling on the grill and beer. Flexitime is the rule, and software engineers often work from home to meet their deadlines. If a dress code existed, it would call for sneakers and jeans.
At Verdix Corp., any resemblance to Silicon Valley's air of frenetic casualness is purely intentional.
When the development-stage software company advertised recently for engineers and scientists to help staff its new headquarters in Chantilly, Va., near Washington Dulles International Airport, the ad was titled: "Silicon Valley Comes to Virginia."
Verdix placed that ad, explained president and cofounder George Cowan, to describe an environment in which, he believes, hard work and tension are balanced by relaxed working conditions and freedom to express ideas.
"We've tried to build a company with just enough structure so that people would understand who they were working for, but not so much that it gets in the way," he said.
The Verdix staff already has a Silicon Valley look. Among the 75 employes, the average age is 32, and nearly half have master's degrees or doctorates.
"We wanted an atmosphere in which all these high-powered and high-quality individuals could be productive," Cowan said.
At a time when older Silicon Valley firms are caught in a computer industry shakeout, Verdix is trying to carve a niche for itself in two fast-growing, competitive areas: computer security, and the new computer language "Ada," which has been adopted by the Defense Department for all "mission-critical" systems involving weapons and communications.
Verdix's role in the Ada field has drawn a $3 million investment from Martin Marietta, the aerospace giant based in Bethesda. Another $1 million is expected in December. The arrangement gives Verdix additional capital and allows it to operate independently, while giving Martin Marietta access to Verdix technology and a potentially profitable investment.
The Pentagon's goal, in mandating the use of Ada, was to reduce its electronic Tower of Babel to a single language and, i the process, save money. Many defense contractors will have to shift to Ada, creating a rapidly expanding market for related technology. The Ada defense market, now about $1 billion, is estimated to grow to about $15 billion by 1990, Cowan said. The Pentagon named the new language after Augusta Ada, the daughter of Lord Byron and later the countess of Lovelace, whose work with logarithms in the 1880s led to the distinction of being considered the first programmer.
Although the Defense Department's preference for Ada opens the military market first, Cowan said, he foresees major interest from commercial users. Verdix, he said, already has made some commercial sales, particularly to users of scientific data. Any massive switch to Ada, however, is likely to occur in stages, he noted, because many companies have large investments in Cobol and other languages.
Cowan's faith in the future of Ada is unbounded. "Ada," he said, "is a more effective language with technologically superior features" -- one that combines features of Fortran, Pascal and Cobol. "I absolutely believe that in five years, Ada will be the new single standard" language, he said.
Verdix's key product is an Ada compiler -- essentially a software program that translates computer language into instructions a machine can understand. Verdix's goal has been to expand its market by developing Ada compilers that can be used on a variety of computer systems and equipment. Verdix faces competition from several firms, most notably Digital Equipment Co. and Telesoft.
Verdix's system has been selected by several companies on the basis of efficiency, speed and cost, said technology analyst May Graves O'nLeary of Scott & Stringfellow in Richmond. "We believe that the Verdix Ada software development system is on its way to being a success, based on studies by those licensing the product," she said.
Using a combination of hardware and software, Verdix also is trying to create computer systems and networks that are secure against internal misuse or break-ins. These products, Cowan said, are in the prototype stage, will be tested in January, and should be ready for manufacture in June or July. Break-Even Anticipated
Financially, Cowan predicted, the unbroken sea of red ink at Verdix will begin to recede. "We are making more money and losing less," he said confidently.
For the first quarter ended June 30, Verdix revenue was $619,000, with a net loss of $369,000. But when the figures are tallied for the second quarter that ended Sept. 30, revenue may reach $1 million and Verdix will be close to break-even, O'Leary said.
By the end of the current fiscal year in March, O'Leary said, she expects to see a total of $5 million to $6 million in revenue, with profitable third and fourth quarters leading to a break-even year. That makes 1987 the key year for Verdix, the year when the investment community will look for tangible earnings.
O'Leary said the Ada market is "poised for significant growth in the years ahead" and added, "We believe that Verdix will be a survivor in the Ada market through superior marketing and management direction."
Analyst Christopher Demisch of First Boston Corp., although he does not follow Verdix, said that there is a large potential market for Ada technology. Because of Defense Department interest, he noted, "the general view is that Ada is on the rise, and companies are getting up to speed on Ada."
Verdix, which went public in July 1983 at $2 a share, has sold as high as $7.50 and as low as 75 cents. The stock closed with a bid price of $4.37 1/2, up 12 1/2 cents, on Friday.
In a business where better mousetraps are made of silicon, Cowan left his executive job at Computer Sciences Corp. in Falls Church to found Verdix for what seems to be traditional ambitions:
"My goal in life is to manage a big company," he said, adding that he wanted to get in on the ground floor of what he and partner Donn Milton saw as an emerging demand for secure computers and Ada-language products. Cowan said their rationale was: "We can build them cheaper, maintain them more effectively and sell them for less money than other people."
Cowan, now 50, got to the president's chair at Verdix the long way. Growing up on a farm in southern Wisconsin, he entered college at 16 but knew he wasn't ready. So he went into the Air Force, where he was assigned to intelligence and served as a radio traffic analyst, cryptographer and Russian linguist. Eight years later, he left the Air Force and went to work running his family's farm -- where he raised corn on 760 acres and sold 2,000 to 3,000 feeder pigs a year.
"There had to be a better way to make a living," Cowan said. "I was in the hospital twice in the last year I was on the farm, once with a collapsed lung and once with pneumonia. I was working 19 and 20 hours a day . . . . I was killing myself.
"We had two very successful years out of the five or six years that I was on the farm," he said. "But there's one thing you can't control when you're on the farm. That's the weather. We had two years of drought . . . . "
At Verdix, Cowan has a lot of things to worry about, but rain isn't one of them. "We've learned how to minimize risk here," he said. "We look at different product lines . . . . We're always looking for who else we could tap if we needed more financial support . . . . I can't control the stock price but I can control whether we are going to live or die. I did not feel that way on the farm."
Cowan's farming experience convinced him to return to college, entering the University of Wisconsin in 1967. He was 32 at the time. Bringing with him college credits earned in the military service, he earned his bachelor's and master's degrees and finished his doctoral work in seven years. At 39, he got his first job at Burroughs Corp., in Paoli, Pa., and two years later completed his thesis, "The General Structure for Resource Sharing in a Computer Network."
At the University of Wisconsin, Cowan met Milton, a fellow graduate student who was doing his doctoral work on compilers. After working at Bell Laboratories, Milton came to Computer Sciences Corp. to work for Cowan as senior computer scientist, where he dealt with Ada programming. Milton, 35, is executive vice president of Verdix and cofounded the company in 1982. Marriage of Convenience
Verdix's arrangement with Martin Marietta was a marriage of convenience. Cowan needed another round of financing to take Verdix from the development phase to production. For its part, Martin Marietta was eager to share Verdix's work. But Verdix made it clear it wanted an investor, not an acquirer. On the other hand, Martin Marietta didn't want to invest and then be left holding an empty company if Cowan and Milton left. So they worked out a deal that apparently satisfied their mutual concerns.
"There are lots of parts of Martin Marietta," said David Cade, director of business development for Marietta Information and Communication Systems, "that need to incorporate Ada . . . and Verdix still has the fastest validated Ada compiler." Computer security, he said, also is of concern to Marietta.
"It was a case of one plus one equals three," Cade said. Marietta's top brass approved the deal within 45 to 60 days, a short time as those things go, he said.
Peter Dunston, Marietta's vice president for planning and acquisition, called the working relationship with Verdix "almost a model" of how two companies can work together. Two Marietta executives from the Information and Communications Systems (ICS) company serve on the Verdix board of directors.
The Verdix-Marietta arrangement involved Marietta putting up cash for stock, warrants and a convertible debenture. After signing the agreement with Verdix in March, Martin Marietta bought 750,000 shares at $2 a share and paid $500,000 for a debenture. In June, Marietta bought another 500,000 shares at $2. That brought the total invested to $3 million. In December, Marietta has an option to buy another 500,000 shares at $2 a share, bringing the total package to $4 million.
Along with its stock purchases, Marietta obtained warrants to buy 2 million shares at $5 a share and another 2 million shares at $6 a share. And if the debenture is not exercised by Marietta or called in by Verdix sooner, it will convert to 250,000 shares in 1989.
Verdix and Marietta have signed a "standstill agreement" that restricts Marietta to 25 percent of the shares until Dec. 31, 1987, and to 35 percent until Dec. 31, 1989.
The agreement gives Verdix first right of refusal if Marietta decides to sell its stock. And it gives Marietta the same right on the shares held by Cowan and Milton, although Cowan and Milton each have agreed not to sell 500,000 of their shares for five years. Cowan holds 834,000 shares, Milton 891,000 shares, or about 12 percent of Verdix stock.
At current prices Cowan's stock is worth about $3.4 million, Milton's stock about $3.6 million.
Verdix has tried to expand its customer base by making it possible to use the compiler on many computer systems. Meanwhile, it is developing compilers for other processors.
With most of its revenue coming from software licensing agreements, Verdix has signed agreements with Honeywell Inc., the Harris Corp., Intellimac Inc., Flexible Computer Corp., Computer Consoles Inc., Tolerant Computers, and most recently with National Semiconductor. The agreements permit the companies to use the Verdix system on their products.
The agreement with Intellimac of Rockville is worth $1.2 million over two years. Intellimac is marketing its systems configurations to Ada users in the defense, aerospace and scientific communities.
Verdix also has moved to the European market with GEC Software Ltd. London as its European development and distribution center.