In the Bomb-Detecting Dogs Business, iK9 Sniffs Out an Empire

In the Bomb-Detecting Dogs Business, iK9 Sniffs Out an Empire

By Josh Dean October 31, 2013


Vapor Wake training: (clockwise from top left) Zebow, Chachi, Boomer, Unser (twice), and Potsie

At the sight of his leash, Baxter explodes out of his crate. The leash means work, work means reward, and that’s Baxter’s entire reason for being. The adolescent yellow Labrador retriever has only eight months of training, so he yanks and skitters more than a fully trained dog. But once his handler clicks the lead onto his collar, he raises his nose and swivels his head side to side, sampling air currents, until he smells something he recognizes. Then his behavior visibly changes. Baxter is “on scent” and quickens his pace, his head and tail up, narrowing in on a cluster of vehicles.We’re on the campus of Auburn University, about 45 minutes south of the base of operations for the school’s Canine Detection Research Institute. An outgrowth of Auburn’s veterinary school, the CDRI trains an average of 200 handler-and-dog teams a year for clients such as Amtrak, the U.S. Marshals Service, and smaller law enforcement agencies. Since opening its doors in 2001, it’s built a reputation as a center for rigorous canine science. The CDRI’s associate director, Paul Waggoner, looks on as Baxter works one vehicle after another, quickly sniffing in the areas he’s been taught to focus on—the gas tank, fender seams, and creases by the trunk, any spot where vapor could be escaping. Suddenly he sits next to one car. His handler reaches under a bumper and pulls out a small pouch of TNT. The whole process took maybe 90 seconds. “Think of it this way: How long would it take us to clear this lot?” says Craig Angle, who oversees canine fitness at the CDRI. “We’d have to tear those cars apart. Dogs are force multipliers.”

Scent-detection dogs have been bred over centuries for hunting, and they’ve adapted rapidly from tracking the blood of a wounded doe to sniffing out anything else humans ask them to find, from cancer to bedbugs to explosives meant to inflict mass casualties. The best sniffing breeds—Labradors, springer spaniels, German shorthaired pointers—tend to be low to the ground, with floppy ears that stir up the air, directing particles into the nostrils. Dogs sniff five times a second, and each nostril pulls in a separate sample, which helps them find the direction of a scent’s source. The dog’s nasal physiology differentiates between air for breathing and air for sampling; the latter is diverted through an olfactory organ that only scent-driven animals have (rodents being the other leading example), where receptors hang from a layer of tissue known as the olfactory epithelium like electrical fixtures from a ceiling. A scent dog has as many as 300 million of these receptors, compared with 5 million in humans. Thirty-five percent of a dog’s brain is dedicated to smell.

Most detection dogs are brought to a source; they sniff a specific target (a car, a suitcase) or, like Baxter, sweep an area, sniffing every possible target. But Waggoner and his team at the CDRI are working to train even more sophisticated dogs, including specialists who can pick up the trail of particles a person carrying an explosive leaves behind as he moves through a crowd. They call these dogs Vapor Wakes. “Vapor Wakes are the only thing that might have helped on that corner,” says Tim Dunnigan, referring to Boylston and Exeter streets, near the Boston Marathon finish line, where the Tsarnaev brothers placed a pair of backpack bombs in April.

Dunnigan, 45, is the founder of iK9, a startup that would like to build a $200 million business beginning with the Vapor Wakes and broadening the role of detection dogs in the private sector, both domestically and abroad. IK9 is a spinoff from a defense consulting firm Dunnigan founded in Columbus, Ga., in 2009, Strategic Integration. SI works primarily with special-operations troops, providing materials support and a tactical training ground on a huge former plantation owned by a silent partner. For certain tasks, the world’s elite soldiers rely enormously on canines, and Dunnigan was struck that a tool so critical to security was still so poorly understood. Detection dogs are such a freewheeling business that a U.S. government training standard does not exist among the many departments deploying them in the field.

“Detection-dog training has been a vocation where most of the knowledge has been handed down in master-apprentice manner,” Waggoner says. “That’s led to a lot of unproven ideas and ways of doing things.” It’s still a young field, he says, and remains a “trust me” kind of business. “It was just sort of, dogs do what they do, and these professionals have the magic of how to train them, but no one understands it.”

As the commercial partner for all applied science developed at Auburn’s CDRI, iK9—the “i” doesn’t stand for anything—aims to innovate in an industry that hasn’t seen much, with Vapor Wake dogs as its calling card. Even so, a $25,000 “technology” that requires constant maintenance isn’t an easy sell. As much as anything, Dunnigan’s strategy seems to be to raise the industry’s profile and demand that anyone offering canine detection adhere to standards that have yet to be formalized. One challenge, he says, is that “everybody thinks his technique is the best.”

Until recently, the man who wants to reinvent the detection-dog business had little actual dog experience. It took a fortuitous meeting between Dunnigan and Paul Hammond, an Englishman who’d spent his entire career training and handling dogs in conflict zones, to get iK9 going. Hammond served 15 years in the British Army dog unit in Northern Ireland and then an additional seven years as a military contractor in the Middle East. Hammond knew how to train dogs, but to launch a training program from scratch would take years, and Dunnigan doesn’t have that kind of patience. They decided they’d need to acquire credibility, and that’s what led them to the CDRI.

As it happened, the university was looking for a business partner. In 2005 the U.S. Marine Corps had come to Auburn in search of a dog that could hunt bombs off-leash, lowering human risk. Waggoner and his team obliged, taking a conventional bomb dog and retraining it. They called it stand-off detection. Dogs trained in this method, known as tactical explosive detection dogs (TEDDs), are now in use across the armed forces. Because Auburn never bothered to patent the concept or training methods, the idea was up for grabs, and when the U.S. government wanted more TEDDs, it awarded a contract worth $20 million to K2 Solutions, a working dog company based in Southern Pines, N.C. “That will never happen again,” Dunnigan says.

To put themselves on the map in a hurry, iK9 figured it needed something newer than TEDDs, so it patented and trademarked Vapor Wakes. Under the terms of the partnership, iK9 pays the salary of all of Auburn’s trainers and shares a cut with the university (the company declined to say how much) for what it earns leasing and selling the dogs. IK9 also has first right of refusal to commercialize CDRI breakthroughs. Shortly after formalizing their business relationship in 2012, Hammond relocated to Anniston, Ala., and began working with the CDRI’s head trainer, John Pearce, to streamline Vapor Wake training. They cut the program’s duration from 12 weeks to 6, making the dogs more affordable to police departments and agencies. Hammond says he could properly train 25 world-class detector dogs every three months if he could find the breeding stock. Some prospects come from the CDRI’s own breeding operation, while others are sourced from smaller, trusted kennels around the world. Not every great puppy turns out to be a great working dog; time and money are wasted on washouts. (Among the many projects Waggoner would like to undertake is a genetic test to identify ideal candidates at birth.)

By absorbing the CDRI’s training arm, iK9 overnight gained a 26-person staff, a fully outfitted, 320-acre training facility, and direct access to a research operation that’s likely to develop the next big thing in tracking hounds. Quite possibly, it will be an autonomous detector dog—an animal directed remotely by GPS. Last year, Waggoner outfitted a Labrador named Major with a clunky array of equipment that received signals from a computer and directed the dog where to go using a preset course. A more advanced version could enable dogs to sweep buildings or cities far out of sight of trainers while relaying data back. The Office of Naval Research has been on the hunt for just such a dog, so there’s plenty of reason to think that the CDRI can revive the project with iK9.

In their short partnership, iK9 and Auburn have already been awarded a Defense Advanced Research Projects Agency grant to teach bomb dogs to submit to MRIs so their brains can be observed while sniffing different odors. Next up is a plan to create a more heat-tolerant detector dog, because the animals tire quickly on hot days and heat seems to degrade their sniffing abilities. Angle, the CDRI canine physiologist, will spearhead that effort and begin to answer many other questions no one’s ever bothered to ask. “We don’t even know what a dog’s ideal resting heart rate is,” he says.

The detector-dog marketplace is fragmented, and no one knows for sure how large it is, but principals from the major companies estimate it at $400 million to $700 million. Whatever the exact number is, it’s “absolutely a number that will go up,” Dunnigan says. To get to $200 million, he counts on securing dozens of annual contracts at about $300,000 per dog-and-handler team, noting that the new Freedom Tower tour in Lower Manhattan alone could easily require six to eight teams. He plans to bid on 50 similar contracts in the New York area while diversifying into other applications—such as bedbug detection. Military posts abroad, the single largest market for detection dogs, may be closing, but bombs have emerged as the great threat of our time, to both armed forces personnel and civilians. It’s grim, but it means opportunity.

The world’s largest detector-dog company is American K-9 Detection Services, or AMK9, based in Lake Mary, Fla. Its business has been almost entirely contract work for the military, which is also the case for its rival K2 Solutions. The other major players are MSA Security, which dominates the New York market, the largest by far for domestic bomb dogs; Denver (Ind.)-based Vohne Liche Kennels, known for being the centerpiece of the reality-TV show Alpha Dogs; and Stapleton Group, a New York startup run primarily by Paul Stapleton, son of Michael Stapleton, widely considered the pioneer of private-sector bomb dogs when he was building MSA into a multimillion-dollar business.

Even though the potential market is immense—any high-traffic location or corporate headquarters is vulnerable—not everyone is willing to pay. For one thing, the vast majority of bomb dogs will never save hundreds of lives by discovering a trunk full of C4 explosive. In the eyes of many security directors, it’s just another expense with little payoff. “The reality is, you’re not ever going to find a [real] bomb, especially if you’re doing sporadic work,” Paul Stapleton says. To ensure security, detector-dog teams need to be at work around the clock, and because dogs require rewards to be effective, handlers must constantly challenge them. This is tedious, expensive work, and it’s easy to get lazy. Dogs are excellent at intuiting signals from their handlers, but it’s nearly impossible for a lay person to know the difference between a dog that’s really finding bomb residue and one that’s just responding to direction. Customers will always have doubts, and Stapleton doesn’t blame them. “You’re taking a lot of people’s lives in your hands to make a few bucks, and it’s frightening.”

While a bomb dog can be bought outright for $25,000 to $40,000, that arrangement requires the purchaser to maintain the dog’s training, which is why most are leased. Contracts are long-term, at least a year; an annual contract for a dog-and-handler team, according to Stapleton, might cost $300,000. If you want 24-hour coverage, you’re talking about multiple teams. When I suggest that $300,000 sounds like a lot, Stapleton balks. “You wouldn’t believe how slim our margins are,” he says. “There’s so much back-end expense.” Training is lengthy: The dogs need regular practice, and they don’t go home after work to their spouses—they need someone to watch them at night, too. There’s little or no room to shave costs without affecting the quality of the dogs. Still, in the 12 years since Sept. 11, Stapleton says, the price-per-hour of a bomb-dog team on a year contract has fallen by half because of an increase in competition and a drop-off in demand before the most recent domestic terrorism.

“Our phones were ringing off the hook after Boston,” Stapleton says. Such postevent urgency quickly fades. It’s a recurring cycle, which aggravates his father, Michael, to no end. In Michael’s estimation, it’s fairly simple insurance math. “One evacuation of a complete headquarters pays for that bomb dog in one day.” The goal of a corporate security director, Michael says, is “to prevent anyone from choosing your facility as a target.” A visible bomb dog, if nothing else, is a deterrent.

“Boston showed people the vulnerability that we have in our societies,” says Mike O’Neil, who was first commanding officer of the NYPD Counterterrorism Division before becoming president of MSA Security. “It is not a business line. It is not a pitch that I give to people. You need to be serious about your security program, because the threat is serious. It could happen any day, at any given moment, at any given time.”

Dunnigan introduced iK9 to the industry in July at the 2013 Police & Military Working Dog Conference in Nashville. By summer’s end, iK9 took over handler and dog training for AMK9. He’s formed a critical alliance with the Stapletons. Through their ties to Giuliani Partners, the former New York Mayor Rudy Giuliani’s security company, Dunnigan is working up a pitch to security officials for the 2016 Rio de Janeiro Olympic Games. He’s also broken into New York; six Vapor Wakes came to the city for a 5-kilometer charity run on Sept. 29, an audition for much larger races, such as the Nov. 3 ING New York City Marathon. The meeting Dunnigan is most excited about, however, is one he recently had in Abu Dhabi. After a seven-month negotiation and multiple trips to the Persian Gulf, he was summoned there to talk with the International Golden Group, one of the largest defense contractors in the Middle East.

Dunnigan brought two Vapor Wake dog-and-handler teams on the trip to show off to important regional players. Because it’s illegal for civilians to travel with explosives, for obvious reasons, he had to rely on the locals to source some for his demonstration. Vapor Wake dogs are intended to find suicide bombers, who wear large quantities of explosives—several pounds, at least—but the local contact had sourced only a tiny amount, maybe a few ounces.

Dunnigan and his handlers were worried it wouldn’t be enough, but the dogs performed ably. Perhaps too ably. One observer, a Moroccan police official, remained skeptical. He suggested that because the person carrying the explosives was an iK9 trainer the dog might have been signaled, or that she was just going to the person she knew best. Dunnigan offered to try the experiment again, this time with the officer carrying the package.

It was risky, he says. This was a minute amount, and if the dog were to fail to find it on the Moroccan, any neutral party would rightly question the veracity of the whole thing. An iK9 trainer put the stuff into the man’s front pocket, sent him away, and told him to return 10 minutes later to walk through the crowd. When he did, the man grabbed a friend to walk closely by, further shielding the pocket. But the dog picked him right up. “After that,” Dunnigan recalls, “people lined up and said, ‘Where do I get mine?’ ”


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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