Bluesoft, Inc: Eyes for Bluetooth

This is the most frightening “we sat down and decided to found a start-up” tale I ever heard. Albert Cahane and his wife were visiting an amusement park in the US when their son suddenly disappeared. In Israel’s amusement parks, you can easily trace a lost child within five minutes just by his screams. In the US, however, kidnapping has reached epidemic proportions and many children are kidnapped every year. Cahane’s tale had a happy ending, but the event made him wonder if some mechanism could be invented for maintaining a reasonable distance between two objects in the absence of visual contact.

Cahana brought in an old friend from his school days, Yuval Bar-Gil, hoping initially to develop applications based on RF frequencies. They even started developing a product using this method, but several months later they heard about Bluetooth and realized they should jump on the bandwagon.

At the time, Cahane, formerly an Internet consultant in Israel, was living in California because his wife, a pediatrician, was stationed there under a three-year contract. Bluesoft was therefore founded and registered in the US. They visited Israel to find potential partners, and took a trip to Motorola’s Israeli R&D center. Motorola loved the idea (which was still based on RF) and was thrilled by the size of the stake it received in the company. It conducted a feasibility study at MOBAT, a Motorola subsidiary and found that the product was successful. Shlomo Berliner, head of development at MOBAT, even joined Bluesoft, along with other people from the company, and Cahane and Bar-Gil knew they were well on their way.

Technoplus Ventures and several US investors made a seed investment in the company in February 2000. Cahane and Bar-Gil were based in California and six other people were based in Israel. Funds Comsor (Comverse’s investment fund), Star, Coral, Qualcomm founder Dr. Andrew Viterbi, and several other investors joined Technoplast for the first financing round, which closed in January 2001. Cahane says that the additional investors included “one of the world’s largest chip suppliers” and an announcement about its participation is due shortly.

How to send a resume

Bluesoft is developing applications for measuring distance using Bluetooth technology. Here’s an example of a possible application: You’re strolling along in a mall, and as you pass a certain store your Bluetooth-equipped cellular phone will light up and advise you of special offers inside.

Or, imagine going to a high-tech employment fair next year, very far from your home, when you suddenly feel an urge to print out your resume. The relevant file is already stored on your cellular telephone, and, using high-speed, advanced Bluetooth technology, you can utilize any of the printers at the fair, since they all support wireless communications. However, how on earth do you make sure your file is printed at booth #2, as opposed to anywhere else at the fair?

This is where Bluesoft’s future products enter the picture. Cahane like to describe them as “giving eyes to the devices”, i.e. enabling the printers etc. to “see” so that everyone in the vicinity doesn’t receive the information. The company developed algorithms capable of ensuring that the devices will only transmit or receive information to or from sources which are within a certain radius. This restriction serves the consumer and also enables information to be received from more than one source, as in the above mall example. The technology also provides a partial solution to the security problem, since limiting the distance of sources prevents, for example, hackers from receiving payment details as they stand outside the supermarket (assuming it is equipped with Bluetooth- supporting checkout counters which will eliminate the need for credit cards ). Cahane admits it is not a complete solution, but rather another layer of security, which will be used in conjunction with encoding and other solutions.

Pre-determined triggers can be built into the system. For example, a sort of alarm system which will send out an alert when the distance between the devices reaches a certain limit can be installed. This was the founders’ original idea. A laptop can be configured so that it will enter a special alert mode if its owner, equipped with a Bluetooth cellular phone, is more than a predetermined number of meters away from it. “It’s quite clear that the cellular phone is something most people won’t forget to take with them, but laptops are often forgotten, and in cases involving general managers, this can have dire consequences, such as industrial espionage, as was the case at Qualcomm a year ago.”

Cooperation with companies

Bluesoft has started cooperating with various companies promoting Bluetooth, such as Intel, Analog Devices, Lucent, Texas Instruments, cellular phone and laptop manufacturers, access-point manufacturers such as RED-M and Witcom, and even Israeli companies in the field.

Bluesoft plans to initially sell its product to chip manufacturers themselves, who will sell their chips to cellular phone manufacturers, thereby giving Bluesoft a considerable short-cut and access-point network. The product will also be sold to consumer product manufacturers to enable joint development in the navigation area, focused advertising, and so on.

As for its business model, the company will charge hardware manufacturers license fees for including its distance measuring applications in their products. As for its network location tracking products, the company plans to ultimately manufacture chips (although it plans to be fabless), and sell its products directly. Bluesoft intends to launch a Bluetooth distance-measuring product in a few months (it is currently being tested, without adding Bluetooth into the equation). The company hopes to launch a network location tracking chip in the first quarter of 2002 and plans to discuss the possibility of launching another capital raising round within the next two years.

Bluesoft has a staff of 13 in Israel and another seven employees in the US and Europe. It is currently recruiting and hopes to add another 40 employees. Following an aggressive advertising campaign, which attracted more than 650 candidates, Cahane knows exactly what he is looking for.” I believe in internal growth, so we’re looking for semiconductor, radio, antenna engineers, who will constitute a pool for future management. Bluesoft’s screening process is therefore aggressive.”

Published by Israel's Business Arena on 16 April, 2001