Device42 Cofounder Returns to Where It All Started: The Grove

Serial entrepreneur Steve Shwartz returned to the Elm City this month to chat with Startup Grind New Haven at The Grove—the innovation hub where he cofounded his latest business venture, Device42.

In a conversation led by Executive Director Nick Caplan, Shwartz dished on his college experiences, the importance of artificial intelligence and the success of Device42.

Shwartz described an “unremarkable childhood” growing up in New Bedford, Massachusetts just outside of Cape Cod. He took a chance by enrolling in an experimental, yet exclusive honors college known as New College of Florida.

The public liberal arts school does not record letter grades, and it once accepted applicants averaging the third highest average SAT scores nationwide, Shwartz said.

Students were able to study “whatever you wanted.” For Shwartz, he chose cognitive psychology and endured his first experiences with computer programming—two disciplines that would set the course for his illustrious professional career.

Shwartz worked a brief stint in Boston as a software developer before earning a national science fellowship position at the Johns Hopkins University to research artificial intelligence.

There, he learned about many of the essentials of artificial intelligence: machine learning and how to get computers to think like people.

Before cofounding two companies in the 1980s, Shwartz was a research faculty member researching artificial intelligence at Yale University. By working with famed professors in New Haven, Shwartz seemed on track to become an academic, but then he started to “question his direction in life.”

Thus began his track record as a founder and angel investor.

Shwartz co-founded Cognitive Systems at a time “when artificial intelligence was hot.” Then came Intelligent Business Systems—a patented natural language product—which built off the lessons learned from Cognitive Systems.

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His first of two failed attempts to retire came after he founded (and led) Esperant Technology, a leader in business intelligence tools for much of the 1990s. The company built reporting tools that allowed businesses to retrieve large-scale, enterprise-wide data.

“Retirement never seemed to stick for me,” Shwartz joked.

Among his many roles, Shwartz also owned CTO Consulting LLC, and served as a board chair of Marrakech Inc, and Tangoe, where he also worked as chief technology officer.

Shwartz is also a longtime angel investor with several successful exists. An 18-year investor of SPS Ventures in Woodbridge, he was part of the company’s early investments in mobile, internet and software companies.

For now, his passion resides with Device42, a leader in the configuration management database. Founded in 2010 by Raj Jalan, the company continued to grow in 2012 with Shwartz assisting the project at The Grove. He said the company left the New Haven coworking space in 2014 for a location in West Haven.

Since then, the company has enjoyed a large amount of growth. Shwartz said that Device42 drew revenue of $500,000 in 2014, $1.5 million in 2015 and $7 million in 2017, and it is expected to earn $13 million in 2018.

Budding entrepreneurs, he says, should begin working for a startup to learn what it takes to run a business.

Shwartz urged the audience to take advantage of incentive programs in the state, such as Connecticut Innovations, that award local investors and provide tax credits for businesses.

“It encourages investors to invest in Connecticut companies,” he said. “It is a big incentive.”

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