BusinessTN

Bob Pap built his small business from the most complex of technologies, but he discusses it in the simplest of terms.

Twenty—three years ago, when he founded Accurate Automation Corp., his business plan was, he says, "to build things that go faster"—a continuously raised bar that AAC continues to clear. Today, its unmanned race boats skim the water at 150 mph, while its robotic, hypersonic aircraft travels and gathers data at Mach 5, landing recoverable and reusable. A second aircraft, currently used subsonically, can go twice as fast.

Those and other AAC technologies are created to "stop bad guys"—a marketable description when your sole customer is Uncle Sam. With a client base that includes the U.S. Army, Navy and Air Force, NASA and the National Science Foundation, AAC has $5 million in annual sales, 60% of which represent unmanned vehicles, as well as guided missiles. The company also sells its groundbreaking plasma technology, used for purposes ranging from protecting radar systems to reducing friction drag on aircraft. ("It's no more than electrons," Pap says.)

Pap's business strategy boils down to understanding "the big guys"—his competition in the military industry. When he isn't contracting directly with the government, he's contracting with major military manufacturers—though, he notes, "picking the right big guy is much of the trick." (He once lost a bid for an unmanned boat, he says, because he failed to team up with niche heavyweight Northrop Grumman.) It's all familiar ground for Pap, who began his career as an applied mathematician at NASA and Lockheed. By 1972, he says, he knew he loved exotic aircraft design—but not working for a big guy whose annual report and low risk—tolerance came with creative speed limits.

He found his wings a decade later, with Small Business Innovation Research (SBIR) legislation co—sponsored by Tennessee Rep. Marilyn Lloyd (D—Chattanooga). Now 11 federal government departments award $2 billion a year in grants and contracts through the competitive, three—phase SBIR program that, he says, levels the playing field for small companies like his. Last year, as the biggest SBIR contractor in Tennessee, AAC received 80% of its revenue from phase—three funding, or follow—on work.

Pap credits Gov. Phil Bredesen with encouraging greater participation in SBIR. But still, he says, too few entrepreneurs in Tennessee understand the program he calls "government venture capital." For high—tech hopefuls who want to play with the big guys, it's just that simple.