Spinning Out, Creating Impact

Though known as a technology research firm, Galois values creating more than just great research. Throughout our history, our scientists and engineers have developed new technologies, built new tools, and made discoveries that provoke a “tail” of downstream opportunity. Over and over again, rather than becoming a software company focused on those downstream opportunities, we created a new company to specifically pursue each opportunity.

Over just the last 10 years, we created Tangramflex, Tozny, ThatDot, Free & Fair, MuseDev, Niobium, and FormalTech. Right now, we’re actively working on spinning out our next two: one which will focus on UAV cybersecurity; and ExistX, a technology services company bridging the gap between groundbreaking research and real-world applications in the systems engineering space. 

Why We Do It

So why do we do it? Why not just expand Galois, release a product line, or start a services-focused branch?

Our aim in starting these new businesses is to make an impact without losing our distinct research and development (R&D) work and culture that make Galois so successful. We believe that R&D work requires a different level of flexibility and creativity than a single product company. Similarly, product-oriented companies thrive from a speed and commitment to specific customer needs, many of which require deep implementation experience that R&D teams are often ill-suited to deliver.  

The mix of these two perspectives creates a useful friction from which we learn and gain R&D insight at Galois, as well as outstanding technical differentiation at each spin out company. The ability to demonstrate the implications from deep computer science research, rather than just publishing research, can genuinely change the world.  For many of us, that possibility pulled us from academic careers into Galois.  

Practically speaking, as Galois is employee owned, when we spin companies out and they are successful, we all share in the wealth related to that success. This reinforcing loop between the intrinsic satisfaction of doing great work together, and the financial satisfaction of success allows us to sustain our efforts for the long run.

How We Do It

So how does a research company successfully spin out new companies? 

Strategically, we have two simple rules: 

  1. Early “yeses”: We don’t try to guess the future of markets and opportunities. Instead, we pursue yeses from customers and partners as early as possible, long before a capability is fully developed. Before investing heavily in a technology, we look to co-create with partners to build momentum and confirmation that we’re on the right track. We do this to stay connected with actual market needs and to attract customer resources to fund our product development beyond just research.
  1. Affordable Loss: we spend only what we can afford to lose. This dollar amount changes over time, moving up and down with Galois’s fortunes. But with any spinout, resources we consider investing are always a secondary priority to those required to make and keep Galois itself persistently successful. We do this to stay flexible and ready to meet the needs of the market, co-creating opportunities with people we trust and creatively using our current means rather than betting big on predictions of the future.

As for the practical steps: 

  1. We plan a yearly budget for starting new companies that we can afford based on our overall financial plan.
  2. We creatively minimize that actual spend to live up to our Early Yes principle (don’t spend just because you can; spend because it’s warranted with minimal prediction).
  3. When there’s a clear market demand and it’s time to hire more people, we establish a new company.
  4. Once the new company is formed, it operates independently, with its own management team and board. However, Galois remains a primary owner and partner, offering strategic rather than operational input and leadership.

The Impact so far

So far so good, even though a lot of work remains. Without going into the specifics of any one company, we have started eight companies, with number nine in process as we speak, and number eight having just incorporated last month. Two of them have been acquired, two didn’t succeed, and the remaining five employ 135 people and growing. Usually, we avoid raising outside capital, but sometimes it’s vital. Two of the companies have raised $16M of venture investment between them, and Galois and our customers have invested approximately $30M of non-dilutive capital to grow these opportunities 

It is very satisfying to see the impact of these companies’ technology. Tozny cryptographic products are deployed in products used around the world to meet privacy and data sharing needs. The TangramPro product is widely used to facilitate embedded systems engineering for planes and vehicles, from modeling through code generation into verification. ThatDot’s event-driven graph technology is enabling machine learning and autonomous systems to work with data at a scale and speed that was never possible until now.  

Other technology is at an early stage and still coming to fruition, most notably Niobium is building a purpose built high performance microchip to process data without ever decrypting it. And our latest company is focused on identifying system behaviors expressive of zero day attacks, in real time. DARPA is an incredible partner in these efforts; four of our companies can be directly traced back to technology facilitated by their aspiration for achieving strategic surprise.  

Pushing Technology Forward

The challenge of tech transition is sometimes best tackled by spinout companies, actively working to cross the “valley of death,” but not always. Many technologies are nascent enough that deep thought and more work are required, and Galois’s impact is more than the companies we create.

We intentionally contribute to tech transition efforts as a core part of our purpose at Galois.  Our team teaches, gives talks, publishes groundbreaking papers, and gets new people involved in breakthroughs.  

We spearhead follow-on R&D projects with our partners, taking insights from one discovery and applying them to the next key hypothesis, addressing challenges holding back breakthroughs in speed or scale that enable useful tech transition. 

We run operational beta projects to tackle pressing problems without clear solutions, working alongside applied government agencies willing to be early adopters. 

And when those paths reach breakthrough moments, we move to our spinout efforts, pursuing early yeses, never risking more than we can lose, and co-creating opportunities with partners.  While we’re not certain what the next spin-out company will look like, we do know that they make a difference, and that we love being in the business of starting them.