The following is the writeup of an interview I conducted with David Cohen, entrepreneur and principal of Colorado Startups, LLC and founder of TechStars.

The Foundations

David Cohen, serial entrepreneur, founder, and principal of Colorado Startups grew up in a family of five in central Florida. His father, initially a partner of a CPA firm, went on to start and grow his own firm from three to around 50 employees. Cohen attributes a lot of his early business experience to his dad, who taught him basic life and business principles, supplied him with books on money management and financial topics, and instilled a “work for reward” ethic early in his life. Interested in computers and technology at an early age, Cohen was programming computers by the time he was 13 and took advanced placement Computer Science courses in high school.

Cohen continued his interest in technology by pursuing a Computer Science undergraduate degree at a Florida university. He supported himself during this time stringing tennis racquets in a golf and tennis shop. One summer during his undergraduate career, Cohen landed an internship writing code for a Department of Defense agency. Eventually, the undergraduate experience came to an end and Cohen’s search for any suitable programming job landed him a single job interview that would change the course of his career forever.

Doing Time in the Corporate World

Cohen’s interview out of college landed him a job with a regional planning council. There he was tasked with the development and administration of a Borland Paradox database that was used to dispatch vans for transporting elderly residents around town. Cohen became the sole technologist working at the council. In addition to his database work, he quickly assumed the role and responsibilities of information technology guru, keeping the electronic equipment working and changing the occasional forgotten password. His work on the dispatch database involved an increasing amount of custom coding such that Cohen eventually sourced and recommended the expertise of a company called Automated Dispatch Services to assist with the council’s dispatch needs.

Automated Dispatch Services (ADS) brought Cohen into contact with his future business partner, David Brown, then director of engineering at ADS who was responsible for installing the ADS dispatch system for the regional planning council. The ADS solution was a DOS-based application as, at that time (circa 1992) Microsoft Windows was still in its infancy and unproven for enterprise applications. Over the course of the next couple months, Cohen became acquainted with Brown during the install phase and in a support capacity afterward as they traded off pager nights, responding to round-the-clock IT support needs.

It was at this time that Cohen and Brown started postulating their what-ifs. They questioned the current state of the ADS application, and wondered if it could be implemented faster, better, and cheaper, using the Windows platform. Targeting the Emergency Medical Services (EMS) industry and focusing specifically on dispatching ambulances, Cohen and Brown quickly worked up a proof-of-concept version that accessed the same database as the existing ADS system. They even went so far as to give a demonstration to Brown’s boss, who rejected the prototype on the grounds that Windows was too new a platform, and that ADS was not interested in pursuing the software business.

Cohen had been with the regional planning council for over a year by this time. During this time, Cohen felt that he was working extremely hard, yet being compensated at the level of a “kid out of college.” He and Brown were the single points of contact when things when wrong, and felt as though they were adding most of the value to the company. They questioned the need to build someone else’s empire, when they could be building and owning their own. The Windows prototype soon became their corporate exit strategy and the beginning of Cohen’s entrepreneurial journey.

Beginning the Entrepreneurial Journey

Unhindered by obligations imposed by material possessions or family, and lacking much business knowledge including any understanding of angel investors and venture capitalists, Cohen moved to Arizona, hired a programmer named Eran, and started work turning the prototype into a real product. This team of two worked in 12-hour shifts, Cohen in the morning, and Eran at night. Having had all financing requests turned down by various banking institutions, Eran was compensated with the promise of 1.5% in royalties per unit sold for the life of the product, and Pinpoint Technologies was born.

Starting Up

Cohen and Brown contacted a former ADS customer and arranged a demonstration of their work-in-progress. At the customer’s site, they connected their Windows version of the software to the customer’s existing database and proceeded to present the customer with their existing data alongside maps in the graphical Windows-based environment. The customer was ecstatic and agreed to loan them $100,000 in return for 2.5% in royalties per unit sold, for the life of the product.

This seed money supported four individuals’ development for a year. Pinpoint Technologies released their first version of the software in August of 1995 in conjunction with the release of Windows 95. Their first release was a disaster; however an additional three months of bug-fixes resolved many of the outstanding problems. Finally, as their money was about to run out, they attended an industry trade show, courted an interested customer, and made the second sale of their product narrowly avoiding having to close up shop.

The Turning Point

When they started, Pinpoint Technologies was intended to be a lifestyle business. They imagined, best-case, that some day they each might be making $100,000 a year in salary with at most 10 employees companywide. They never intended to start this company with the sole interest of making large financial gains, but did it more for the freedom and independence of working for themselves. During their startup phase, their primary metric was the number of months they could afford to live on their current cash balance. Cohen described a feeling of personal relief when this metric increased to around 16-18 months.

The company’s turning point came during the Y2K craze as everyone scrambled to purchase new Computer Aided Dispatch (CAD) systems to replace their legacy systems affected by the Y2K anomaly. Sales during this year hit record highs and Pinpoint Technologies was bought out by ZOLL Medical Systems at this time. The next year, they were unable to sell anything due to the mass upgrade that occurred the year earlier. This was only a temporary problem however and today, the Pinpoint Technologies system has been deployed in over 600 cities and has dispatched over 80 million ambulances. Their company, now operating under ZOLL Data Systems name, is currently operating with annual sales in the tens of millions.

Value Proposition

The Pinpoint Technologies CAD system was disruptive in an industry dominated by companies that offered systems that were technological dinosaurs, came with poor customer service, and carried price tags in the millions. Cohen indicates that Pinpoint Technologies rode the Windows and enterprise software waves. They were able to design and deliver a system that was faster and smaller, with a price tag of around $80,000 and a promise of first-class customer service. Cohen directly attributes the Pinpoint system as causing a consolidation in the industry and a shift in pricing structure. Today the typical Computer Aided Dispatch system is priced at around $100,000 per installation.

Problems Along the Way

With around $125,000 in loans during their startup phase, Cohen describes this time as the scariest point in the company’s history. Cohen also does not recommend offering royalties on sales as a means to finance the company as was done with Eran and their first customer. When their application took off, Pinpoint Technologies paid back their initial loans of $125,000 and bought out their customer’s rights to royalties on sales for around a million dollars. A similar royalty buyout deal was arranged for Eran when he ceased operations with the company. While the royalty deals were not the best financing method available, they were a necessity for getting the company off the ground, the alternative being no company at all. Cohen mentions that when it comes to starting up, you do what you must to get by and make things succeed.

Cohen identifies the credibility gap as a major obstacle that Pinpoint Technologies had to overcome as a startup company. He believes their initial customers had to take a great leap of faith by purchasing their application, a problem that didn’t disappear until they reached an installed base of around 10-15 customers. This installed base only caused another problem of rapid growth, once the application caught on. Cohen recalls a period where a rapid increase in head count required a continuous training effort, helping the new employees come up to speed on the product and company processes. This problem soon passed as these employees were able to then take on the responsibility of training subsequent new recruits.

The Present Day Entrepreneur

Back in 1993, the David Cohen of Pinpoint Technologies was primarily a technologist admitting to having very little business acumen at the time, relying on a lot of luck and a determination to execute. Today, his determination to execute is still evident along with an expanded business repertoire gained through active blogging and angel investing which he attributes to defining his reputation in the community. Around a year ago Cohen was not known in these parts, but about six months ago Cohen started making an effort to meet people and develop relationships in the Boulder business community.

Angel Investor

Cohen currently invests at the angel level in startup companies located in Colorado. His angel investing activity is run through his company, Colorado Startups, LLC and is currently invested in four companies. Cohen believes there are many angel investors that don’t actively invest and believes that if you’re going to learn about angel investing, the best way to get started is to find companies and start making investments. Cohen indicates that his strengths don’t lie so much in the financial evaluation of companies but more in the vision and strategic analysis of technical companies.

Community Activist

Cohen is very active and vocal in the Boulder business community through his angel investing and blogging activities. When comparing the local business community to what he experienced in Florida, he mentions that in Florida the business community was very self-interested and the ecosystem was terrible. Most entrepreneurs and business people in that environment didn’t have time to talk to others. Cohen attributes the Boulder community to being very open and receptive. Cohen makes an effort to develop relationships with people he respects and recommends continuing the dialog by having purpose when meeting, developing common interests, creating value for the other person, and giving back to the person and the community.

TechStars: Giving Back to the Community

One of the ways Cohen is practicing what he preaches is through his new program, TechStars. TechStars is an opportunity for ten startup companies to receive a little bit of initial seed money and a lot of mentoring, advice, and access to advisors. Cohen often makes reference to his past when he was starting up Pinpoint Technologies and emphasizes that he was “blissfully ignorant” at the time, didn’t have the business background, and didn’t seek out advisors or mentors. Cohen believes that through TechStars he can provide the selected startup companies a big advantage by providing opportunities he now realizes are important for creating successful ventures.

Entrepreneurship and the Corporate World

When asked if Cohen would ever consider going back to the corporate world, the expected (and actual) answer was an obvious no. If he ever had to, he would consider an early-stage company with equity and would potentially consider a stint in the corporate world to see how things are done in various industries or companies. Cohen believes that innovation is stifled by most large companies. He specifically identified Google as one of the exceptions to this rule given their policy of allowing their employees allocate 10 percent of their work towards self-designed projects.

Cohen sees a lot of people that hold down full-time jobs dabbling with entrepreneurship on the side. He thinks that many of these people are capable of doing cool and innovative things, but are mostly scared to fully commit to their side projects due to risk aversion. He believes a lot of these people think that some day they’ll do something but in reality never end up doing anything. Cohen states that if you don’t put your whole energy into doing something, it will most often never happen.

Future Prospects

Over the course of a decade, David Cohen, has transformed himself into the serial entrepreneur that he is today. From his beginnings growing up in an entrepreneurial family, to his post-undergraduate transformation from IT employee to entrepreneur, Cohen was able to revolutionize the Computer Aided Dispatch industry early in his career through his startup company, Pinpoint Technologies.

The future prospects for Cohen and the Boulder business community look very positive. With TechStars on the scene, Cohen is making a genuine attempt to give back to the community and help others in ways he wished were available when he was starting on his first venture back in 1993. By doing so, he is helping to strengthen the Boulder business community, acting as a catalyst for opportunity and growth in the area. Cohen’s background in entrepreneurship and attitude about life can be seen as a success story that others should aspire to learn from and imitate.

This entry was posted on Monday, February 19th, 2007 at 12:54 pm and is filed under Entrepreneurship, Interviews. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.