Hey, if Bill Gates can do it, why not Jesse Rasch. Drop out of a prestigious university, start up a company, promote a bit of technology and ride it to the moon.
Rasch’s company, inquest Technologies, may not quite be the next Microsoft but it is off to a good start, complete with traditional high-tech origins in a cramped, rented space, a-behind-the-scenes co-founder and millions in the bank.
Recently, inquest sold a 51 per cent interest in the company to the American telecommunications firm SBC Communications Inc. for US$115 million.
The company had humble beginnings in a Montreal apartment where Rasch was studying at McGill University. He started out studying science, transferred to business, studied some finance and computer science and finally left school altogether. University wasn’t for Rasch.
“I learned very quickly that I loved technology and that I had a great understanding of technology, but I wasn’t a creator of technology,” 24-year-old Rasch said during a recent interview in InQuent’s new office in Toronto. “Because I always understood technology very well, I could envision where technology was going and what we would need to do…to service future markets.”
Fortunately Rasch had an ace up his sleeve. “[I] had a lot of friends who were the creators of technology, so there was a real nice pairing there.”
In the mid 1990s he and his friends started up a company called WebHosting.com, to do early Web site development for the likes of Future Electronics and the Bank of Montreal. “I really provided the strategy side of the equation and the co-founder of this business, Michael Apted…would be the architect of our hosting platform,” Rasch said. inquest is WebHosting.com’s parent company.
A bunch or young guns getting the ear of big corporations was no easy task. “The key for any entrepreneur is persistence, and when you get shut down you just find another route to…to get in there and try to get some mind share with the decision makers,” Rasch said, intoning what is obvious to all but done by few. Besides persistence, the other key was research. Rasch said for the Future Electronics account they were competing against some very established development firms. Rasch and his cohorts did a thorough market analysis and found out exactly what Future Electronics’ competition was doing on-line.
“And [the client] said, ‘You guys have done a lot of work here today, a hell of a lot more than your competitors did, you’ve earned this contract,'” Rasch said with a note of joy.
starting to grow
The company started to take off and eventually Rasch had to ask roommates to move out to make room for other employees. As the number of clients increased they found themselves being asked to host Web sites, something they had never done. They partnered with some American companies to provide hosting services. In a roundabout way, it was these partnerships which led to WebHosting.com’s success.
“You know what, I’ll tell you if [the hosting companies] did a good job back then in 1997 I wouldn’t be in this business today. But because they did such a piss poor job, we said maybe we can do this on our own and maybe we can do it better.”
They had no tools, at the time, to manage the sites that they were taking care of on behalf of their clients, so they rounded up a group of programmers and decided to create a Web-based tool to manage every aspect of a Web presence.
“And that beget everything else,” Rasch said.
WebHosting.com’s own customers started to use the tool and were pleased because it saved time and drove down costs, Rasch said. As a group they started to think about all of the thousands of companies that could use a similar tool. They started to market the product on the Web and orders started to trickle in from around the world.
“And then a kind of light bulb went off and said, ‘Hey, here is a worldwide opportunity for recurrent monthly revenue that has really no barriers for us selling to anyone.'”
Once they started to get some traction and got clients from around the world, Rasch and his associates made a formal business plan and concluded that from a business perspective it was best to head to Toronto. For Rasch, moving to Toronto was returning home. He was born and raised there where his father is an architect and his mother a real estate agent.
a key to success
Part of InQuent’s success has been the fact that the company has never been run like a dot-com, Rasch explained. From the beginning it has been turning a profit. They never had the cushion of a few million dollars of venture capital funds sitting in the bank should they run into dry times. “It doesn’t always make you act as carefully as you should,” he said.
“Our company, in particular, had never taken in an ounce of outside capital…that forced us to be very careful in terms of growing the company to make sure operationally we were tightly controlling our finance functions.”
It was this desire to stay in the black that led to the deal with SBC. They realized inquest was going to have to grow ahead of its revenue curve to be able to properly serve channel partners such as Bell Canada. In order to grow inquest needed funds.
“VC would bring in clients and contacts and we didn’t need that, we were doing just fine,” Rasch said. Another option was an IPO. “It is probably a little early right now, we don’t necessarily have all of the structure…to support that yet.”
So inquest ended up going the strategic investor route.
“Along came SBC, at the same time they had invited me down to Texas to talk to their executive team about how we could help them with their problem, which is the same problem that all the other telecoms have which is they needed a hosting product that they could sell in their data centres. The more and more we got talking the more and more we got to like each other and that really crystallized the investment, ” Rasch explained.
The company’s Toronto office fits the bill of a typical laid back high-tech firm, though dramatically larger than its Toronto predecessor, according to Rasch. The 150 plus casually-dressed employees have a lounge, with “beer in the fridge and all that good stuff…where they can chill out,” stock options should they ever go public, and enough space to expand. The future of inquest looks bright. Rasch is going to bring in a CEO to help run more of the day-to-day operations while Rasch focuses on strategy.
At a young age, Rasch has found success, but there is always a price to pay. He works long, long hours and no longer has the time to pursue hobbies such as rock climbing, scuba diving, roller blading and competitive martial arts. With plans to eventually expand to the U.S., Europe and Asia, he has his work cut out, but if the past is any indication he and inquest will