Many businesses struggled or failed in the throes of the pandemic, but long-shelved business ideas also got brought to life.
QStart Labs LLC helped build them.
"Any time there's any kind of economic change, people take advantage of the moment to finally fulfill their dreams," co-founder Jeff Lamb said.
Over 14 years the Central Ohio software development and advisory firm has built technology and shaped the business models of some 70 companies – five of which were acquired.
"The reason people do business with us and work with QStart vs. any development shop is we care more about building the business than about building the technology," President Kevin Hiser said. "A lot of time we spend saying, 'Don't build this – put the money in sales and marketing instead' ... which is backward for a development shop.
"I want to sit down with founders; I want to help them move forward," he said. "I understand the sacrifices they make."
QStart took on more business in 2020 and '21 than a typical year, Hiser and Lamb said. Among the new clients are a pandemic-adapted dating app and a service for booking return legs of charter flights.
"There were tons of ways to solve new problems, and a lot of people with financial means to do it were taking the risk," Hiser said.
"We didn't have a single (pre-existing client) that failed during Covid," he said. "It was awesome – but it was a lot of work."
The founders get the services without giving up equity. QStart charges for software development at cost, profiting only from revenue sharing – so both founder and developer have incentive to succeed.
"We’re still alone in the space, as far as I’m aware, of an equity-free model for building startups," Hiser said. "The model itself has been very successful for us."
So why is QStart alone?
"We're not flush with cash all the time," he said. "It's really hard. I don't think most people have the true heart for startups."
QStart got its own start as the in-house tech team of Columbus VC firm NCT Ventures, augmenting the engineering of portfolio startups.
Lamb, whose title is "nerd," and NCT's managing partners spun QStart out to take on a wider array of clients in the 2008 recession.
Revenue fluctuates between $1.4 million and $2.8 million yearly.
It can take three or more years before a startup generates revenue to share, and the model is designed so that success cuts off the stream: QStart gets a cash payout if a client is acquired, typically a single-digit percentage, but then revenue sharing ends.
Exits include entrepreneurial education curriculum, a pet insurance quote engine, pet insurer and vehicle-vetting software for used car dealers. Some founders are working on second or third companies with QStart.
"I would love to have a unicorn," Hiser said. "It hasn't happened yet."
Lamb and a handful of QStart's 13 engineers are embedded full-time at the largest client, NCT-backed DOmedia LLC.
QStart doesn't do marketing, so new business comes in via referrals from clients and their VC investors. Now about three-fifths of business comes from markets outside Central Ohio such as California and Texas.
For a few of those, the acquirer pays for ongoing software development and maintenance at market rate.
How QStart keeps talent from leaving
The firm raised about $3 million in outside capital from NCT and others, but bought out their stakes five years ago.
"To me that was a huge milestone," Hiser said.
Lamb said he owns 51% and employees the rest; they get quarterly checks from revenue sharing.
While temporarily remote during the pandemic, QStart relocated from the Arena District to an office next to wooded parkland along the Scioto River in Dublin.
"The team calls it the treehouse," Hiser said.
That team has been stable over a decade – the shortest tenure is five years. At one point QStart grew to 30 employees, but "didn't enjoy it," Hiser said, so they scaled back to the core group.
"They are intrigued by constantly solving new problems," Hiser said. "They love to hang out; it's almost like a small family."
Recruiters call "every day," Hiser said.
"I say, 'I will give you the guy's phone number, because I want them to be happy,'" he said. "I want people who want to be here."
