The Data Compression News Blog

Not everyone involved with Euclid knows that the same management team has been working on another startup, Corista. Corista is working on medical imaging, and rumor has it that they too will depend on some impressive compression breakthroughs in order to succeed.

It’s a pretty good deal for the Wingard family. By leveraging the funding techniques developed at Euclid by Richard Wingard, Liz Wingard can presumably draw another few hundred K per year at Corista, which makes for a nice total family income.

Corista is a story I don’t know much about, although I have heard it is using the same Angel/LLC funding techniques that have worked so well for ED. I only bring up their name because of this quote from a job posting on their web site:

Corista is the 2nd company to be developed by this management team. The first, Euclid Discoveries (www.eucliddiscoveries.com) has developed a video image compression technology that compresses video images and provides a substantial improvement over current state of the art. Euclid Discoveries is currently represented by a leading NYC Investment Bank in the acquisition process. The company was founded in 1999 and is privately funded.

They key sentence in there is that Euclid is ostensibly in the acquisition process.

The Investment Bank is of course Allen & Co., in the person of Nancy Peretsman. Nancy’s name is brought up a lot in an attempt to gain legitimacy, but Nancy’s actual involvement is speculative at this point. And of course, whether Allen & Co. is going to be able to sell ED is even more speculative.

- Mark

Euclid Discoveries has been raising money, fear, and loathing for so long now that they feel to me like a lifelong friend.

I was working my through some old emails last week and I came across an angry message from a Euclid supporter sent all the way back in 2003. Gray Smith is one of the Kentucky investors that have been mentioned here so often, and he took offense at some of my skepticism, firing off this email:

Mark -

Sorry, but you will soon be eating your “E words” regarding Euclid Discoveries. And, unfortunately, your reasoning on the subject is so far off-base that I’m forced to discount everything else you’ve ever said.

Regarding the business model and funding strategies, can you think of one example of a small tech enterprise that survived venture capitalism or hand-holding with the likes of, say, Microsoft? Can you say “Hotmail”?

Secondly, the principals of Euclid have sat on the MP3 standards committee for a number of years. Their product will hit the market compatible with every existing application, and will be the sole property of the principals and investors.

Do some homework. The PR firm handling their publicity (and their patent firm) are the premiere [sic] firm(s) in the niche. They don’t take on losers. And they’ve seen the demo.

Have a nice day.

Gray Smith

You’ll note that Gray is using several of the key strategies Euclid supporters have engaged in since the beginning:

• Attack the messenger instead of debating the facts: “your reasoning on the subject is so far off-base that I’m forced to discount everything else you’ve ever said.”
• Claim legitimacy by association - by virtue of hiring a PR firm, ED suddenly is imbued with some sort of goodness, because PR firms only accept payment from companies that are really going somewhere.
• Confuse business relationships with technical skill. Getting on the MP3 standards committee is not like getting into the Rock and Roll Hall of Fame. It is not an endorsement by your peers. It is an indication that you are capable of filling out an application form and sending it in with a check that doesn’t bounce.

And yes, Gray, I can think of many small tech companies that have survived venture capitalism or hand-holding with the likes of, say, Microsoft? Can you say “YouTube?”

Gray is apparently still working at the same company in Louisville that he was back in 2003, so I sent him an email asking if he had an update on how soon I would be eating my words.

So far, no response.

- Mark

Way back in 2005, Bob Werner of Euclid Discoveries gave an interview to Roger Wood. Through the magic of mp3 storage, that interview is still available on the web. Here are some of the great quotes from this interview:

Bob: EuclidVision is an object-based video compression technology built with mathematics and computer vision, which will deliver orders of magnitude, 4-15 times the performance of the world standard MPEG-4. That’s a lot but essentially what that could evolve into is you could turn your iPod into a DVD player. [...]

Roger: This seems like the right product at the right moment.

[...]

Roger: Bob what stage is this product in? I know you’ve probably done research and development, are you past that stage?

Bob: We’re past that stage. We’re ready for commercial deployment. Our exit strategy to our investors has always been when we are ready for commercial deployment the company will be sold privately. [...] We’re at the commercial deployment stage now, and we are privately seeking purchasers.
[...]

Bob: We raised money in seven different rounds. In each round, we succeeded in coming up with the technology we needed to get to the next round. [...] We went through seven phases to get to this point. Its stressful, but well worth it. The angels seem to like it.
[...]

Bob says that he and Richard were unable to get funding from west coast investors (too skeptical), and he is proud to say that he was able to get the majority of his money from investors close to home in Kentucky and Tennessee, investors who had never been offered this kind of deal before.

Bob talks a lot about how his management of his angel investors is done by constant communication, and how this keeps them happy with the relationship.

Not much public news since 2005, and of course, this leads to all sorts of speculation and rumor. If the company was up for sale almost five years ago, what happened? And how much more money had to be raised in the last five years? How much have the investors from those previous rounds lost to dilution?

Maybe a lot of questions, but if the angels are happy, as Bob claims, no worries for Euclid Discoveries.

Philip James Whitley raised over $5 million dollars in funding for his company, NearZero, promising revolutionary data compression results. After stringing along investors for the better part of a decade, Whitley is facing his day in court before the Serious Fraud Office of New Zealand.

It’s a long story, both familiar and sad, of people cashing in their life savings to make a fortune on a revolutionary technology. A technology that Whitley still claims exists, but so far has been unable to produce. (In fact he claims he destroyed it intentionally.)

Sachin wrote about it here a couple of years ago. You can now get an update from the papers in New Zealand.

Testimony in the trial had Whitely proclaiming he was “richer than Bill Gates.” Turns out that now he is now bankrupt and facing possible jail time, but he had a good ride while it lasted. Failure to map an adequate exit strategy seems to have been his biggest weakness.

We know that the great recession of 2009 has caused slashes in staffing at companies large and small, and it appears that Euclid Discoveries (discussed in great detail here) has had to cut back as well.

Euclid has a list of key bios on their web site, and as of today, December 7, 2009, that includes just three people:

• Richard Y. Wingard, Co-Founder & Chief Executive Officer
• J. Robert Werner, Co-Founder & President
• Charles P. Pace, Chief Technologist

What’s strange is that this list of key bios used to be a lot longer. Using the beloved Internet Archive, we can take a look at the same list from just two years earlier, and wonder what happened to:

• Steve N. Hutchinson, Executive Strategist
• Anne Marsden, Chief Marketing Officer
• John Weiss, PhD, Chief Algorithmic Mathematician
• Igor Najfeld, PhD, Algorithmic Mathematician
• Amit K. Roy-Chowdhury, PhD, Chief Consulting Scientist
• Jeffrey V. Roberts, Director of Engineering
• Anne Watelet, Technical Process Manager
• Renato Pizzorni, Lead Software Engineer
• Darin DeForest, PhD (ABD), Lead Algorithmic Engineer
• Richard Gyger, Technical Lead
• Elizabeth Marmion, Director of Operations
• Bentley Pace, Knowledge Manager

I don’t know whether any of these people were cut loose, or whether ED just decided to clean up a rather long web page. And a check of LinkedIn shows that there are at least a few people who still list themselves as employed at ED:

• Bill Wilmoth, Information Technology Analyst
• Nigel Lee, Chief Algorithmic Engineer
• Anne Watelet, Technical Process Manager
• Jeffrey Roberts, Director of Engineering
• Bentley Pace, Knowledge Manager

I would be very surprised if all twelve of these people were full time employees at Euclid. Carrying that many big salaries would have created a pretty rapid burn rate, and I don’t think the company could have sustained it for this long.

The big question is whether what we are seeing now is the death rattle of a company cutting expenses to the bone, or whether there is just a lot of smoke and no real fire. Whichever it is, Euclid Discoveries is, as always, not saying.

This article in the Washington Post reports that On2 is being purchased by Google for $106 million in stock.

On2 has a really excellent video codec with some advantages over industry standards from Microsoft and the MPEG. But the relatively small price for a well-established and sporadically profitable company points out the difficulty faced when trying to sell video compression not backed by industry standards groups.

One often used metric on a buyout is the cash value per employee. In this case, it’s roughly $1.75M for each On2 employee. Just to contrast, earlier this year my employer, Cisco Systems Inc., acquired Pure Digital, makers of the Flip video recorder. In that case, the payout per employee was roughly $5.8M per head.

Probably not apples-to-apples, but something to think about.

David Scott has written a bijective BWT transform, which brings all the advantages of bijectiveness to BWT based compressors. Among other things, making BWT more suitable for compression-before-encryption and also give (slightly) better compression.

Jarek Duda’s “Asymmetric Binary System” promises to be an alternate to arithmetic coding, having all the advantages, but being much simpler. Matt has coded a PAQ based compressor using ABS for back-end encoding. Update: Andrew Polar has written an alternate implementation of ABS.

So many of today’s files are already compressed (using old, outdated algorithms) that newer algorithms don’t even get a chance to touch them. Christian Schneider’s Precomp comes to rescue by undoing the harm.

There aren’t too many companies working on cutting edge codecs, and of those few this one is hiring. Best of luck.