MOUNTAIN VIEW, Calif., 27 June 1998 — Entrepreneurial Award Finalist – Emerging Category
Special to the Business Journal
When someone comes looking for the services of Locus Technologies, it is because they have a problem that company co-founder and CEO Neno Duplancic likens to cancer.
But it is not an anomaly of the human body that Locus seeks to cure. Rather, its target anomalies in the air, water, or soil that leads people to the Mountain View-based company.
“If you get to cancer early enough, there is a chance you will survive and get out of it. But if you let it go too long, your chances of survival are minimal,” Mr. Duplancic said. “It’s the same with environmental contamination. If you get to the source early and move aggressively to contain, chances are it would be a major headache and you won’t have to spend a lot of money to remediate. But if you wait until next quarter and then the next quarter, it’s going to cost more and more.” Locus Technologies was founded in April 1997, at a time when nobody, its founders included, thought it was a good time to start an environmental firm. Indeed, Locus found its origins in the failure of another environmental firm where Mr. Duplancic and the seven others who comprise Locus’ management team once worked. Two factors led to the rocky times for the environmental industry. First, environmental regulations that created significant market growth in the 1980s diminished demand in the 1990s.
When Congress enacted Superfund regulations in 1980, an army of engineers and geologists switched to environmental work But that work began to grind to a halt in the 1990s because while a lot of money had been spent investigating remediation, not all that much remediation actually took place.
Second, merger mania began sweeping through the industry.
Mr. Duplancic’s previous employer was acquired by a group of investors, whom he said underestimated the financial needs of the company while at the same time overestimating their management abilities.
“The company found itself in a serious financial crisis,” said Mr. Duplancic. “But we had a good team and good clients and we split to form the new company.”
Meanwhile, the previous employer fell into bankruptcy.
Mr. Duplancic founded Locus with one goal-engineer the lowest cost remedy at its clients’ sites while satisfying regulatory environmental standards. The company helps clients minimize environmental liability by using pure science and renegotiating site remedies with regulatory agencies.
Chevron Oil, for example, was facing a $45 million fee for remediation at the Purity Oil site, where companies dispose of used oil. Chevron officials were somewhat skeptical when Locus told them they could take a different approach.
After conducting studies, Locus was able to come up with a remedy that cost Chevron less than $10 million.
“Better, faster and cheaper. Everything starts with a single bore hole in the ground,” Mr. Duplancic said. “Clients hope we will hold their hands and get them out of trouble. They just want the cheapest and safest way out and that’s where we come into play.”
Mr. Duplancic gained his knowledge of the environmental industry during his years at IT Corp., which eventually became the largest environmental company in the United States, and at D’Appolonia Consulting Engineers in America and Europe. There, he was responsible for nuclear power plants and offshore platform projects in Belgium, Italy, the Netherlands, Spain, Germany, the Mediterranean and the Middle East.
Like many startups, Locus operated on a tight budget at its outset. Startup financing came from six of the founding partners and a Bank of America line of credit.
Mr. Duplancic said within its first two months, Locus landed several major contracts, negotiated favorable payment terms with its major client, and negotiated to rent office space from two major clients.
In its fifth month, Locus became profitable. Initial revenues for 1997 are estimated at $10 million.
Companies from Xerox to Schlumberger, which bought Fairchild Semiconductors and inherited its contaminated sites, have turned to Locus Technologies since its founding. In so doing, some of these companies have found Locus was able to solve problems that had confounded other environmental firms.
Xerox, for example, had been trying for some time to obtain a letter of closure from the Regional Water Quality Control Board for a site in Hayward it wanted to vacate.
When Xerox retained Locus, engineers conducted an environmental audit and found contaminants in a shallow groundwater aquifer and a small area of the unsaturated soil above the aquifer. The water contamination was not a threat to public water supplies, but the soil required remediation. Using a conventional method – a soil cap – would have required a maintenance lifetime of 200 years to keep the Environmental Protection Agency happy.
Using a new policy that was about to come into effect, as well as newer technology to reduce the soil contamination, Locus eliminated the need for a soil cap. Within three months after landing the project, Locus obtained the letter of closure for Xerox.
The Xerox project was Locus’ first job and it remains a favorite story of Mr. Duplancic’s.
“This was a case where no matter what Xerox did and how they did it, none of it made a difference because they couldn’t get that letter,” Mr. Duplancic said. “Xerox had used many consultants there, they called us on short notice and we were able to figure out how Xerox could use this new policy.”
Mr. Duplancic’s involvement with Schlumberger dates to 1982, when he was with a previous employer.
He and members of his team were retained by Fairchild Semiconductors to address the now-infamous South San Jose site, which at the time was considered to be a small project.
When Schlumberger acquired Fairchild, it also acquired the company’s problems, which snowballed so much that Mr. Duplancic’s team now manages all of Schlumberger’s contaminated sites in California and one in New York.
“They didn’t know at the time they had such a problem. But they are very responsible corporate citizens,” he said. “They are trying to prevent the spread of contaminants and we are applying some pretty exciting technologies.”
Tom Jones, who manages contaminated sites for Schlumberger, believes that not using Locus is a mistake most companies can’t afford to make.
“In environmental cleanup technology, disciplines are intertwined. I don’t know if it was by happenstance or design, but Locus has each of the disciplines represented in its group,” he said.
Barbara Jagiello, a San Francisco attorney who met Mr. Duplancic at a Croatian-American event, finds that people are drawn to Mr. Duplancic not only because of his impressive credentials, but because he doesn’t spend a lot of time talking about himself.
“He listens a lot and watches a lot and he seems to have a good sense of people and how they are likely to respond,” she said.
Mr. Duplancic is watching how his company is likely to grow in the coming years. Most likely, he said, expansion is in the future.
“We know what we do well and we are good at it,” he said. “Our goal is to put a couple of more points on the map, where our primary growth will come from, and then we will try to go international.”