A New York outfit that uses bomb-sniffing dogs to keep workplaces safe is the first and only small business certified by the Department of Homeland Security.What’s its secret?
(FORTUNE Small Business) – Ever wonder whether the security dogs you see sniffing around lobbies know what they’re doing? Well, it depends. Since 9/11 the market has been flooded with bomb dogs. Roughly 1,000 businesses around the country–from large, diversified security firms to one-pooch shops–offer canine explosive-detection services. The businesses vary broadly in quality, and there are plenty of so-called 9/12 opportunists: The owner of a Hagerstown, Md., bomb dog service was convicted and sentenced to 6c½ years in prison for defrauding the government. He had supplied the Federal Reserve and other agencies with utterly untrained dogs.
However, the bomb dog firms that know what they’re doing get paid handsomely. Some dog handlers earn as much as $200,000 a year. The gold standard in the industry–and the fastest-growing company in the field–is a New York City outfit called Michael Stapleton Associates (MSA). Revenues have nearly doubled each of the past two years, and executives at MSA, who say the firm is “highly profitable,” expect them to reach $20 million in 2005. “Their explosive-dog program is right at the top, in my opinion. When it comes to the right dogs and the right training, they’ve always taken the high road,” says Oscar Hall, a founder of the North American Police Work Dog Association, headquartered in Perry, Ohio.
It is curious that MSA is doing so well, especially when you consider that it has never discovered a single bomb. “We prefer to think of it as a 100% success rate,” says George Harvey, MSA’s president. “Obviously no bomb has ever slipped through undetected.” Harvey stresses the value of deterrence. Perhaps the dogs by their mere presence send a message to terrorists that a building is well protected.
A more concrete benefit that MSA touts is reducing unnecessary evacuations. Dogs can check out suspicious packages, avoiding the need to call in a bomb squad. Standard police procedure is to clear people from the two floors above and below a suspicious package. Since 9/11 there have been plenty of false alarms. One of MSA’s clients has calculated that every 15 minutes of evacuation time costs the company $75,000 in lost productivity.
MSA’s client list includes the IRS, the UN, American Express, E*Trade, Merrill Lynch, and landmarks such as the Statue of Liberty. Recently MSA became one of four companies selected as an approved vendor by the Department of Homeland Security. It’s the only explosive-detection business to receive the honor and certainly the only small business. The other three recipients are Lockheed Martin, Northrop Grumman, and Teledyne.
How can such a small company run with the giants? Much of the answer lies with founder Michael Stapleton. This 59-year-old, formidably large man once worked for the New York City Police Department’s elite emergency-services unit. If someone gets in trouble, call a cop. When a cop gets in trouble, call emergency services. In those days Stapleton was exposed to police work’s outer limits: hostage situations, bomb threats, suicide jumpers on buildings and bridges. Once Stapleton spent two hours trying to talk down a distraught man poised at the edge of a hospital roof. When the man fell silent, Stapleton knew it spelled trouble. He gave the signal. His two partners grabbed Stapleton’s legs to act as anchors. Then he dove forward and grabbed the man right before he leaped into space. “We were the go-to guys,” he recalls. “Nothing was unusual.”
In 1987, Stapleton retired with a meager pension and some vague notions about how he might turn his emergency-services skills into a viable business. While he worked nights as a nurse in a psychiatric hospital, during the day he tried to start numerous businesses, including providing security at rock concerts and teaching seminars on how to talk down emotionally disturbed people. In 1993, however, a massive geopolitical event provided Stapleton with a huge opportunity. That was the year of the first World Trade Center bombing. He decided it made sense to focus exclusively on explosive-detection services. Then came Sept. 11, and everything changed, especially the awareness of America’s vulnerability, along with perceptions about how best to handle the threat.
Today MSA has 73 dogs, almost all Labrador retrievers, with a mix of black, yellow, and chocolate. Labs tend to have mellow dispositions, perfect for working closely with the public. German shepherds and Belgian Malinois, two more-aggressive breeds, are often used by the Army as bomb sniffers. MSA gets its dogs from just four master trainers, all with long track records. For example, Charles Kirchner, owner of Canine Consultants in Inman, S.C., has been in the business 43 years and once provided dogs to Jordan’s King Hussein. Before the dogs reach MSA, they are trained to recognize a variety of scents (no one will provide a complete list for fear of tipping off terrorists). Among the smells the dogs learn to recognize are gunpowder, black powder, nitrates, TNT, and plastic explosives. Sometimes these fearless canines are trained on real explosives too.
Dogs have roughly 200 million receptor cells in their nasal cavities, about 40 times as many as humans. Training typically consists of imbuing small objects with various scents, then hiding them. As the scent grows familiar, the ante is upped, and the object is better hidden farther away. When the dogs find the object, they’re trained to sit very still and alert. (Narcotics dogs are trained to scratch at a suspicious package, but you don’t want that behavior with explosives.) To reinforce learning, the dogs receive regular rewards, usually something as simple as praise or a pat on the head.
Fully trained dogs cost MSA about $10,000 apiece. According to Kirchner, only about a tenth of the dogs he considers are good enough to meet Stapleton’s exacting standards. “I look for enthusiastic searchers who want to please the boss,” says Kirchner. “If there’s a single, IQ-like test, that would be it.”
Equally important are MSA’s other employees, the ones holding the leash. Thanks to his years as an officer, Stapleton has great contacts in the NYPD and other police departments. Most of MSA’s 130 employees are either retired officers or current ones who are moonlighting. MSA’s Lower Manhattan headquarters may appear corporate–blond wood and Aeron-style chairs–but the vibe is pure precinct house. There’s plenty of joking and ribbing, and often someone is cooking up a big batch of peppers and sausages.
Industry experts say that what gives MSA an edge on its competitors is its careful pairing of handlers and dogs. The company sticks to a one-handler, one-dog policy, just as the NYPD does. Much deliberation goes into the matchmaking, almost like a dating service: This guy’s a bit of a smartass. Do we have a dog he’s likely to hit it off with? By contrast, many of MSA’s competitors rotate the dogs from employee to employee. According to John Harvey, MSA’s director of canine services, dogs that always work with the same person are calmer and more efficient. Careful matching of handlers and dogs has one other big advantage: It improves employee retention. The human/dog duos are together 24/7. At night MSA’s handlers take their dogs home, and they become family pets. Given the affectionate bonds that form, even the crustiest ex-cop can find it hard to just walk away from the job. Kris Brandt, 51, is a 21-year NYPD veteran who joined MSA in 2001 as a handler. He is paired with Hannah, a black Lab, and together their beat is the World Financial Center, an office and retail complex near ground zero. “I know it sounds goofy, but this dog and I truly belong together,” says Brandt. “We just understand each other.”
Even though MSA has done well with its bomb dog business and expects it to keep growing, Stapleton has decided to diversify. He has launched a remote X-ray scanning service called SmartTech. It is designed to assist the employees who operate X-ray machines in corporate lobbies, mailrooms, and loading docks. They are the first line of defense against a bombing. They also tend to be undertrained, underpaid, and bored stiff.
SmartTech makes it possible to send a suspicious-looking X-ray image over the Internet to MSA’s offices in New York City. The company has 20 employees dedicated to manning computer monitors, scrutinizing the images. Among them they have more than 100 years of bomb-tech experience. The SmartTech team can give an X-ray an expert read in real time. When necessary, a team member can get on the phone with the X-ray operator to offer further instruction: “Turn the package upside down” or “Zoom in on that round object.”
MSA has signed up 165 SmartTech clients in a dozen states. So far, the company claims, its service has prevented roughly 600 unnecessary evacuations. Recently an X-ray operator in a corporate lobby submitted a frightening image for analysis. A woman’s purse appeared to contain a pair of hand grenades. It took one of the SmartTech guys about a minute to figure out they were simply a couple of oddly shaped perfume bottles.
Starting this year, SmartTech will be offered as a standard feature on X-ray machines manufactured by L-3 Communications. That is a major coup. Though it declines to offer specifics, New York City-based L-3 has a substantial share of the U.S. market for security X-ray machines. MSA sees other opportunities as well. There’s been talk that the federal government may open a portion of airport security screening to private-sector bidding. The company’s Homeland Security seal might put it in a prime position to land some of that business. Regardless, MSA projects that through SmartTech alone–even if it doesn’t add another bomb dog–it can grow over the next five years to $50 million in revenues.
SmartTech has its own space in MSA offices, set apart from the other operations. It’s kind of a high-tech nerve center with modems and wires and servers. A sign on the door reads NO DOGS ALLOWED.