Computer-generated simulations of wildfires, prepared by Santa Fe's Redfish Group
Rebuilding the Info Mesa
December 2007 / January 2008
Volume 5 Number 6
Santa Fe calls itself the City Different. In June 2000 Ed Regis put the new Mexico capital city on the map as an informatics hotspot with his Wired magazine article, "Greetings from Info Mesa." Suddenly the world knew about a small industry cluster and its resident geniuses who had taken software to a new level and, in the process, revolutionized everything from drug discovery to economic prediction.
Advanced computing had made it possible to harvest unthinkable quantities of data, but manipulating and interpreting—€”not to mention divining trends and making forecasts—€”were out of reach. What was needed, Regis wrote, were "grand new tools."
"Today," he wrote, "those tools are pouring forth from an unexpected place: Santa Fe, New Mexico, home to a growing, computer-powered industry known as informatics, and the center of the data dump universe," he wrote. "Informatics is all about developing software that digests reams of raw data and returns cohesive information that can, for example, lead to new drug discoveries, high-tech manufacturing materials, mechanisms for predicting financial markets or methods for streamlining production supply chains.
Regis identified these companies: Genzyme Genetics, PE Informatics, Phase-1 Molecular Toxicology, The Prediction Company, Bioreason, Daylight Chemical Information Systems, OpenEye Scientific Software, Complexica, Metaphorics, Strategic Analytics, Swarm Corporation and Bios Group. They were using informatics tools in biomedicine, drug discovery, business planning and finance.
Santa Fe, better known as a tourism and arts mecca, seemed an unlikely tech center. But it was also home of the Santa Fe Institute, which had built an international reputation for complexity research, and the National Center for Genome Resources. And it was a short drive from Los Alamos National Laboratory, which had a hand in creating both organizations.
The Institute and Los Alamos seeded the informatics cluster. Stuart Kauffman, a researcher at the Institute and an originator of modern complexity theory, was a founding partner of Bios, which applied complexity theory to everyday business problems. And Los Alamos alumni were founders of Bioreason, the Prediction Company and Complexica.
Riding the dotcom bubble, Santa Fe's informatics companies expanded. They delved into new problems and added staff. Several attracted venture capital and a couple even considered going public. They sailed into the tech industry's perfect storm—€”the bursting bubble, the aftershocks of 9/11 and the fear that settled over investors. As it happened, the bursting bubble hit Santa Fe a year after it struck California—€”about the time of 9/11. The shakeout was painful; acquisitions, consolidation, restructuring and failures thinned the landscape of Info Mesa.
"In that year and the next 18 months, a bunch of companies went out of business," says Roger Jones, an informatics pioneer who has founded multiple companies. Today he is chairman and chief scientific officer of Qforma.
The pioneering Bios Group, after shrinking from 150 employees to 20, was acquired in 2003 by NuTech Solutions, a North Carolina company. Phase-1 Molecular Toxicology, filed a Chapter 11 bankruptcy petition in 2002 and emerged in 2003 but didn't survive. Its epitaph: It was too far ahead of the market. Bioreason, which had raised millions in venture capital, struggled for several years before selling its assets in 2005 to Simulations Plus of Lancaster, Calif.
One of the survivors was Jones, a Los Alamos veteran and co-founder of Complexica. Trying to understand what had happened to his fellow travelers, he conducted his own survey in 2003 and told the Albuquerque Journal, "Some failed, some are living on a razor's edge, some are surviving well and others have achieved their goals."
One surprise to Jones was that of 12 companies that failed, 10 had used venture capital. "Venture capitalists are looking for high, fast growth," he said. The venture underpinnings of most of those companies didn't allow them to survive the dotcom collapse and the recession sparked by 9/11. The survivors had relied instead on partnerships with large corporations that had similar goals and provided funding to the smaller partner. Another survival strategy was a focus on specific industries. David Franklin, CEO of Strategic Analytics, told New Mexico Business Weekly in 2006: "A lot of (companies) had too broad an approach and not enough focus on specific industries and markets."
In 2003 CommodiCast, a 2000 spinoff of Complexica, was struggling. "We were doing anything we could to just keep the doors open," Jones said at the time. Then the company landed a contract to train the sales staff of a California biotech company in understanding the financial position of their pharmaceutical clients. The company took advantage of the job training incentive program offered by the state of New Mexico, which pays half the salaries of trainees at qualified companies. The program allowed CommodiCast to hire five employees to develop a new pharmaceutical industry component, and they won three new clients. It pulled the company through.
However, a second Complexica spinoff, Assuratech, failed. A third spinoff, Advanced Safety Concepts, sold its intellectual property.
In the dawn after the storm, other survivors found new opportunities applying informatics to defense, security and military operations. Five of the companies had contracts to learn why it was so difficult to track down terrorists and how the insurance industry could cover businesses and individuals in a more dangerous world.
"There's a kind of Santa Fe way of thinking about how things interact—€”a complexity science way of thinking," said Jones. "Traditionally we focus on key players—€”George Bush or Osama bin Laden. What complexity science tries to do is look at all the forces and interactions in a large system, all the entities and agents and what their interests are. What this leads to is a sort of intuition that is not part of a traditional way of thinking."The survivors also found that worldwide interest in informatics was keen. Complexica opened an office in Venice —€”that's Italy, not California.
"The Italians have focused on complexity science as a leader for them in economic development, and they're backing it up with incentives" Jones said in 2004. "I expect some of the European companies will be looking at Santa Fe branches in the not-too-distant future, especially if investment interest remains strong."
In January 2005 CommodiCast absorbed its parent company, Complexica. "Complexica was kind of like the Cheshire Cat. All that was left was the smile," Jones said. In late 2006, CommodiCast changed its name to Qforma, which today specializes in predictive modeling for pharmaceutical applications.
The companies of today's Info Mesa are living proof of the old adage that if a thing doesn't break you, it makes you strong.
Info Mesa, says Jones, is "strong, but it's different. It's been consolidated." He compares it to the consolidation of auto makers in the early 20th century.
Other survivors, besides Qforma are:
—€ Black Mesa Capital, a hedge fund that uses informatics to spot opportunities. Founded in 2002, it made headlines recently for warning that at least one large hedge fund or investment bank was liquidating trading portfolios.
—€ Dalke Scientific Software, which provides software systems for computational life sciences, including structural biology, bioinformatics and chemical informatics. It was founded in 2000 by Andrew Dalke.
—€ Data Ventures, a global analytics and consulting company specializing in retail grocery and consumer package goods industries. A Los Alamos spinoff created in 1996, it's no longer owned by its founders. The company is based in Charlotte, N.C., and has offices in Los Alamos and Vienna, Austria.
—€ Daylight Chemical Information Systems, which analyzes chemical databases. Founded in 1987 by Info Mesa pioneer Dave Weininger, Daylight Chemical has licensing agreements with major chemical, drug, and agricultural companies. It has offices Aliso Viejo, Calif. and Cambridge, England. Its two spinoffs are Metaphorics (now in California) and OpenEye.
—€ Genzyme Genetics, which does genetic testing. It's a subsidiary of Genzyme Corp.
—€ OpenEye Scientific Software, which has focused on drug discovery and design. An employee-owned company, it celebrated its 10th anniversary this year at the American Chemical Society's exposition in Chicago. Founder Anthony Nicholls says, "We are very focused on the science, and we have strong opinions about the right way to do computational drug design. We try to contribute to the research community, and like to treat our customers as colleagues." OpenEye has grown on its own revenue, without venture capital investment, government grants or bank loans. It has offices in Boston and Strasbourg, France.
—€ The Prediction Company, which uses complexity theory and proprietary forecasting technologies to predict the ups and downs of the stock market. Founded in 1991 by Doyne Farmer, Norman Packard and Jim McGill, it was acquired in 2005 and is now a subsidiary of UBS, a Swiss company that had been a client and venture partner since 1995. Its Santa Fe office remains.
—€ Mesa Analytics & Computing, which provides research and analysis in predictive modeling and cluster or time series analysis in such areas as chemoinformatics, precision agriculture, fraud detection or control systems. It was founded in 1999 by John MacCuish, a former employee of Los Alamos and Bioreason.
—€ QTL Biosystems, a developer of bioassays. Founded by Los Alamos scientists, it now has offices in California and London.
—€ Redfish Group, which applies complexity science to difficult problems in business and government. Recent applications include wildfire and sports stadium evacuation simulations and modeling of boat traffic in Venice, Italy. This loose-knit organization was founded in 1991 by Stephen Guerin. Redfish occasionally works with one of Bios Group's spinoffs, Icosystem, which is based in Boston.
—€ Strategic Analytics, which provides analytical software used by financial analysts, bankers and portfolio managers to forecast performance. Founded in 1999, Strategic Analytics is considered the flagship of the financial services companies. In 2004 it moved out of the Santa Fe Business Incubator to leased space at the National Center for Genome Resources after reaching annual revenues of nearly $1 million and $5 million in contracts. Customers include Discover, Household Bank and Capital One.
Info Mesa today is a "much smaller community," says Jones. "We all know each other. We're more than encouraging to each other."
And as they did during the heyday in 2000, the informatics people meet weekly to brainstorm and socialize. The group even has a name FRIAM, for its Friday morning gatherings, and a web site. It's not your typical networking. Subject matter may include agent-based modeling, applied complexity, artificial life, evolutionary computation or swarm intelligence
It's also a busier community, Jones says. The survivors have more paying customers—€”often among Fortune 50 firms. Says David Franklin, of Strategic Analytics, "The companies that survived are now a lot more healthy and profitable."
Randy Burge, founder of the New Mexico Information and Software Association, observes, "The sub-industry of informatics has always been very exciting to me because I see the direct market applications. There are real-world problems being worked on with direct relationships to the marketplace."
Sherry Robinson is a freelance writer based in Albuquerque.
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