Creating Growth Paths
Company: Lau Technologies, Littleton, Mass.
Founder: Joanna T. Lau
Business then: Electronics-systems manufacturer, specializing in defense industry.
Business now: Holding and investment company, which consults and invests in start-ups.
Grass definitely doesn't grow under Joanna T. Lau's feet. Since Inc. first profiled Lau as its Turnaround Entrepreneur of the Year in the December 1995 article "Case in Point", her business, Lau Technologies, has purchased, sold, and spun off companies as a strategy to continue their growth and expand their possibilities.
As Inc. magazine writer Leslie Brokaw points out in the article, Lau's entrepreneurial career started back in 1990, when a paper she was writing for an MBA class at Boston University's School of Management led to a business opportunity. The paper focused on Acton, Mass.-based Bowmar/Ali, a defense contractor that made electronic components for the U.S. Army's Bradley armored personnel carrier, and the company's use of information systems in manufacturing systems. But while researching the paper, she became interested in the fate of the company, whose parent, Bowmar Instrument Corporation, was struggling financially, making Bowmar/Ali's fate uncertain at best.
Taken by its employees' commitment to Bowmar/Ali, Lau and 23 of the original Bowmar/Ali employees used $400 thousand of their own money, secured $1.2 million in outside funding, and purchased the company that would become Lau Defense Systems (LDS). Lau Technologies would be its parent company, and LDS would continue its defense work. But that's just the tip of the iceberg in Lau Technologies' history as a business.
Since the initial purchase, Lau Technologies has remained committed to the defense industry but has also had a keen eye for discovering new opportunities. In 1992, when defense spending began to sag, Lau saw an opportunity in digitization and began the necessary R&D to forge ahead with developing digital imaging technologies. The company also licensed a digital imaging facial recognition technology from MIT to further explore opportunities of the technology. "The real [business] opportunity came when digitized drivers' licenses came about and replaced the instant photo," Lau says. Lau made it her mission to educate states about the advantages of digitizing licenses. Impressed by her argument, Lau won the Massacusetts driver's license contract, and went on to win numerous other contracts including Ohio, Arizona and 20% of the nation's states. Such opportunity, however, posed another challenge to Lau -- how to fund expansion.
The solution: spin off the facial recognition division of Lau Technologies. In 1994, Viisage was born to raise the necessary capital to fund growth. Lau Technologies offered 20% of Viisage's stock to the public.
By 1995, Lau had bought one company, diversified its strategy in order to survive, and spun off a division to ensure its success. She had also earned Inc.'s Turnaround Entrepreneur of the Year award. What could be next for the 30-something entrepreneur?
In an effort to better focus on emerging facial recognition technology, in 1997 Lau Technologies formed a third business, Lau Security Systems. That year two Viisage employees also started a business called Biometrica, which would target casinos in the use of facial recognition technology. "Our investments have always been in 'what's next,' " says Lau while discussing the company's increasing focus during the late 1990s in facial recognition technology. As the nation became more security conscious, Lau Technologies progressed from digitization to facial recognition technology, she adds.
By 1999, LDS had further solidified its place in the defense marketplace with its acquisition of VISTA Control Corp., a U.S. supplier of computer boards used on tanks, aircraft, assault vehicles, and submarines. But by 2001, Lau realized they didn't have enough liquidity to continue to grow LDS. "We had to pay off some debt," Lau says. "You can't grow a business with bank debt."
To continue LDS's growth, in 2001 Lau Technologies sold the company to Curtiss-Wright Corp., headquartered in Roseland, N.J., a manufacturer of motion control and flow control devices. One contingency of approving the sale, however, was that Curtiss-Wright retain LDS's employees and its Littleton, Mass. location. "The good news is that the company has maintained all of its employees here, and they brought more work here," Lau says proudly. "It was a good strategic move on their part and our part. We don't have enough liquidity to continue to grow Lau Defense, and we see tremendous growth for that company, so it made sense to have someone come in to continue to grow it."