M&A SPECIAL REPORT
Haystax picked as 2013's best small business dealmaker
- By Stephanie Kanowitz
- Apr 02, 2014
Football fans weren’t the only ones monitoring play-by-plays during the Super Bowl in New Jersey. Tools from Haystax Technology, a new analytics company, helped law enforcement officers scrutinize potential threats in real time from 600 data sources.
That real-time ability is the differentiator between other big data analytics firms and Haystax, which opened in 2012. Its acquisitions of Digital Sandbox, an analytics company that focuses on the law enforcement and commercial marketplaces, and Flexpoint Technology, a cloud computing company, in March 2013 got Haystax on its feet.
Haystax’s acquisition of Digital Sandbox was picked as one of the best small business deals of 2013 in Washington Technology’s annual M&A special report.
“We’re not focusing as much on the analyst as we’re focusing on the decision-makers,” said William van Vleet, president and chief executive officer of Haystax. “When there’s somebody who’s responsible for either an event or a mission or some outcome, they need to have the best information available at their fingertips to be able to do it. The problem is there are so many sources that they can get overwhelmed. What we do is we monitor large streams of data and hundreds of real-time trending data feeds, process that information, sort it and prioritize it for the decision-maker to take action on the most critical threats to either the mission or the outcome.”
Haystax combined Digital Sandbox’s analytics with Flexpoint’s cloud computing to create Constellation, its cloud-enabled analytics platform. The three solutions that use the platform are advanced threat analytics, public safety cloud and secure cloud collaboration. But product development and sales account for only half the company’s business, van Vleet said. The other half is services, providing support so customers can tailor the products to their goals.
“We work with you really kind of in the background to help train and then deploy and operate,” he said.
Customers include the Army, Federal Emergency Management Agency, Homeland Security Department and Florida Department of Education. In California, Haystax is the de facto company for event security management, van Vleet said, which he sees as a growth area. Other opportunities lie in the defense and commercial sectors and school security.
“We are just taking the same Constellation and cloud computing technologies to launch a nationwide school safety cloud,” he said. “We’re taking that to an adjacent market to address the very unfortunate and rising threat of people taking guns to school.”
Because the company’s goal is to be a midcap earning $300 million to $500 million in the next five years, more acquisitions are coming, van Vleet said. He expects half the growth to come organically and the other half through purchases.
Van Vleet defines a good acquisition as a company with a great leadership team, a track record of past and future growth, a complementary customer base, and a fit in Haystax’s technology stack, or as he calls it, its end-to-end value chain. It follows these steps: Information is provided, it’s combined with information from other areas such as video or text and data sources are linked to determine the relationship among them. Next, Haystax handles the analytics, visualization and dissemination of the results.
The leadership roster at Haystax may look familiar. It’s headed by some of the same team that led Applied Signal Technology, a midcap that focused on defense and intelligence. In 2011, Raytheon acquired Applied Signal, and a year later van Vleet and James Doyle, Haystax chief financial officer, set out to found a new mid-tier company. Thomas Safir, vice president of strategic development, also came from Applied Signal.
“Our challenges and interests were really in going and creating the next-generation midcap company,” van Vleet said. “The large caps bring a lot of size and stability and excellence in things like discipline and program management and efficiency, if you will. And the marketplace also has a small number of entrepreneurs who come in, but the midcap tier is important because it provides a lot of the innovation that you get at the small companies but it also provides more stability like the large caps, so you get the best of both worlds.”
With recent consolidation in the marketplace, that middle class of companies has almost disappeared, he added, creating an opening for a new firm. In partnership with Edgewater Funds, a private equity firm, Haystax launched to focus on cyber and analytics.
“As we looked forward, we said, ‘Well, what are the next challenges facing our government and businesses and people, for that matter, for the next decade?’ And we believe that the next challenge is going to be driven by the overwhelming amount of data,” van Vleet said. “Where before there was kind of a data-scarce environment, the challenge in today’s environment is more one of how do you figure out what’s most important out of all the information that’s coming in. In other words, how do you sort the needle out of a haystack, and hence our name.”