Steeling for Change
Serial Entrepreneurs Scale New Heights with QnectJef Sharpe and Jeff Hausthor are on the edge again. The cutting edge, that is.
The entrepreneurs, who have been partners in five business ventures, joined Henry Lederman last October to start a new company called Qnect, and are launching a new software product called QuickQnect at the three-day NASCC Steel Conference in Toronto.
They say the product will revolutionize the way the joints in a steel structure are connected. “The idea of turning this manual process into a software solution is brand-new, and QuickQnect is up to 100 times faster than the conventional way of connecting the joints in a building,” said Sharp, adding that the service is available in the cloud.
Lederman, who has spent 42 years in the steel-detailing industry, developed an early version of the software that has already been used in 11 buildings, including structures at UMass and Harvard. And when BusinessWest spoke to the three entrepreneurs, they were looking forward to introducing their breakthrough product at the Toronto conference, which is expected to attract more than 3,500 structural engineers, steel fabricators, erectors, detailers, and educators involved in the design and construction of fabricated steel buildings and bridges.
Lederman said QuickQnect combines two critical components of the steel-connection process into one, eliminating weeks or months of manual labor required to connect each joint in a multi-story steel structure.
He created the new software to stay competitive in an industry that has cut costs by outsourcing work overseas. Developing it was a process, but the first step was recognizing there was room for improvement in the three-dimensional system used by steel-detailing companies.
Lederman’s history includes high-profile projects, including the World Trade Center Memorial Museum in New York City and Tata Hall at Harvard University. He has been a speaker at industry events and is a leader in detailing innovation.
“It’s fun starting something from scratch that has never been done before. And what this new product [QuickQnect] does is pretty extraordinary. But developing it was tempered by my desire to see it in its fullest commercial form,” he said.
That pursuit brought Lederman together with Sharp and Hausthor last fall. They were introduced through a friend, and his original plan was simply to get ideas from the successful entrepreneurs.
But the meeting proved to be serendipitous. Sharp and Hausthor were looking to start a new business, and Lederman was impressed by their background and knowledge. “They had amazing expertise, as they had grown other companies and also had IT experience. They had what I needed to take the company beyond what I had envisioned,” he said. “They viewed things I might have had doubts about as minor obstacles.”
Sharp and Hausthor said working with Lederman met the criteria they have established for a new venture (more about that later) as they know what it takes to transform a novel idea into a product, then market it successfully. But it’s work they truly enjoy.
“It’s exhilarating to start a new company, and even though there is risk, stress, and tension, there is also a feeling of accomplishment you can’t get with most 9-to-5 jobs,” Sharp said. “And this is an amazing company.”
Each of the entrepreneurs has different skills, and their titles at Qnect reflect their honed talents. Sharp is CEO, Hausthor is COO, and Lederman is CFO. They all agree that education is critical and learning must be an ongoing process. “It’s an interesting path, and the importance of entrepreneurs can’t be fully stated,” Sharp said.
However, he was quick to add that it takes a team effort to be successful. “Identifying great people is the most important job of a CEO.”
Lederman concurred. “There are many amazing business people doing wonderful things, but it’s very hard to find the right resources,” he said.
Still, they are confident they will reach their goals because their product will save time and money. But it took sophisticated engineering skills to create the software that automates a manual process. “Two hundred calculations are necessary for every joint, and there can be upwards of 2,000 joints in a building,” Hausthor said as he spoke about a building, constructed with the pre-commercial version of the software, that had 11,000 joints.
Sharp said they have also put together an exceptionally talented development team.
“I’m confident they will be unstoppable in building and expanding our software breakthrough. The design of the joints in a building is really important, and reducing months of work to a few hours drives everything else, including the cost of using steel, which is the most environmentally friendly solution for large buildings and is 97% recyclable,” he noted, adding they hope to identify powerful local investors.
The three men have impressive backgrounds. Lederman has built three successful companies, Sharp has founded six, and Hausthor has directed IT and software-development efforts and operations logistics for six firms.
“I like all new technology and enjoy investigating new things,” Hausthor said.
Sharp and Hausthor have been partners in five ventures and love being on the cutting edge of development. They also share a passion for helping the planet.
“It’s exciting to do things that have never been done before,” said Sharp. “You can start a business by buying a franchise in which everything is set up for you. But it’s not as creative or interesting as starting something from nothing and building something of great value that will last.”
His first business was a mobile food service he named the Clam Scam, which he launched when he was in college.
His next venture was started in 1999 after he moved to Western Mass. from New York, where he had been running a manufacturing company called Gravity Graphics. “I had a burning idea for a dot.com company that would sell excess manufacturing capacity online,” he said.
The idea didn’t require resources or capital, since he simply wanted to make more efficient use of what already existed on the planet. “Having a company that has an impact on the world has always been important to me, and in the past, green has always been a theme,” Sharp told BusinessWest.
Hausthor, who joined Sharp in the business known as XSCapacity, was a self-described “Fortune 500 guy” before they met. He had been a programmer analyst for Deloitte, an associate at Morgan Stanley, a technical specialist for Sony Electronics, and a project manager for Sony Corp. of America.
A friend introduced the two men, they had lunch together, and a short time later, Sharp asked Hausthor to help him start XSCapacity.
The idea appealed to Hausthor. “I had moved to Western Mass. and was working from home. I was in charge of 40 people in New Jersey, but I felt isolated,” he said. “So I made the jump.”
The idea took flight as other firms adopted the novel idea of using real estate, autos, and more to maximum capacity. “XSCapacity was a concept,” Sharp explained. And although they were reasonably successful in building their product and raising money, the company became part of the dot.com collapse.
Their next venture was TechCavalry in Northampton, which provided computer service for small businesses and homes. “We needed to do something quickly which we could fund ourselves that would provide us with relatively instant revenue,” Sharp said, adding they sold the firm in 2012 after 11 years, and it is still in business today.
Although TechCavalry was successful, “we felt compelled to do something good for the world that would have a positive impact,” Hausthor said. So in 2006 they founded Qteros Inc. with two other partners.
“The company was created to start green companies,” Sharp said. “We worked nights and weekends, and it took us nine months to find our first project.” They combined talents with Susan Leschine, a professor at UMass Amherst, who had discovered a microbe that made ethanol from cellulose.
“But we had to scale up the technology, as it was still at the test-tube level at UMass,” Hausthor said. “We had to make it into a product that needed to go into a $200 million facility. We were still running Tech Cavalry, and suddenly we were microbiologists at a facility in Marlborough.”
Sharp describes the time as “a whirlwind. We hired two scientists a month and grew quickly.” They secured a government grant, and their backers included the petroleum giant BP. The firm had 50 employees when the pair left in 2008, although Sharp continued to serve on the board of directors until 2012.
They were discussing what to do next when Sharp met Steve Frank from Florence, who had started a supercomputer business and was looking to expand. “He convinced us it should be our next company,” Sharp said, adding that Paneve, which has grown into a large data firm today, made a new type of computer chips.
But when the operation moved to Colorado at the behest of its engineers, and its Amherst office closed, Sharp and Hausthor decided to remain here and began a new search for another startup, which occurred when they met Lederman.
By that time, the duo had developed criteria to determine whether a business opportunity fit their needs. “It has to have good people,” Sharp said, adding that it’s important to him to have control of who is hired. “The product also has to be reasonably close to being ready to sell, as we have already owned two companies that spent a long time in the development stage. When we joined Henry, he was already using a pre-commercial version of the product, but wanted help scaling up and driving the business. The chemistry was good, and it was an excellent combination of our skills.”
Hausthor agreed. “The product also has to be protectable in terms of patent and other intellectual properties and has to be a technology that helps the world,” he added.
The fact that Lederman’s business was local made it especially appealing, he added. “We had met people in Boston who wanted our help, but we didn’t want to drive long distances or have to fly to do business.”
Sharp says starting new companies has become a way of life. “It’s pretty cool knowing that you can start something from an idea. But no entrepreneur does it alone. It’s very much a team effort, and it’s critical that the team gets credit, because without them you could never be successful.”
Sharp admits it’s not for everyone. “Starting your own company can be very exciting, but it can be just as exciting to join a young company,” he said, reiterating the importance of a strong team.
But people like Sharp, Hausthor, and Lederman will always thrive on work that is on the cutting edge.
“I was an entrepreneur before the word was coined,” Sharp said, “and what is really exciting is that we are always doing things that haven’t been done before.”