David Cook | Crain's Connecticut

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

David Cook

Background:  

Queralt Inc. launched six years ago with funding from the U.S. Department of Homeland Security, an industrial gas company and several private shareholders. The New Haven, Connecticut-based firm is named after its president, Michael Queralt, and has satellite offices in Boston, New York and Seattle. Starting with elementary sensor products, Queralt has moved to cloud-based solutions using data from multiple sensors and other inputs.

CEO David Cook said the company is working on creating secure credentials for mobile devices that do not use passwords and cannot be hacked. Among Queralt’s clients are Wallingford, Connecticut-based health provider Masonicare and the New Haven Public Schools system.

A Dartmouth College graduate, Cook is a protégé of John George Kemeny, co-creator of the BASIC computer programming language and pioneer of classroom computer use. After working at First Chicago Corp., Cook moved to Connecticut and rode the 1980s personal computer wave as a principal in a ComputerLand franchise that was the first seller of Apple and IBM PCs in Connecticut. He was also involved in InSite One, a cloud-based medical archives company that was sold to Dell Inc. in 2010. At the time of its sale, InSite One’s Wallingford data center had 3.6 billion medical images in storage.

The Mistake:

Getting into a commodity-based business. The PC business was great until it reached the point where everyone had one on their desk.

What happened next was a decline in gross margins over a decade from the 40-percent range into single digits. That hurt.

Having been a serial entrepreneur I can tell you that it’s hard to create a sustainable business when you’re selling commodities. That’s why I’ve spent my time since then building companies based on intellectual capital.

After the sale to Dell, InSite sort of morphed into Queralt and we’ve moved out of hardware and are totally into software development.

It’s good to have brilliant people around but that doesn’t mean that company will necessarily succeed. That’s one of the things I learned in my time with Kemeny.

Great inventions create their own markets.

The Lesson:

Great ideas are a dime a dozen; success comes in the execution of the idea.

Get back to basic principles so that you think things through. Nothing happens as fast as you think and a lot of shooting stars expire.

As such, you have to find a niche and work hard to provide value to the customer. You have to add value using intellectual capital that also provides an economic return. That’s easier said than done. You have to solve real problems for your customers. With commodities, it’s much simpler but much more likely to fail.

The book “Siddhartha” is becoming increasingly popular in business schools and has meant a great deal to me. It contains three important lessons in old-fashioned virtues: No. 1 is think; No. 2 is patience, or play the long game; and No. 3 is fasting, or enduring the pain.

You have to add value but that takes a lot longer than one would think. You have to be patient and be willing to suffer the pain that will come along the way.

You have to scale up your intellectual capital but not be locked into a defined market. Think about Henry Ford and the car. If you asked people what they wanted before the car came along they would have said faster horses. Great inventions create their own markets.

Queralt, Inc. is on Twitter at @queraltinc.

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