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This Is My Last Startup. Honest


People: ENTREPRENEURS

THIS IS MY LAST STARTUP. HONEST

Don Jones vows he'll stay with his latest, Industry.Net

With every seminar at Carnegie Mellon University, Donald H. Jones felt the pressure mount. In his new role as lecturer, Jones, legendary in Pittsburgh as an entrepreneur, was proving quite a raconteur. As he recounted his adventures building and selling three high-tech companies, his students began surrounding him after class, begging him to start one more company--with them. "O.K., O.K.," they'd say when Jones insisted he had no plans. "But if you were going to start another, what would it be?"

Finally, Jones relented. "I do have this one idea...," he recalls saying. With that, the Jones Express was off. He started calling his club of investors, who have made millions with him, and his technical buddies, asking if they'd like to take another ride. In short order, he had a team and a new company--Industry.Net, an online matchmaking service for companies and suppliers.

OVER HIS HEAD? That was 1990. By now, based on Jones's record, the company should be sold, the money in the bank. Instead, in January, the unassuming Jones brought aboard a high-profile CEO--Jim P. Manzi, who quit as CEO of Lotus Development Corp. last October, three months after IBM bought it.

In the life of every high-tech startup, Jones explains, there's a point when the focus must move to marketing. At that point, you sell, or you raise millions and shoot for the big time. With Industry.Net, which soon evolved into an industrial "mall" on the World Wide Web, Jones opted to take his shot.

But not alone. Last fall, he visited headhunter David Beirne and said he wanted to hire the best CEO in the country. Beirne produced a list of 20 names. When he saw Manzi's, Jones says, he told Beirne: "I don't want to talk to anyone else." He was impressed that Manzi had built Lotus in a fiercely competitive market. In January, Jones met Manzi, sold him a big minority stake, and hired him. Manzi says he was drawn to Jones because they both see people as a company's chief asset.

Now, Industry.Net, one of the biggest Web businesses, is on a major growth push. It's hiring programmers in nearly every major U.S. city, and a public offering is likely. Jones, now chairman, runs operations in Pittsburgh, while Manzi drives for international growth from Boston. Jones says Manzi has told him: "You keep the wheels running, while I put wings on this thing."

It's a new world for Jones, who has never paraded any of his clannish companies down Wall Street or before the media, never subjected one to such a growth push--and never shared power with a hard-driver such as Manzi. In early March, when four key Lotus vice-presidents left to join Industry.Net, Manzi's edge seemed evident. Some former colleagues say the hires are meant to hurt Lotus, not help Industry.Net. Says Manzi: "I don't know what's going on at Lotus. I'm looking to attract quality people."

Could Jones be over his head with the notoriously prickly Manzi? The entrepreneur, who spoke to many people who had worked for Manzi before hiring him, denies any tensions. "Our chemistries," he insists, "are incredibly parallel."

Jones, 58, has spent his whole life around Pittsburgh; he grew up on a farm nearby. Like many area engineers, he got his start at Westinghouse Electric Corp., in 1961. Within months, he quit to join a smaller company, J.W. Fecker, which built machinery to control the motion of satellite systems. There, he began meeting the technologists and investors who would join his four startups.

In 1968, Jones founded Control Systems Research to make machines to control the speed and modulation of motors. The technology was "very rudimentary," recalls Myles Berkman, an original investor, "but Don could always push things ahead of the curve." In 1976, Jones sold CSR to Contraves Inc.

By then, the personal-computer revolution was at hand, and "I got interested in databases," Jones says. He set up a company that used a Tandy PC and a modem to assemble industrial directories. Soon, Technology Recognition Corp. was selling directories worldwide--and Jones sold it to A.B. Dick Co.

That was in the early 1980s, when companies were eager to automate to cut costs. With General Motors Corp. earmarking $40 billion to revamp plants, Jones saw a gaping market. He founded International Cybernetics to develop industrial robots--but soon altered the plan. Reasoning that companies would pay dearly to avoid retooling whole factories, he moved IC into making control boxes to add to existing machines. Soon GM gave him a fat contract for the new Saturn plant in Spring Hill, Tenn. In 1985, Gould Electronics bought IC for $40 million, most of which went to Jones.

NO BEHEMOTHS. In 1987, Jones gave $1 million to Carnegie Mellon's entrepreneurial center and turned to teaching. "I come home at 10," he says, "and my wife says, `I can tell you've been teaching. You're all pumped up."'

His students get pumped up, too, which is how Industry.Net was born. Jones & Co. first saw the company as a kind of computer dating service for industry, providing companies and suppliers the data to find the right match. Then, in 1993, D. Navin-Chandra, a computer-science professor at CMU, gave Jones his first look at the World Wide Web. Within minutes, Jones says, he decided to put Industry.Net on the Web and turn it into an industrial mall. He also offered the professor a part-time job. "I said, `This is where the action is,"' Jones recalls.

And how. Today, some 4,500 manufacturers and suppliers, from IBM to tool and die shops, pay from $3,000 to $8,000 a year to maintain electronic storefronts on Industry.Net's site, where customers not only shop but also complete transactions. Industry sources put last year's sales at more than $28 million and expect them to double this year.

Jones wants to ride this one all the way. While his industrial ventures bucked up against bigger rivals, he notes, Industry.Net faces no behemoths. He thinks the service has reached barely 1% of its potential market. And what of Jones's role in the company Manzi is increasingly shaping from Boston? It's murky. But given Jones's history, he's not likely to wind up poor, or alone.By Stephen Baker in PittsburghReturn to top


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