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Decisions, Decisions

Profile of a technology start-up's search for the right market niche.

Unschooled in the ways of commerce, scientist Michael Kuperstein finds himself the owner of a technology with unlimited applications. Now all he needs to do is choose the right niche

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Between the business plan and the marketplace lies the reality, as Michael Kuperstein has discovered since opening Neurogen Laboratories Inc. in January 1988. When idea meets customer, things change. Fate intercedes. Markets open, close, and shift. All this surprised Kuperstein, who never intended to turn his grant-funded research operation into a business in the first place, let alone worry what his key markets would be. Those intentions didn't last long.

Kuperstein, then 34, with a Ph.D. in brain science from the Massachusetts Institute of Technology, had motives more academic than mercenary in starting Neurogen Labs. He couldn't find a good tenured job at a university in the Boston area, so he set up Neurogen in Brookline, Mass., as a private institute to further his research on neural networks -- computer solutions based on how the brain works. Conventional computers are programmed with expertise that lets them perform specific tasks. Neural network computers, meanwhile, are programmed to learn from experience and figure out the correct course of action -- much as humans use their brains.

Soon after Kuperstein got the lab up and running in early 1988, the angst started to surface. "My first thought was, 'Oh, no, what do I do now? How am I going to survive?' " When would the grant money dry up? As Kuperstein got deeper into the research, a way out presented itself. "Gee, there's a lot more here than I first thought. The opportunity to commercialize what I was doing was tremendous." It was time to think not just about science but about business. In August 1988 Neurogen grew a mercantile arm, Neurogen Inc. Kuperstein suddenly found himself an entrepreneur -- albeit one with a problem. Owner of a proprietary technology with seemingly limitless applications, he had to choose which to pursue. Where was Neurogen's market?

Kuperstein had to find a customer.

Neural networks have applications in four basic fields, two of which -- robotic control and pattern recognition -- were options available to Neurogen. In robotic control, neural networks guide robots, making them more versatile in a factory setting because the robot can actually learn from its environment and modify its behavior. In pattern recognition, neural networks use computer imaging technology to identify anything from targets to tumors.

For Kuperstein, this is where the road first forked. If Neurogen were to survive as a business, he had to make a choice and travel down one path or the other.

Kuperstein chose pattern recognition. The choice might seem odd. The year before, Kuperstein had developed the world's first neural network robot. He had garnered a lot of praise and press for doing so. But by the time Neurogen was up and running, the robot wasn't. It was still a prototype. Getting the robot into production would take more time and money than Neurogen had. Even though his heart lay with the robot, Kuperstein knew he could get to market much faster with a pattern-recognition product.

But what exactly would that product be?

Kuperstein had no idea. Instinctively, he set out to copy another computer imaging company's product. He would create an electronic stylus with which stock traders could record transactions. The nation's stock exchanges would be his market. But in the midst of his research a serendipitous, eureka sort of moment interceded, presenting Kuperstein with an application that others had yet to crack -- the recognition of handwriting by a computer.

Within two weeks after that revelation Kuperstein had completely refocused Neurogen's mission and written a program that could recognize four characters. He was on his way to devising a computer program that could read handwritten numbers. Kuperstein knew this could be done in a relatively short period of time with a limited amount of money. Kuperstein stopped thinking about styluses and the stock market.

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By April 1989 Kuperstein had a production prototype of a product called Inscript. He also had added two more employees. Arthur Gingrande Jr. became Neurogen's vice-president of marketing and sales. Jerry Fisher became vice-president of product development. Neurogen Inc. was formed with Kuperstein, Gingrande, and Fisher as the company's founders. Betweeen June and February the three of them raised $200,000 privately to keep the company going.

Inscript is a deceptively simple-looking device, a collection of off-the-shelf semiconductors mounted on a PC board along with Neurogen's proprietary software. This simple array, however, masks the considerable brain work programmed into the software. Added on to any IBM-PC/AT based scanning technology, Inscript can read virtually any handwritten digit at the rate of 15 characters per second. It can do so as long as that digit is "segmented," or not touching another digit. It can also read dashes, periods, and commas.

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