The staples of building a sustainable business, even in the ultra-fast tech sector, are at the forefront of Joe Rhem’s latest startup.
Shaking up an industry space is nothing new for Joe Rhem.
As founder of Manatee County-based Star2Star Communications, he had already disrupted the traditional telecommunications sector with the company’s Voice-over Internet Protocol (VoIP) telephone services. His idea for his next disruption came while growing Star2Star, which has since become a $75 million business.
In his latest and greatest disruption attempt, Rhem has utilized several must-do business lessons, good for startups and seasoned companies. Focus on what you are good at, for one, and punt everything else. Also be quick about supporting the company with back-office needs — don’t skimp on the systems that make a business work. And be quick to change with customer needs and marketplace demands. In short: Be everything a legacy company in your industry isn’t.
But first Star2Star landed a major account with Dollar General. Rhem watched as Star2Star’s equipment was installed in a carefully mapped out spot on a wall filled with other, sometimes redundant equipment for store functions like security and private network connections. He thought there had to be a better way.
“I looked at that and said, ‘That could be one box; it should be one box,’” Rhem recalls. “I need to go make this one box.”
But Star2Star was growing like crazy. And although Rhem always wanted to do more than just voice at the company, there was never a good time to branch out. “When you’ve got a tiger by the tail, you can’t think about fishing,” he says. “Anytime we would try to spin up some development efforts around something else, the main purpose of the company would come and take those resources away.”
Then in 2014, Star2Star took on outside investors, when it was doing $48 million a year in sales. Cash in hand, Rhem decided it was time to make his move. He knew Star2Star was in good hands with Norman Worthington, his neighbor and a fellow entrepreneur who had come on board as an investor and CEO shortly after Rhem started the company.
“I’m an engineer, a problem solver. I build things,” Rhem says. “But Star2Star had become more of an institution where everyone knew what they were supposed to do. There were no new fields to plow — except for these products that I can’t ever seem to get going inside the organization. And so I left on good terms and started a new company.”
In any sort of early stage venture you’re betting on the people, and I felt like Joe was a really good bet.’ Alex Cruikshank, WiredIQ
That new company is Sarasota-based WiredIQ, which has recently begun to roll out Rhem’s long-desired all-in-one product, BrainBox. It’s a single unit where a company can control alarms and other security, its secure internal and external internet networks and its telecommunications systems — powered, naturally, by Star2Star products.
“My goal is to be Star2Star’s biggest reseller this year; that’s my other baby,” Rhem, 55, says. “But WiredIQ is a matter of self-expression, you could say. It simply had to be done.”
Brains of the operation
Rhem tested his concept for WiredIQ locally after purchasing Sarasota IT services company Kangas. It had been in business since the 1980s, with plenty of existing customers who could be upgraded to WiredIQ’s new equipment. “It gave us a nearby set of customers to [help us] understand how the product should be optimized to give everybody their best feature set,” he says.
Alex Cruikshank, a software developer who’s also worked in wealth management, soon came on board as both an investor and executive vice president of product development at WiredIQ. “In any sort of early stage venture, you’re betting on the people, and I felt like [Rhem] was a really good bet,” Cruikshank says. “He’s got some rare skills in terms of anticipating what the market needs and being able to persuasively convince people. Because he’s done so many things that have become successful, it makes him really well-suited for this venture and is why I made the leap to get involved with him.”
WiredIQ and its BrainBox began went into national distribution last year, and it already has deals with two large national distribution companies plus a national installation company. It’s in about 1,500 endpoints to date, with a potential deal on the table that could greatly expand that. “It’s just a matter of scaling up at this point,” Rhem says.
He’s not ready to talk revenues or growth projections. But he does hope to soon see WiredIQ on the Inc. 5,000 list of the fastest-growing privately held companies in the country, a list Star2Star has made seven times. “I can remember when we were at this point with Star2Star, and we’re already starting to see some really significant growth,” Rhem says.
And WiredIQ has a major advantage working in its favor. “We’re getting about three times as much revenue per customer as we did at Star2Star because we have all these other applications to sell,” he says. “So we expect this company to grow about three times faster. As successful as the last venture was, this one I think will eclipse it.”
Another key? Rhem isn’t afraid to seize new opportunities. Much like Star2Star helped lead a revolution in telephony, Rhem is positioning WiredIQ to be a leader in a new approach to network connectivity called SD-WAN (software-defined networking in a wide area network). It’s a new way for companies to securely connect multiple branches or locations that’s faster than a T1 line and can be run over top of their existing broadband connection.
“We have that technology built into the BrainBox,” Rhem says. WiredIQ also has a patented way to accelerate and prioritize some functions over others. So if a customer wants its voice calls to come through faster than email because the calls are in real time, that can be done.
WiredIQ is also taking the SD-WAN concept and bringing it to a company’s local network. “You can think of it as the entire suite of managed services that a business needs,” Rhem says. “From one central point of management, you can see and manage and administer all of your assets. And you get one bill and one vendor to deal with, instead of having all those boxes on the wall and vendors to deal with.”
Lakewood Ranch financial advisor Evan Guido, who developed a friendship with Rhem after he did some IT consulting for Guido, says the tech guru, in yet another key, is adept at making complex concepts simple. “The best thing to do with Joe if you’re going to work with him is to flip over a piece of paper and hand him a pen,” Guido says. “You’ll get a stick figure of you, one of your office or building, and then he’s going to show you how the data gets to you, how it gets around the building and how it’s secure at all those positions. And that’s what we all want.”
Building from success
Rhem has been tinkering in the tech world for a long time. “The sixth grade was when I met my first computer,” he says. “It was a mainframe terminal in a school where my stepdad was the principal. After dinner he would drive me back to school and lock me in there for several hours, and I’d work writing programs.”
By the time he was at Sarasota’s Riverview High School, he had his own software business that he incorporated in Florida — after giving up his right to be a minor — as Summit Software Corp. He sold it to a friend while at Georgia Tech and then went on to found a company called Mindwave Technologies in Sarasota, which was eventually acquired by Infresco and then Computer Associates.
That was how Rhem met Norman Worthington, who founded Infresco. Rhem spent several years as principal architect at Computer Associates, where he worked on Walmart’s business-to-business connection and other projects.
It was while he was at Computer Associates that he first began developing the technology for Star2Star in his garage. A change in leadership at Computer Associates forced Rhem to choose between his day job and his side project — and he chose the latter. And now he’s taking the same kind of leap with his new venture and is sure to draw on lessons learned over his career.
Like knowing that constantly just trying to keep up is no-no. “At Star2Star we were always trying to play catch-up with our back office because the company was growing so quickly,” Rhem says. “That made us hire a lot of people and have a lot of manual processes. We’d start to use a software package built for a certain size company and then find out two years later we’re not that size anymore, and it just doesn’t work. So this time we built the back office from the very beginning to accommodate a large enterprise. We put as much effort into that as we did in the product development.”
Although that can be risky and potentially costly, Rhem says it’s worthwhile investment.
He’s also following a precedent set at Star2Star to outsource all sales and distribution. “Rather than try to build that ourselves, we’re working through distribution that already exists and only through distribution,” he says. “We did very well at Star2Star by not doing the selling ourselves, but just by making partnerships with people who do that.”
Rhem says WiredIQ will be his last major business venture. “The last time I did this I was in my low 40s, and now I’m in my mid-50s,” he says. “It’s a 60-hour work week when you start a company like this. And even though we’re almost four years into it, it will be that way for another two years because that’s how long it takes to build everything out. Then once you get to that point and get all your lieutenants in place, then I can step back. I think in about five or six years we’ll have this thing as another worldwide enterprise, and then I’ll be ready to let it go.”
When that happens, the only other thing Rhem wants to do is open up a little winery in Traverse City, Michigan, where he can spend the summer. But until he’s relaxing and sipping some red wine, Rhem remains one to watch.
“Pay attention to Joe Rhem,” Guido says. “You’re going to get another success story.”