- Associated Press - Saturday, October 25, 2014

BOISE, Idaho (AP) - Faisal Shah’s recent meeting with four of his newest business partners was different in a few ways from the thousands of other business sit-downs he’s shared over the years.

First, Shah was showing photos of a prototype product - a bag that detects when its contents go missing. It was a departure for Shah, who made millions in software not sold on shelves.

Second, Shah, 53, was feeling a little dressier than usual, upgrading to a French cuff shirt to go with his usual blazer and distressed jeans.

Third, his new business partners - the innovators whose big bag idea impressed Shah enough that he offered to invest in a prototype and patent application - were teenagers from Centennial High School in Meridian.

Shah had mentored them during the citywide B-Launched Jr. contest that he co-founded and funded with other members of the Boise tech community. Shah coached the team as members developed the idea, created a rough prototype and presented their business plan to judges. After the team placed second in the competition, Shah offered to pay for the team to explore becoming a company.

The students bantered with Shah as they settled into his second-story Downtown office above the Main Street Bistro, the former home of Nebula Shift, a tech business incubator Shah launched with longtime partner James Hepworth. Today, the space is home to AppDetex, Shah’s latest startup focusing on brand protection. A foosball table sat in the corner. Illegible dry-erase writing and diagrams were scrawled across a section of white wall.

As usual, Shah’s eyes lit up talking about the team’s coming challenges: Completing a prototype. Preparing a presentation. Pitching to venture capitalists.

“He’s always thinking, always calculating,” Centennial senior Ray Mullings III says. “He can take apart a big problem and see all the smaller problems within it, to see how to fix the most important ones.”

Days before, Shah had been more interested in talking about the students’ project than about MarkMonitor and First to File, the brand- and patent-protection software companies he and Hepworth founded and sold for millions. Those were yesterday’s news to Shah. The students’ theft-prevention bag? That’s new.

“I’m so excited about this project and about these kids,” Shah says. “They are all so, so smart. They have really exciting ideas.”

MEANDERING PATH TO BOISE

Shah’s father was born in India, his mother in Dubai. Shah was born in Trinidad and Tobago, then moved to Venezuela at age 8 and Puerto Rico at 10, as his father received a series of promotions as a sales representative for international pharmaceutical company Pfizer. In Puerto Rico, Faisal and his two sisters spoke Spanish and English and attended American schools.

Shah’s father died three months after being diagnosed with a rare cancer of the bile duct. Faisal was 13.

He struggled to understand how his father, who was healthy shortly before the diagnosis, could be gone for good. The starkest reminders, Shah says, were the silences at home once filled by his father opening doors or walking through rooms.

His mother stressed education, spending most of the $500 she earned teaching each month on her children, Shah says. It was always assumed that the three children, who excelled academically, would attend American universities. The death of Shah’s father instilled a new drive in the boy: If life was short, he’d better be aggressive.

“If I have the opportunity and the time is right, I’ll take the risk and let the chips fall where they may,” he says.

His sisters studied medicine in the U.S. and practice in Houston, where his mother, Fatma Shah, relocated in 1985. His older sister, Seema Shah, is an infectious disease subspecialist. His younger sister, Farah Shah, is a dermatologist.

Faisal Shah became a lawyer.

CROSSROADS

Shah’s star rose quickly in the coming two decades. He earned a bachelor’s degree in business administration at the University of Colorado and a law degree from the University of San Francisco School of Law. He held several law jobs and earned a reputation as a top corporate attorney before becoming a partner at Pillsbury Madison & Sutro, a large firm in Los Angeles that is now Pillsbury Winthrop Shaw Pittman.

A partner at 35, Shah realized he’d finished his checklist and was bored. He loved the business side of law. He wanted more of that.

His college roommate, Ed Priddy, was a part-owner of Richardson Labs, a Boise company with more than 200 employees that grabbed market share after Congress largely deregulated the dietary supplement industry in 1994. The company was preparing to go public and needed to beef up its legal department. Shah was intrigued enough to take the job at a 75 percent pay cut, hitting the reset button on all he’d achieved.

“Not only were the partners surprised, I think my family was surprised, because nobody walks away from the accoutrements of being a big-firm lawyer to something that seems so risky,” Shah says. “I was an accomplished professional. I was there. And I said, ‘No. This isn’t it.’ “

Once in Boise, Shah led an effort to stop an Australian company from selling products under the Richardson Labs brand name. The fight turned Shah’s attention to brand and intellectual property protection, the space where he’d later make his millions.

In 1998, Richardson sold to Florida-based Rexall-Sundown Inc. Instead of steering the company through the legal wrangling involved in a public offering, Shah instead ironed out the paperwork that ended his job.

SHAH’S MATCH

At Richardson Labs, he was usually one of a handful of workaholics working past midnight. Another was Hepworth, who oversaw everything tech at the company.

The pair took to each other during after-midnight chats at the office. They shared a dry sense of humor. Early in their friendship, conversations focused on business. That never changed.

Hepworth says he and Shah never formally discussed starting a business together. It just sort of became clear that had to happen. Richardson kept Hepworth on the payroll to tie up loose ends after the sale. Hepworth and Shah started bouncing ideas off each other, looking for something to run with.

About eight months after Richardson Labs closed, they found it at a monthly lawyer gathering called The Breakfast Bite, hosted by law firm Davis Wright Tremain. A speaker talked about the new challenges to intellectual property law posed by the Internet, which was just starting to catch on.

Shah listened raptly. This was big. If anything, he thought the speaker wasn’t grasping the enormity of the problem. Hepworth agreed.

After the lecture, the pair headed back to the empty Richardson office and started sketching out a plan that would become their company, MarkMonitor.

“James and I came back and did a little magic, put together some software that could track infringement on the Web,” Shah says. “That’s how it started.”

Companies use the software to target illegal use of their brands.

LONG HOURS

Shah brought legal expertise to the table. Hepworth knew software. Both had few hobbies outside of work.

Shah, who is currently in a relationship, has never married or had children. Hepworth was recently married when he and Shah started working together but had not yet had his two children.

Shah said he and Hepworth put in more late nights writing patents, software and business plans during the early MarkMonitor days than he had during his time as a lawyer.

“With a startup, you take it home with you, ” he says. “In fact, you don’t go home. You stay at the office and try to make something happen.”

Today, Hepworth’s most common advice to young startup founders is to double their hours at work.

“It’s hard for people to understand what it takes,” he says. “We’d stay until midnight or 1, like, every day. Not just weekdays.”

Shah and Hepworth scraped together startup money from family contributions and angel investors. Shah lived on savings for the 18 months it took to develop MarkMonitor to the point it was ready to pitch.

Over time, the MarkMonitor software gave subscribing companies abilities to find and stop online infringement of their logos, brands, domain names and products, and to protect against online fraud and phishing threats.

Once the software was ready, Shah took weekly flights around the country, meeting with Fortune 500 companies, explaining why they needed MarkMonitor to protect their brands in cyberspace.

Hepworth joined Shah on many of the trips. They’d share a single room in the cheapest hotel available, a practice MarkMonitor employees later complained about when they were expected to do the same. Employees, the founders discovered, expect separate rooms.

The first contracts were validating. They brought in sums of money that seemed huge at the time but paltry in retrospect, Hepworth says.

Hepworth and Shah say they never worried the company would fail.

“We didn’t really think of it that way,” Hepworth says. “We just thought we were right, that no matter what, this was going to make it big.”

Sales came naturally to Shah, who had hustled selling Gallo Wine between undergraduate and law school. Shah would kick up the charisma and pinpoint the problems each company could solve by subscribing to MarkMonitor. That teed up Hepworth to explain how the software worked.

“He was good at getting people excited, then I’d come in and back it up with facts,” Hepworth says.

RECESSION SPEEDBUMP

The darkest days for the company were around the time of 9/11. About 15 of the company’s 35 employees were laid off. Everybody, including Hepworth and Shah, took a pay cut for six months. Several more employees left for greener pastures.

Shah says his confidence never wavered. The company recovered and grew to more than 300 employees before Hepworth and Shah sold it to Thomas Reuters in 2012 for a price Shah says was in the “hundreds of millions.” The company held contracts with the majority of Fortune 1000 companies, Hepworth says.

“There are moments of doubt that creep up for any startup founder,” Shah says. “But there was never any moment that I ever thought this wasn’t the right place to be and that this wasn’t going to be a big space. You could bank on it.”

The next year, Hepworth and Shah sold First to File, an online patent management company they’d spun off of MarkMonitor in 2006, to CPA Global for an undisclosed price. Hepworth still works as chief technology officer at First to File, which has 15 employees in Boise.

A NEW HOBBY: MENTORSHIP

Around 2010, University of Idaho graduate Aaron Stanton realized he needed help finding a path for BookLamp, his 2-year-old Boise software company that used algorithms to analyze and categorize literature.

Stanton asked Rick Ritter, who oversees companies at the Boise tech incubator The WaterCooler, if he knew any startup veterans who might be willing to be a mentor. Ritter directed him to Shah.

Stanton says he met Shah for coffee weekly to bounce ideas off him. He says Shah spoke from experience without reveling in his own success or getting huffy if Stanton didn’t take his advice. Shah provided a different voice than BookLamp board members for a simple reason: Shah, who then had no investment in BookLamp, could let him make mistakes. That was invaluable, Stanton says.

The relationship became more formal when Stanton recruited Shah and Hepworth to become board members. The two men invested in the company and four or five others in Boise, Hepworth says.

BookLamp sold to Apple in July for between $10 million and $15 million - a successful exit in the startup world.

“I feel I owe a great deal to Faisal,” Stanton says. “I don’t know if BookLamp would have been around if he hadn’t been around.”

Ritter directed another young entrepreneur, James Robson, to Shah and Hepworth for direction on his startup, a file encryption company, Completely Private Files. That was in 2008 during the Nebula Shift years.

“I was floundering along with how to do it,” Robson says. “My strength is the technology. It’s not the business. They were willing to put in the time to think about the business to see where it might succeed and steer it away from where it might fail.”

Robson sold the company in 2009 for an undisclosed sum, another successful exit for Boise.

Shah says five or six companies passed through the Nebula Shift incubator office. Two were sold. The rest petered out. Today, AppDetex fills the Nebula Shift space, and Shah’s mentoring happens off-site or after hours, as was the case with Robson and Stanton.

Shah, who’d picked up the mentoring bug from Hepworth, rounded up members of the tech community to start B-Launched, the adult version of B-Launched Jr., offering startup mentorship and thousands in startup money to the winners. Shah estimates he spends about 30 percent of his time mentoring entrepreneurs.

A CIVIC BENT

Shah remains active with the B-Launched programs as a mentor and financial backer. He’s also working with the city of Boise and two of his B-Launched cohorts, Treetop Technologies founder Jason Crawforth and longtime tech industry veteran Karen Ann Meyer, to create a tech industry meeting space in the city. The project, tentatively titled “The Trailhead,” would provide a venue for tech events as well as a connection point for startups and investors. Shah and the others plan to fund part of the project.

How many more companies will Shah start? He laughs at the question. He says he always considers his current project his last, but he doesn’t really believe that.

“It’s in me to do this,” Shah says. “I’ll tell you one thing. I’m not stopping anytime soon.”

Hepworth guesses seven or 10 startups are yet to come. He and Shah say they’d love another chance to work together.

Stanton says Shah will find more BookLamps to dote over.

“He will probably be starting companies until the day he dies,” Stanton says. “But Faisal is the godfather of startups. If you layer in companies that simply won’t exist if he didn’t exist, then he’s got an infinite supply in him.”

LOAD COMMENTS ()

 

Click to Read More

Click to Hide