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The odyssey of a software entrepreneur

Paul Wetenhall:
The odyssey of a software entrepreneur

The thin black box Paul Wetenhall fishes out of his desk–an electronic Bible, it turns out–hardly looks like a business’ bane.
Wetenhall can set you straight on that –and how.
Having navigated the shoals of SelecTronics Inc.’s short-lived, stormy sail into manufacturing this and other hand-held electronic devices, and having jumped ship when the firm vetoed his attempt to guide it back on a software track, Wetenhall can spin stories of tough times and lessons learned.
Now, he is drawing on those lessons–and on 13 years at Xerox Corp.–to steer his own software start-up to success.
QSoft Solutions Corp. develops and markets software used to improve business processes and group work, mining the niche most commonly characterized as total quality.
“My effort over the last couple of years has been to really become the person and the company that knows more about this topic than anybody,” Wetenhall says, speaking with an ever-so-slight Southern drawl.
He seems well on his way to that goal.
Wetenhall discerns the incredible promise of computer-aided group work, says Richard Leo, vice president and general manager for Xerox Quality Services, a division of Xerox.
“The thing I’m impressed about with Paul is his clarity of vision and thoroughness to plan and execute a strategy consistent with the vision he has,” Leo adds.
QSoft got its start by developing products for XQS. MeetingRight, its first product, helps plan agendas and is used during meetings for taking notes, keeping time, brainstorming and producing meeting minutes. Another product, SolvingRight, guides groups through structured problem solving.
The firm also launched a catalog late last year that brings together 35 products by QSoft and other software firms, all related to total quality and process improvement.
And in July, QSoft–collaborating with legal and health care experts–landed a $50,000 Phase I small-business innovation research grant to develop encryption technology for filing medical records electronically.
To handle these projects, QSoft operates as the classic virtual corporation, Wetenhall says, with just four employees at its East Rochester offices.
“My objective is to have very high revenue per person, as opposed to have a lot of people,” he says.
An example of this virtual approach is QSoft’s latest venture, a benchmarking product that hits the market next month.
QSoft brought together benchmarking expert Robert Camp and software developers in Canada and Philadelphia to create the product, which QSoft will market.
Efforts like these are nudging revenues at the 3-year-old firm above the $500,000 mark, Wetenhall says. So far, QSoft is breaking even in the income column.
More importantly, he believes QSoft is within months of hitting the proverbial sweet spot: the point at which technology–in this case, QSoft software–and customer demand converge.
But Wetenhall, a cautious man, knows better than most how unpredictable–and unforgiving–the market can be.
Wetenhall’s first experience as an entrepreneur began in 1984, when he and Michael Weiner, another Xerox employee, drew up the business plan for Microlytics Inc., now a subsidiary of SelecTronics.
The pair pitched their idea to the venture capital arm of Xerox, which in 1985 agreed to fund the project and spin out a chunk of its technology related to computational linguistics and data compression. Other local investors bought shares in the venture as well.
With Weiner at the helm, Microlytics licensed its technology to companies that made electronic dictionaries, translators, thesauri and spellcheckers. In the beginning, Wetenhall stayed at Xerox and served as a board member for the start-up.
Soon Microlytics’ customers began to read like the Who’s Who of computer companies: Microsoft Corp., WordPerfect Corp., WordStar International Inc.
“If you go to Finland, I suspect even today WordPerfect gets their Finnish spellchecker from Pittsford, New York,” Wetenhall says.
By 1988, sales hit the $2 million mark. The firm’s staff swelled to nearly 20 and it needed someone to manage the explosive growth. Enter Wetenhall, who broke ties with Xerox and signed on as executive vice president and chief operating officer.
Around the same time, Microlytics hooked up with SelecTronics, a manufacturer of hand-held dictionaries then based in Minneapolis. Up to this point, Microlytics had made a mark by licensing its technology. But Weiner, other managers and the firm’s board had grand dreams for Microlytics and believed the only way of achieving their vision was to join the tangible world of widgets.
“Everybody was so focused on assets that are physical and on building things,” Wetenhall explains. “And they perceived “things’ as having large revenue–and that’s the key.”
“People were saying, “You know, if we made these widgets, instead of just getting the $5 we get for the software that’s in it, we could get the $50 that they get when they sell it to Macy’s or Sam’s or whatever.’ Never mind that the $50 only had $7 of profit content.
“And never mind that the $50 in revenue meant that you had $30 or $40 in inventory costs. And that that $50 you had to collect as a receivable.”
Despite these issues, Microlytics ultimately merged with SelecTronics, becoming a subsidiary of that public company and taking on the soup-to-nuts task of manufacturing and marketing hand-held devices with Microlytics technology.
“It turned out to be just a terrible thing,” Wetenhall insists.
He also describes the time as a wonderful learning experience, gaining insights into offshore manufacturing and the consumer business, as well as the messier areas of human dynamics.
For while external factors were at play–each week seemed to bring another retail customer to bankruptcy court–Wetenhall points to internal woes as well.
“There were things that were the result of basically people’s inability to work together, when you cut through everything else,” he contends. “Or an individual person’s greed outweighing their view of their role relative to the team.”
By 1991, SelecTronics was hemorrhaging red ink and cutting its staff. And by this point, Wetenhall and Weiner realized their management styles–Wetenhall the disciplined, systematic manager; Weiner the hyper-energized, frenetic visionary–were irrevocably at odds.
“I got to the point where I said I’m not sure I’m that useful to the company anymore, and I’m not sure I really like this anymore either,” Wetenhall says.
“Some people would say I was too calm,” he muses, recalling that period. “I didn’t lose any sleep. I didn’t have an ulcer. I think my basic philosophy of life is work hard, do things but don’t worry about them.”
He learned that outlook from his father, who worked for Eastman Kodak Co. when Wetenhall was born in 1952. Five years later, the family moved to Utica after the elder Wetenhall took a job with a metal-working company there.
When Wetenhall was 10 years old, that firm migrated to Orangeburg, S.C.–and so did the Wetenhalls. Back then, Orangeburg was a small farming community that viewed Northerners as “a notch above the Communists–but not too far above,” Wetenhall recalls.
As a young boy, he lived through the tense period of school integration in the 1960s. Those turbulent times left their mark; when choosing between his top two picks for college–Cornell University in Ithaca and Georgia Institute of Technology in Atlanta–Wetenhall recalls seeing a photo of campus radicals at Cornell, bandoliers of bullets hung across their chests as they stormed one of the Ivy League halls.
Wetenhall opted for Georgia Tech.
After graduating in 1973 with a bachelor’s degree in industrial engineering, Wetenhall moved straight to graduate school at the University of North Carolina at Chapel Hill.
Carolina stressed collaborative work, Wetenhall’s first taste of this quality movement tenet. Earning an MBA in 1975, he interviewed with a slew of companies before casting his lot with Xerox.
Although Wetenhall held a Rochester connection–his grandmother and two great aunts lived here then–locale was not a factor in joining Xerox, he says. Rather, the firm offered him a post combining finance and marketing–a unique combination that, coupled with Xerox’s high-voltage spirit that Wetenhall likens to the hipness of Microsoft today, clinched his decision.
From 1975 to 1981 the junior executive moved through a variety of analyst jobs in marketing control, marketing analysis, pricing and sales operations, taking on a new job every 12 to 18 months.
A breakthrough assignment came in 1981, when Wetenhall was tapped to manage Xerox’s incentive program for its U.S. sales force, a $100 million budget covering roughly 5,000 workers.
Unlike previous managers, Wetenhall incorporated quality concepts into the process, from feedback sessions with the sales reps to systematic information gathering.
Many of these techniques he learned from the Judicial Process Commission, a local activist group pushing for reform of the criminal justice system. Wetenhall transferred the group’s emphasis on consensus building and collaborative work to his job at Xerox, which still was in the early stages of its total quality movement.
Wetenhall drew on those skills even more a few years later, when he was asked to lead a special project to put together Xerox’s first private-label deal.
The 33-year-old Wetenhall, by then manager of pricing for Xerox products in the United States, hacked out the complexities of the deal with senior management at A.B. Dick Co. USA in Chicago, which planned to sell Xerox copiers under its own name.
Wetenhall pulled off the project–from initial negotiations to product shipment–in a stunning seven-month period. He credits such swift completion to team collaboration and his disciplined approach to the negotiations.
Soon after wrapping up that project, Wetenhall was promoted to manager of marketing for Xerox’s mid-volume copiers, ones selling in the $5,000 to $30,000 range.
At that time, Xerox was getting whipped by Japanese rivals, especially in the mid-volume market, says Roy Haythorn, then vice president of marketing at Xerox and Wetenhall’s boss.
Wetenhall took the lead in launching a family of products–the 50 series of copiers–that was highly successful in regaining market share from Japan, Haythorn says.
“He’s bright as a whip,” Haythorn observes. “I’d always bounce the business issues off Paul, and he always helped me come to a rational, logical decision. He’s a fact-based kind of guy, where I might be more driven by intuition.”
When Wetenhall first toyed with leaving Xerox to join Microlytics in 1985, Haythorn persuaded him to stay a little longer.
“I thought he had very significant potential as a fast-track manager,” Haythorn says. “But Paul always had a burning desire to play the role of entrepreneur.”
In an ironic twist, Haythorn last year became president and CEO of SelecTronics, which two years ago pulled out of manufacturing and returned to its roots as a licenser of software and technology.
And this week, Haythorn also stepped into the president’s post of the Software Executives Group of Central and Western New York, a professional organization of Rochester’s growing software industry. Wetenhall is a member of SEG’s steering committee.
Wetenhall and his wife, Katharine Pearce, a controller at Xerox, lived in the city until last year, when they moved with their two children–John, 6, and Sarah, 8–to Brighton.
Wetenhall, an active member of the Lake Avenue Baptist Church, plans to turn his energies toward the non-profit sector some 10 years down the road. Until then, his focus stays with QSoft.
If his estimate in on target, QSoft will need a shot of capital within the next year to fund its next stage of growth.
“I’ve wanted to do this on a self-funding model, because even though I’m 100 percent convinced that I’ve got something here that I think is important, I’m not 100 percent certain that my timing is exactly right.
“Rather than the sort of lesson I learned from Microlytics, the more pie-in-the-sky, I want to give people something that’s well-thought-out,” he says. “That’s kind of consistent with my personality. So that’s what we’re doing.”


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