February 5, 2007

Click here to listen to the full interview with Trent Hein (.mp3 format).

Click here to view the transcript of Trent's online chat with the Camera.

Fresh out of college in 1991, Trent Hein emerged onto Boulder's tech scene with XOR Inc., a startup he co-founded with Herb Morreale. The startup skyrocketed — revenues grew 776 percent between 1993 and 1998 — and by 2000, had 550 employees. In 2001, two years after an investment firm gained an ownership interest, both Hein and Morreale moved onto new ventures. Hein co-founded Applied Trust Engineering, a network security services company, with former XOR co-worker Ned McClain. Morreale now is with software startup Medium.

Sitting in the conference room of his second startup, Hein recently talked with the Daily Camera about his experiences during the past 15 years and what he learned from running startups during the booms and busts.

Here's an excerpt from that discussion. It has been edited for clarity and space. Click on the Podcast link to listen to the full interview.

Q.How soon out of CU did you get involved with your first company?

A.Myself and Herb Morreale, actually started XOR right as we graduated. A couple months before we were due to graduate, we started developing a set of clients and sort of a business plan. And then right out of college, we actually rented a house together — not something I would recommend. Herb's a wonderful guy and still a great friend, but I don't know that I would recommend living and starting a business with a person in the same house. But we were kids right out of college and we didn't know what else to do. And we figured that would keep our operational costs down. It certainly did, but it meant that we lived and breathed work, 24 hours a day.

Q.How quickly did XOR begin growing and what fueled that boom?

... We had a belief that the Internet was a viable commercial medium, that you could sell product on it. In fact, we had a number of firsts at XOR. We were the first company to put a bookstore on the Web, back in 1992 ... . But it became commercially viable to use the Internet to do a lot of things. That really drove a lot of our growth. As well as just in general, networking. A lot of folks began using computer networks in health care, in the financial sector and so on. And they needed expertise that they might not have had within their organization.

Q.How quick was your turnaround of leaving one business and starting another?

A.When I left XOR, I was in the process of finishing the third edition of the UNIX system administration handbook ... So I took a few months off and really focused on getting that book out the door, which was excellent. And then turned onto, what was next?

Ned McClain who was director of infrastructure engineering at XOR also left the company and was eager to start a business in the security/infrastructure space. Ned and I had worked together very closely for many years, and it was just a perfect fit. It was just the right time for both of us.

One of the things that I think that's really important about starting a business is you have to have somebody to do it with, someone who you can bounce ideas off of, someone who can celebrate with you when times are good and someone who can help you through the bad times.

Q.How much did the events of Sept. 11, 2001, impact your business?

A.Because we're not in the physical security space, I don't know how much Sept. 11 directly influenced us. Certainly it heightened the public's awareness of security in general, and we do work in IT security, that's important for people to be aware of what's going on, no question about that.

... We originally would have celebrated our opening day as Sept. 11. We were planning that morning, on moving into our first office. And for obvious reasons, we now celebrate the start of the company on the day that we actually received our incorporation papers, which was Sept. 24.

Q.What have you learned from your past experiences to apply to this job?

A.The No. 1 thing I always tell folks in small businesses, is "Don't panic. No matter what happens, don't panic." It's easy, especially in a small business to take one particular situation — something didn't go well at a presentation; or something didn't go well with a client; or something happened totally externally to your business; you've got a new competitor that either is doing well or is not doing very well at all. It's easy to get very focused on that and lose sight of what you're trying to do. And the reality is, all around us, there's all of these events that happen, and if you have a strong vision and a good execution, then those other events are going to kind of fall to the side.

You just have to stay focused and not get too distracted by the things that could freak you out, so to speak. We certainly had that happen many times here and had that happen many times at XOR ... and the reality is, stay focused, it works out.

Q.What are some of the hurdles you have faced and currently face in your business?

A.Finding the right people. That is something we struggle with every day here, finding people that want to work at an entrepreneurial environment, which really does require a lot of dedication and requires an incredible amount of patience.

Q.How does the technology sector here compare to when you first got out of CU? And what trends have you noticed?

A.In 1991, people thought we were crazy. But one of the reasons Herb and I wanted to start XOR here, is because we wanted to have a job in the network infrastructure space in Boulder. Certainly there were plenty of jobs in Manhattan or in California in that space that we could have gone and taken, but neither one of us were eager to move to one of those areas. We wanted to stay here in Boulder. And at the time, Boulder ... didn't even really have a publicly available Internet infrastructure. That was one of the things that we helped bring about during that era. So during that time, it was very different, people didn't understand the need to have wide-scale secure network infrastructure.

Then, toward the late-90s, certainly in the 1999-2000 era, it got to a point where you couldn't import people fast enough, and you couldn't hire people from the local market in this space. And then after 2001, we certainly saw an economic downturn and people were more readily available.

But boy, I'll tell you, we are right back to where we were in 1999 in terms of network and infrastructure folks. We are having at least as much difficulty finding and hiring folks in that space as we were in 1999. That's good and that's bad. That's good because that means the economy is better and that there is demand for this type of skill-set, but it's bad because it means we spend a lot of time and resources in recruiting. And maybe it's an opportunity for people to move to beautiful Boulder and that would make me happy.

Contact Camera Business Writer Alicia Wallace at (303) 473-1332 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it