Larry Nelson

Entrepreneurial Dominion

Going with the Flow

Everyone in metro Washington hates the traffic congestion – except Larry Nelson. The CEO of TrafficLand, Inc., is building a business by delivering streaming video images of driving conditions on the city’s highways.

FAIRFAX--Larry Nelson is the first to admit he didn’t have much of a business plan when he quit a high-level job in 1999 to launch his own video-surveillance business. Having worked his way up through the ranks in the industry for 23 years, he was tired of just collecting a paycheck. He wanted to be his own boss. So, he approached a long-time business associate in the United Kingdom.

“I told him I was ready to leave. I told him I wanted to do something with the Internet, something with video,” recalls the Fairfax entrepreneur. He’d seen videos of traffic conditions on the Internet, but they moved pitifully slowly, about one frame per minute. He knew he could do better. He wasn’t sure who would pay for the streaming images, but he was confident someone would. He’d figure that out later.

Amazingly enough, Nelson got some start-up funding. Remember, this was the end of the Internet bubble – all it took was a good idea and a PowerPoint presentation with the word “Internet” on the title slide. So, leaving the security of his job as the CEO of the North American division of a leading CCTV hardware equipment manufacturer, he “dove into the dark water.”

Many bubble-preneurs who leaped into the same murky depths busted themselves on the rocks. But Nelson survived. His technology worked: He found a way to stream video at 15 to 20 frames per second over the Internet. And he identified customers who would pay for his technology solution: first responders in the Washington, D.C., area like police, fire and rescue. Now he’s got proven products, break-even cash flow, diversified revenue streams and $600,000 of venture funding that will help finance a regional roll out.

TrafficLand’s most visible product can be readily viewed on its website, which streams live traffic videos from more than 240 locations in Northern Virginia, suburban Maryland and Washington, D.C. Click on a dot on the map and you can view the traffic flow at the rate of one frame per two seconds, a tad slow but fast enough to readily evaluate traffic conditions. Nelson makes that service available for free, and he’s routinely getting 5,000 to 25,000 visitors daily to his website.

In exchange for providing the public service, TrafficLand gets access to the feed from transportation department video cameras, which he can repackage and re-sell. He delivers nearly full-motion video to “cops, firemen, and emergency services – the guys who save peoples’ lives.” More recently, TrafficLand has started selling traffic data to commuters.

For $6 per month, motorists can subscribe to a “personalized traffic reporter” with upgraded video quality – one frame per second – plus Web tools that allow them to organize thumbnail images of the camera shots along any route they select. “A user can look at up to 20 cameras at one time,” says Nelson. “If he sees congestion at any of the locations, he can click on it and get a blow-up image.” Nelson won’t disclose the number of paid subscribers, but he indicates that the numbers are “significant” and growing.

Meanwhile, new business opportunities pop up as Nelson builds on his relationship with the Virginia Department of Transportation (VDOT) and its counterparts in Maryland and D.C. “We install video walls for smart traffic centers,” he says. “We do design work. We are involved in the design of a video network for the I-81 corridor. We put in video matrix systems to switch cameras within smart traffic centers. The [streaming images are] just the tip of the iceberg.”

Nelson suffers from no lack of ideas for new products and services. “We’re in Fairfax,” he explains in recounting a recent innovation. “Half the time I go out, I forget to check the website. I’m driving down [Route] 123 to [Interstate] 66 and I go, ‘Nuts.’ For a while he called his assistant to check the traffic conditions for him. Then it dawned on him that other people would want the ability to check conditions while on the go. Now TrafficLand has a wireless technology product to deliver streaming images to PDAs.

Having demonstrated that he can stream near full-motion video over the Internet, Nelson also has discovered a new market in security applications. A number of federal agencies want to monitor their government buildings. TrafficLand’s Internet-based technology is far more cost effective than feeding video over private circuits. “We have no idea where this is going or what it’s going to do,” says Nelson with typical hyperbole. “It goes where it goes. But it’s been a hell of a lot of fun.”

Nelson may have traveled a winding road at times, but there’s no question that he’s found a hot market. According to the Texas Transportation Institute’s Urban Mobility Study, metropolitan Washington, D.C., has the second worst traffic congestion in the country, second only to Los Angeles. The cost of congestion in lost time, extra gas consumption and wear-and-tear on cars was measured at $667 per person in 2001. That translates into more than $1,000 per commuter, and it’s probably low: The cost of congestion has been escalating at a rate of about 8 percent per year.

What’s worse for commuters is the uncertainty generated by congestion. People can adapt to routine commutes that take a couple of minutes longer each year. What stresses them most is the unpredictable gridlock caused by traffic accidents, road projects or other woes. To buffer the uncertainty, especially if they have appointments to make, commuters typically leave early. By checking their PC screens, commuters can quickly decide how much extra time to allow.

Is that insurance worth $72 per year? If only a tiny percentage of the market thinks so, TrafficLand stands to do very nicely. “There are 1.6 million commuters in the Washington, D.C., area,” Nelson says. “Seventy percent have access to the Internet at home, an even higher percentage at work. Start doing the math. There’s a potential market of one million people. Tap three percent of the market, that’s 30,000 subscribers…” Or, $180,000 per month.

If TrafficLand were the only game in town, Nelson would be sitting fat and happy. But other companies are cutting deals with VDOT. Leesburg-based Trichord, Inc., for one, deploys its own acoustic sensors along the Interstate and collects data which it converts to average travel speeds, plots on maps and delivers to customers through a variety of Web and wireless tools.

The advantage of the Trichord service is that it estimates travel times between two points. But Nelson insists there’s no substitute for video footage: “I can find out all I really need to know by looking at seven cameras. If cars are backed up past the water tower, I’ve got a problem. If there’s gridlock, [bleep] it, I’ll hang around the office and get some work done.” He does concede, though, that the combination of video and other traffic-sensor technologies would be really powerful.

Nelson is returning an unspecified percentage of his subscriber revenues to the state transportation agencies in the hope of spurring them to set up more video cameras along congested corridors off the Interstates. Expansion of coverage to secondary roads will make the service even more valuable to commuters, stimulating even more subscriptions. “Give me secondary roads!” exclaims Nelson. “I want cameras on Route 50 and Route 28!”

In Northern Virginia, the cities of Fairfax and Alexandria are installing video cameras already. TrafficLand has begun preliminary design work on a Hampton Roads project expected to come online by early summer. Additionally, Richmond is implementing a system for its cameras, which could mean more work down the road.

An initial round of venture funding, invested by the Washington-based Zitelman Group, will help TrafficLand complete the capital region implementation and position it to go national. “TrafficLand is one of those companies in just the right space at just the right time,” says President Rick Zitelman. “This is a company ready to go to the next level and the additional capital will give them the financial base and ability to get there.”

As always, Nelson plans to go with the flow: “Just go out there, do the best job you can, treat your customers like gold, and see what happens."

-- April 21, 2004

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