Interview with Dr. Behnam Analui, CEO of Abtum
In this interview with Dr. Behnam Analui, CEO Abtum, you’ll hear about Behnam’s background, what Abtum does, and how this technology is based on a breakthrough architectural approach to radio frequency (RF) filter design. I met Behnam because he is part of the San Diego-based EvoNexus pro bono incubator in their Irvine location.
In 2000, Behnam immigrated to the United States from Iran to attend graduate school at Cal Tech, in Los Angeles, where he earned his Masters and PhD in Electrical Engineering. I discussed in a previous article the importance of letting the best and brightest from all over the world into the United States to work, and Behnam is clearly an example of this. Read my series on Immigration! After graduate school, Behnam worked at Luxtera, in Carlsbad, CA. Luxtera is the fiber to the chip company that developed a breakthrough technology in silicon photonics.
Here are some of the key parts from our interview:
In 2009, Behnam left Luxtera to do research at USC on the “hardest problems in electrical engineering” in hopes of discovering an idea worthy of starting a company. At USC, Behnam worked with Dr. Hossein Hashemi, one of his former classmates at Cal Tech, who was then a professor and researcher at USC. Dr. Hashemi is Behnam’s co-founder and the CTO at Abtum. Some of the problems that Behnam and Hossein explored included medical devices for pulmonary applications, wireless tracking of people, electrical timing issues, and the most difficult challenges in RF filter design. During the development stages of this electrical project, the team were able to determine where to get hermetically sealed wires and cables and other electric equipment at the best possible price. Additionally, in this process, they discovered a new architectural approach to RF filter design that results in a 10X to 30X performance improvement compared to traditional design approaches.
Abtum was formed based on this breakthrough technology. RF filters allow devices to tune to the signals they desire while eliminating “noise” and information in other frequencies. An example of the importance of filters is the radio in your car. If you are tuning your radio to KPBS in San Diego, to listen to the local NPR broadcast, you want to hear that broadcast and nothing else. The RF filter enables this.
Abtum’s novel RF filter architecture is applicable to multiple market opportunities, but Abtum has decided to focus on the RF filter market in portable and mobile devices, including cell phones.
Many frequency bands are used in cellular phones based on different wireless carriers, different generations of cellular technology (e.g., 2G, 3G, 4G), and different frequencies used around the world for cellular transmission. The number of RF filters that are designed into mobile devices is exploding, and becoming a major part of the overall cost of a cell phone. Next generation high-end cell phones could have as many as 50 RF filters. The opportunity will just continue to expand with the advent of “unlocked” phones that can be used on different carriers’ networks.
The market for RF filters into mobile devices is $3 billion to $4 billion. The high-end market alone is over $2 billion, and growing at a rapid rate.
Filter designs have used a conventional textbook approach for over 50 years, and Abtum has developed a technology that breaks the fundamental performance trade-offs and delivers filters with substantially improved performance at lower cost.
The intellectual property for the core technology of the Abtum solution was developed at USC, where the team filed five patents around the technology. Since forming Abtum, the team has filed an additional seven patents, and continues to develop new intellectual property in this “white space” area. Some inventions will be kept as trade secrets, while others will be patented.
Since to core technology was developed at USC, there needed to be a technology transfer from the University in order to form Abtum. Universities are starting to take a more aggressive approach to commercializing key technologies that have been developed in academia. Sometimes the university takes licensing royalties and at other times straight equity in the startup. In some cases they take both. USC has an arm for standard technology transfers, and Abtum was formed based on this approach.
The Abtum technology is complementary to traditional filter design and manufacturing processes. It is an architectural enhancement that dramatically improves filter performance. Ultimately, the technology is applicable to tunable filter designs as well.
While at USC, Abtum developed a hardware proof-of-concept around the technology that provides measured results. This approach provides significant validation of the technology, even though there is still significant work to commercialize the technology. Over the next couple quarters, Abtum plans to develop a minimum viable product (MVP), which is the next significant milestone in the product commercialization. Abtum expects to generate significant revenue by 2018 and be profitable in 2019.
Abtum is a very cool company with a product based on hard science and engineering challenges. The product addresses a large and rapidly growing market, and the technology is hard to duplicate. I’m very excited about the prospects for Abtum and will continue to follow them closely! Tell us what you think!
Patrick: Hi, this is Patrick Henry from QuestFusion, with the Real Deal…What Matters. I’m here today with Dr. Behnam Analui. He is the cofounder and CEO of Abtum, which is a very cool company up in Orange County.
I met Behnam because he’s in the EvoNexus incubator, which is a pro bono incubator here in southern California, with locations in downtown San Diego, UTC La Jolla area, as well as in Irvine.
Welcome, Behnam. I’m glad you were willing to do this.
Behnam: Thank you. Thank you for having me.
Patrick: You bet. Why don’t you tell me a little bit about your background? What you were doing before Abtum?
Behnam: Let me say hello to your audience. I moved to the U.S. in 2000. Originally, I’m from Iran. I came and went directly to graduate school, to Caltech in Pasadena.
After I got my Ph.D. I moved to a startup company up here in north county, Luxtera. Very cool technology in silicon photonics.
We were the only ones who actually had the technology and brought in the first product into market.
I was there until 2009. Around then was when, with one of my partners, who was a professor at USC, we said, “Let’s start a company together.” That’s when I left Luxtera and went to USC and started working on Abtum.
Patrick: That was a year or two ago?
Behnam: That was in 2009. It’s been a few years. I’m going to tell you more about the detail of what the history is behind it. We spent a lot of time at USC working on the core technology that is now Abtum.
Patrick: Okay, great. How did you come up with the idea for the Abtum product? What motivated you to do that?
Behnam: The history is actually very interesting about that because we didn’t know what product we wanted to do. We said, “We want to do a business and we want to do it based on the technology that matters.”
The first few months, we were really looking at the hardest problems in the business, especially in the area where we are more familiar. We started to talk to people. We looked at different markets.
Patrick: You guys are both electrical engineers?
Behnam: That’s correct.
Patrick: You were looking at the most challenging electrical engineering problems in the industry?
Behnam: Absolutely. Just to give you a bit of an idea, we looked at medical devices. We were looking at pulmonary issues, for instance, measuring heart rate and breath rate, being able to detect humans using wireless technology.
We were looking at timing. Timing is an important problem also. Creating very accurate timing solutions. We were looking at radio. That’s where we picked the problem that is now our product at Abtum.
Patrick: When you talk about radio, in the engineering world we talk about RF, radio frequency, problems and challenges. I’ve been in involved in that, the analog mixed signal world. What is the product that Abtum is doing and what problem does it solve?
Behnam: We do radio frequency over RF filters. Filters are one of the most fundamental elements in almost any electronic system.
In the radios and wireless communication, when devices want to talk to each other, they use signals. You can imagine in the air there are so many different signals. Filter is the component that gives your radio the right signal and basically clears out all the other noise that is in the air.
Patrick: For our non-technical audience, can you give an analogy? It allows you to focus on just this part and ignore everything else? What exactly does the filter do?
Behnam: The best example I like to use is the FM radio. Everyone has an FM radio in their car.
Let’s say you’re a fan of KPBS. It’s the NPR channel in San Diego, which I really like and used to listen to. You have to tune your radio to 89.5.
When you’re tuning, what you’re doing is your setting the filter at the frequency of your KPBS. Every other channel is being filtered out.
Patrick: I typically listen to my iPod these days. When I did used to listen to radio, if you’re getting static or you can’t dial into the channel very well, is that result of a poor filter? What is that?
Behnam: For the most part. Obviously, radio is a complex element. Filter is the very first component that takes out all the noise and the static that is unwanted and undesired. It lets you actually tune in to the right channel.
Patrick: Cool. You’re doing basically high-performance filters for every market? What market are you focused on?
Behnam: That’s a great question. As I said, filters are applicable to a broad range of markets. Our technology, at the core, can be applied to a broad range of applications, any electronic system that needs to be connected.
However, as a company, we have chosen to focus on mobile devices and cellular bands, which mobile devices use, because of its sheer big size and having the most pressing need, in terms on needing high performance filters.
Patrick: Obviously, that’s an enormous market. We have a big company in town that’s a big supplier in the market, Qualcomm. They’re having their challenges these days, but obviously it’s still a huge market.
What’s your competitive advantage, your differentiation, the pain point you’re solving? Obviously, these mobile devices have filters in them today, right?
Patrick: What do you do that’s different and special?
Behnam: The biggest need that the mobile industry has today in terms in radios in the front end, as far as filters are concerned, is that a number of those filters are actually exploding.
That comes from the fact that most of the smart phones today actually need to support many frequency bands, accessing different channels.
Global connectivity is what all consumers want. More bandwidth is what all consumers want. All of this results in needing a lot of filters inside devices.
What our solution does is, as opposed to putting us on a trajectory for needing to have up to 50 filters in the next few years, it can actually replace all those with a single tunable filter, which is very similar to the FM radio that I was talking about.
We can have a single component and choose the right frequency and the channel that you want with our single component.
Patrick: In other words, today’s mobile devices, including cell phones, have multiple filters to deal with the multiple bands. I guess there are various different bands supporting 2G, 3G and 4G.
There are also different bands supporting different operators and different frequency bands around the world. We have the FCC in the U.S., but Europe has their own FCC, and China has their own FCC.
You basically have all these different filters. What you’re talking about is increasing the performance of the existing type of solution, and then ultimately replacing it with something that’s tunable?
Behnam: Absolutely. You said it best. I think ultimately what is going to be the value for the consumer from this perspective is, for instance, they’re looking at unlocked phones.
What does an unlocked phone mean? You want to be able to switch your phone from Verizon to AT&T. For that to happen, you need to have the bands that AT&T supports, as well as Verizon supports.
Patrick: Okay. That’s really interesting. Obviously, filter companies have been around forever, longer than probably you and I have been.
Behnam: That’s true.
Patrick: All the way back to the RCA days. How is it that you’re coming up with this unique idea now? Is there some breakthrough science that’s occurred in the last five or ten years, or you’re just thinking about things in a different way? What’s the real innovation here, because obviously, this is a big deal?
Behnam: Absolutely, and it’s most of the things that you said. Filters, up to today, have been designed based on textbook approaches, which have been around for 50 years.
What we do, especially with the time we spent at USC at university, we actually broke a fundamental performance tradeoff in filters.
That tradeoff doesn’t exist anymore if our architecture is used. It enables a 10 to 30 times performance enhancement in critical performance metrics of filters.
That’s one of the things that we’re adding. We’re adding a magic dust that enables filters to improve or have better performance.
The second factor behind it is we can be looked at as an agnostic technology or a complementary technology to existing filters. You said it right: filter manufacturers have been around for the past 50 years.
There has been so much money invested in that sector in the industry. We’re going to leverage that. We’re not going to revolutionize how filters have been manufactured.
We will leverage the same manufacturing approaches, standard manufacturing approaches, but we will add our architectural innovation to add significant performance enhancement.
Patrick: Okay. That makes sense. This was technology that was developed with you and your cofounder at USC. Is it patented or trade secrets? How do you protect the intellectual property?
Behnam: We’re doing that at multiple layers as well. Obviously, it’s a core technology.
Originally we had five inventions, patents, that were filed at USC. We have continued the growth of our patent portfolio. We have a total of 12 patents pending right now.
We’re in a so-called white space, where our technology is very valuable. It’s a space where we can grow our portfolio very easily.
The second aspect of this is, as I said, we’re working very closely with standard manufacturers and partnering up, maybe in some cases, working on some exclusive deals with some of these manufacturers that will enable us to be the sole provider of this technology.
There are multiple layers that will enable us to protect the technology and the product.
Patrick: How hard is it as guys who work for USC, teaching, researching, taking the technology out of academia into the commercial world? How does that work?
There have definitely been guys from Stanford, Cal Berkley, USC and Caltech who have done this.
For our viewers out there, how do you go about doing that? Do you approach the president of the university or the dean? How do you share the intellectual property?
Behnam: That’s an excellent question as well. Obviously, we have gone through that process. Universities are realizing the value of the research that is being done. Even though they’re non-profit, they’re actually realizing how to profit from the technology.
Now there are two tiers. One tier is licensing the technology out to existing, let’s say, big corporations that will take that. It’s easy for them to scale up and develop products out of the technology that was developed.
This is a standard licensing model. More interestingly and more recently, universities are realizing the value of enabling startups based on the technology done by the founders who came out of the same university.
For us, the way it’s happening is most universities have a standard arm for technology transfer. You would go through the similar path of licensing the technology. This is what we did.
You negotiate a license as a company. You negotiated a license agreement with the university. Some universities are more generous than others. Some universities have the policy of taking some equity in the company and they just let the inventors run the company. Some are interested in also getting some royalty.
The second aspect of this, which is important, especially as a hardware component company, is taking the research out and making it into a product is a whole new world.
Even though we have a hardware proof-of-concept product and we’ve shown that our concept works, making it a product is going to be what the company is going to focus on. It’s going to be a tough challenge.
Patrick: I’ve been involved with a lot of filter companies over the years. I’m not the hardcore scientist. I’ve been on the business side of engineering for so many years, but I have talked to some of the hardcore scientists who are investors in your company.
The fact that you actually do have measured data is a huge deal. It’s a big part of the proof of concept. Can you talk a little bit about that and why that’s important?
Behnam: Absolutely. I think I didn’t allude to this. In the few years that we spent time at USC, that was our focus.
We could convince, especially a few research departments at the Department of Defense, that this is an important problem and it’s a hard problem that we’re trying to solve.
They supported us. They funded the research and development. Our goal was to show the concept, which was an architectural concept that we came up with, and demonstrate it to them and then later to potential commercial customers in hardware.
This came as a result of talking with multiple customers and realizing that they just don’t believe in an idea. They want to see that this concept is going to work.
To be honest with you, it was not easy. They were right. For us, we have a proof of concept, which is a PCB with multiple components on it.
We had to go through multiple rounds and relearn a lot during that process. What are practical difficulties that we will have to deal with?
You’re absolutely right. We are seeing when we talk to people right now, to potential investors or potential partners and customers, that the hardware prototype proof of concept is actually very valuable.
Patrick: For those of you who don’t know, a PCB is a printed circuit board. That’s the board you actually put chips on to.
You’ve been able to show in this hardware validation method that you do get this 10X to 30X performance improvement over conventional means?
Behnam: Exactly. Absolutely. After we made the claim that we have this field, commercial customers, big corporations, actually came to see it in our lab to make sure what we have is what we’re saying we have.
That’s exactly what we showed. We showed an unprecedented performance with simple filters with our architecture around it. We showed improvements up to 30 times better performance than a traditional filter.
Patrick: That’s awesome. Basically, it’s hard science. It’s hard engineering. It’s proof of concept. It’s big market opportunity with broad commercial applications.
Let’s just talk about the initial market opportunity, the mobile device market. How big is that in terms of the market for filters in mobile devices?
Behnam: Our filter is the fastest growing piece of RF market, not necessarily in mobile only but driven by mobile.
It’s estimated to double in size every two to three years. Right now we’re talking about, for the whole market, for mobile devices only, a $3 billion to $4 billion market size, and it’s just increasing.
We’re targeting the high end of that market. In the segment is the fastest growing part, because most smartphones are going to need high-end filters as we move forward. We’re talking about a multi-billion-dollar market size, which is really exciting for us.
Patrick: I think when we’ve talked previously, you talked about an infrastructure market, which I guess is cell phone towers, in addition to the mobile market.
Can you talk a little bit about the applicability of the technology to the infrastructure market in addition to the mobile market?
Behnam: Absolutely. Especially as we go to more advanced 4G and 5G, we’re starting to talk about it. The infrastructure is going to be closer to a heterogeneous model, where you have a lot of mobile devices. Everyone is going to have one.
Then you’re going to have these mobile devices needing to talk to a tower, traditionally a tower right now, maybe to a smaller cell, which is in the mall area or in the coffee shop.
All of those devices, similar to mobile devices, would need to have filters in them. They need to communicate at the same frequency band as with the same mobile devices.
We’re seeing, as we talk to potential customers, that they’re dealing with the same type of challenges, too. Our technology definitely has applicability in that market. There are a few customers that we’re in conversations with, with specific products.
With minor modifications in our product definitions, we can address that market as well and create more revenue paths for ourselves.
Patrick: The story has legs to it. There are multiple opportunities beyond just the initial mobile market. I guess most of the volume today is 4G in the U.S. Is there still any 3G out there?
Behnam: There’s actually still 2G as well. It’s been around for 30-something years. It’s rolling out.
3G definitely is one of the growth paths as well. There are many bands in 3G and 4G that are shared. If you make a product, it can be applied to both 3G as well as 4G.
In some parts of the world, they are developing 3G and 4G infrastructures in mobile devices in parallel. 3G still has its advantages. It’s less expensive. Some emerging markets would prefer that. However, 4G is definitely the dominant market.
Patrick: LTE dominates the 4G market?
Behnam: That’s correct. Eventually, LTE became equivalent to 4G. We had WiMAX, originally. In some parts of the world it was deployed, but LTE seems to be the winning solution.
Patrick: What stage are you at in terms of your product development?
Behnam: We’re an early-stage company. As I said, we have shown proof of concept of a hardware prototype.
We have a plan to develop our first MVP, minimal viable product, which shows the advantage of the technology in terms of a real product that meets the specifications.
Our plan is to develop our first product, alpha samples and beta samples, over the next few quarters.
Patrick: That’s not too far out then. You’re within a one-year window. You are early stage, but because of all the work you did at USC, you’re pretty far along in terms of the proof of concept. Now it’s just commercializing it and getting it into a commercialize-able form.
Behnam: Exactly. We believe that the couple years we spent at USC actually significantly reduced and de-risked both the technology and the development of it. We are ready to get into market as soon as we have the model.
Patrick: What does the competitive landscape look like? What are the incumbent, existing filter players? What do they offer? Are there other people doing what you guys are doing?
Behnam: Absolutely. As I said, it’s a really hot market. It’s growing really fast. Consumer demands are never ending.
The incumbents, the big filter manufacturers, are working on improving their own devices as well. There’s a lot of investment in those, for instance, increasing capacity, in adding more manufacturing capability, along the same traditional lines.
It’s not that there’s new innovation going on, but there’s definitely investment.
Patrick: There’s incremental stuff going on with the incumbents, but you don’t see anything that’s breakthrough happening with the existing players?
Behnam: Not at all. Even on the startups, we do see that there are a few startups coming out, again, working along traditional scales.
For instance, can we have a better material that can incrementally improve performance? Can we have a better circuit that can incrementally improve performance?
We do see investments in those areas, which in a sense, actually resonates with our message. We are complementary to all of that. We have an architectural advantage that no one else has and we add significant improvement in performance.
We like the fact that the investor society, as well as the industry itself, is realizing the need for more investment in the filter area.
Patrick: You’re focused on the performance element of it. Is there a cost benefit to using your technology?
These mobile devices are getting so expensive. It really prevents them from penetrating a bigger portion of the overall market and breaking in to different price points. Does your technology enable that?
Behnam: Absolutely. At the core, we enable significant improvement in performance, by improving performance, by breaking a tradeoff.
However, when we have that performance at hand, depending on the segment of the market we want to address and add value to, we can actually trade that off.
For the mobile market specifically, our early products are going to enable an existing low-end technology, which has a well-known small cost structure or low cost structure, to compete with high-end filters, which are known to be really expensive.
Suddenly, a lot of potential customers of ours will be enabled to sell low-cost filters at high prices.
Patrick: You’re basically drawing a whole new price performance curve?
Patrick: It’s not just that you’re providing additional performance. You can enable different levels of performance at different cost points than previous solutions could.
Patrick: That’s awesome. Those were my main questions other than when are you going to be generating revenue? Do you see a clear path to profitability?
Behnam: With the current plan that we have, our product development, as you pointed out, is going to take a few quarters. We’re looking at being able to capture market share with our very first products in 2018.
Depending on the segments that we’re addressing, we can have extremely high margins. As a company, we’re focusing on our core expertise, which is that core technology, developing our engineering team really well and having that first product out.
Our current financial projections actually show really high margins with the business plan that we have. As a result, we’ll be really printing money by 2018 or 2019.
Patrick: This is a hardware company. This is hard science. This is difficult engineering, and these are long development cycles, long sales cycles, similar to my old company Entropic.
You have a multi-year process between developing the product, getting the design into OEMs, original equipment manufactures, and then ultimately getting it deployed with the big carriers, the big operators, like a Verizon or an AT&T.
How do you get the interests of investors? How do you keep them interested and keep them patient through a multi-year process before you get to 2018 or 2019, where you start getting bigger revenue and ultimately profitability?
Behnam: You’re right. It’s a hardware company. With it comes longer development times.
For us, the big prize is that it’s clear that it’s a huge market. If it can gain enough momentum and capture some of that market, it’s going to be a big prize.
However, in the meantime, as a hardware company we will be having multiple milestones that will show progress toward getting to that big prize.
This is how we’ve operated so far. We have worked on our proof of concept prototype just to show the concept works. Our next step is developing our MVP. We’re going to show traction from customers as we have our office samples.
Multiple milestones on the way are going to keep investors calm and happy, to show that we actually getting close to that huge prize.
Patrick: Awesome. Along those lines, do you have a pretty good idea about how much money you need to raise overall? I’m not saying initially, but before you get to profitability.
Is this $5 million, $10 million, $50 million or $100 million? Just ballpark it for me. What are investors looking at before you get to ultimately generating the big revenue and the profitability?
Behnam: One of the things that maybe I should have made clear from day one is that we’re not an SOC or a complex semiconductor company, similar to what Entropic was.
Patrick: Yes, Entropic had $80 million raised before we got our first big deployment.
Behnam: We’re nowhere close to that. We are still developing hardware samples and so forth. We’re looking in the ballpark of $10 million, maybe, to get to a place where we have proven profitability.
Obviously we’re going to raise that in multiple rounds, again to show that we do have the traction, we do have the product developed, and there’s interest from the market. Then we will use the second round for the growth.
Patrick: What’s your exit strategy ultimately? How do investors get their money back, and hopefully a huge return?
Behnam: We think that there will be huge returns, because there’s a pressing need and a huge prize.
As a business, we’re focusing in on revenue generation, profit generation and creating more and more revenue paths. Obviously, we are not naïve. We understand that, especially in the industry we’re in, it’s a more traditional, consolidated industry.
Big players are more interested to have the technology companies for themselves, block others from having their hands on and actually bringing the margins in house.
As a company, we are focused on our core expertise. We are building our team. We are building our IP portfolio, and we want to get to a point that we will show traction, real commercial traction, of this technology.
It’s foreseeable that, with many players out there with interest in this technology and in this market, we get acquired at some point. If it’s the right price, we are not against that. I’m sure our shareholders and our investors are going to be happy about it.
Patrick: That makes a lot of sense. Those are all the questions I have. Did I leave anything out that you wanted to talk about in regards to yourself or Abtum?
Behnam: No, I think we pretty much covered everything. I appreciate you having me. I hope that your audience is going to enjoy this conversation.
Patrick: Thank you, Behnam. I really appreciate it. This is Patrick Henry from QuestFusion with the Real Deal…What Matters.