very accurate and energy-efficient way of tracking and communicating with tags at different distances and through different materials (like warehouses filled with heavy equipment, or crates packed with plastic containers). Its special sauce was a unique mix of circuitry, antenna design, and algorithms for locating and identifying the tags.
In 2004, Wal-Mart announced it was planning to use RFID to tag its pallets and crates. “We were on top of the world,” says Fein. “We felt really lucky we’d picked RFID.” Then came a year-and-a-half long battle over RFID technology and radio-spectrum standards, against competitors like Alien Technology and Matrix, and big players like Texas Instruments and Philips. In the end, after lots of technical analysis and testing, Impinj’s approach to ultra-high-frequency tags and readers won out—it was shown to be more accurate and efficient than other approaches—and Diorio was elected chairman of the governing standards group. “That gave little old Impinj an upper hand over the big companies and startups,” says Fein.
Despite the company’s owning the triumphant technology, a lot of the RFID hype started to wear off in 2005. Wal-Mart’s mandate failed to kick in; the company didn’t penalize its vendors for not using the tags, and it didn’t buy the technologies to read the tags itself. And since then, the growth of the RFID market has remained painfully slow. “RFID was over-hyped in the short term, but under-hyped in the long term,” says Colleran, Impinj’s chief executive.
What he means is that the potential for overhauling the way companies track products is still there. “The challenge is demonstrating the benefit, and making adoption simple,” Colleran says. In the meantime, Impinj has been solidifying its RFID technology and market share, and securing the rights to market other essential pieces of the puzzle besides chips and radio-frequency antennas. It now sells entire RFID systems—different kinds of tags, readers, antennas, and software—for use in the pharmaceutical, retail, and food safety industries, among others. “Originally we wanted to do just chips, but in a nascent market like RFID, you need to have all the systems,” says Colleran.
In January of last year, Impinj raised a $14 million venture round led by Samsung. And last summer, Impinj sold its memory business to Virage Logic for $5.2 million and acquired Intel’s RFID-chip business, to strengthen its position in chip hardware. But with the market still waiting to take off, and in a very difficult economic climate, what’s an RFID company to do?
Hold the course, the Impinj leaders say. Since the financial crisis began, Fein says, “Orders have been delivered, and few have been canceled. It’s hard to know what our revenues will be.” Colleran would only say that Impinj’s “revenues have grown at a brisk clip…The industry is growing from a small base.” He compares the state of RFID today to the personal computer market in the early 1980s, and the Bluetooth wireless-device market in 2000. “You’ll know it’s mainstream when the technology is invisible,” he says.
So, eight years later, the jury is still out on what the return on investment will be for Impinj. The company currently has 130 employees, more than two-thirds of whom are engineers; the others include sales and marketing, finance, and operations staff (manufacturing is outsourced). Its technology is impressive enough, but in the end, betting on Impinj is equivalent to betting on RFID—and nobody knows if or when that market will reach critical mass. My guess is that the investors at Arch, Madrona, Polaris, and Samsung are still pretty excited to have the strongest horse in the race. Now it’s just a matter of patience.
Looking ahead, Fein gives a couple of general guiding principles. “We are improving the way we make investments,” he says—with an eye toward product development. Second, he says, “You have to be flexible and adaptable to the market.” Colleran echoes the sentiment and adds his two cents, which sums up the history of RFID pretty well: “It’s inventing a new technology and a new industry.”
