Military Upgrade

Scharf and Lord won’t let us spill the beans about their financials publicly, but the duo says they were able to recover their initial $125,000 investment in the company at the end of last year, on less than half-the-sales of 2006. And more orders are piling in. So what exactly do they do?

Fighter jets and artillery units need at least as much high-speed communication as an average U.S. teenager. But historically, military equipment was connected with copper cables and bulky switches that didn’t measure up well in the era of fiber-optic and wireless communication. So while giants like Motorola were busy developing products for the civilian market, the military niche was largely untapped, leaving ample room for boutique shops such as Protokraft to develop custom-order communications solutions for the 100 or so U.S. military equipment makers out there.

Scharf and Lord had no initial intention of working for Uncle Sam. The duo started a telecom equipment company during the go-go 1990s. “We rode the elevator up, and then rode it down,” says Scharf of the Stratos Lightwave IPO in 2000, a painfully typical trajectory of many high-tech IPOs of that period. Stratos shares shot up to $66 shortly after the company went public, then dipped to mere pennies in late 2002. The shares now change hands below the $10 mark. After a couple of years of the rough-and-tumble, the entrepreneurs said “No, thanks” to the stresses of the public market and took a product development gig for the British Army. The Brits’ unhappiness with their original supplier opened Scharf’s eyes to how obsolete military communication hardware could be in comparison to civilian technology. Since then, the duo has been busy doing things like custom-designing Internet routers so they will not melt on the battlefield. Protokraft’s products can be seen in action in Iraq and Afghanistan, both considered “harsh environments”—technospeak for high-temperature and battle-intensive areas.

Protokraft currently works in the fields of avionics, naval and land mobile tactical equipment. Their products, which cost five to 10 times as much as their commercially available equivalents, allow fast communication between missile launchers and launch controllers via fast Ethernet fiber optic cables, enabling safe distances between them. The company’s 10 full-time employees are now developing encryption boxes for the National Security Agency and a high-tech gizmo that will fly aboard B-52 bombers. With Raytheon, General Dynamics, Lockheed Martin, Boeing, L-3 Communications Systems and Airbus on the client roster, Scharf and Lord are facing ample business prospects. “Now we have military coming to us with their needs because what they want doesn’t exist,” Scharf says. Sharf, a New York City native and Lord, who was born in Florida, chose Kingsport as headquarters in part because most of their clients are located within a one-day drive from East Tennessee. Also, many subcontractors (who print circuit boards, etc.) are also housed nearby. The company just expanded its floor space and expects to increase employee count to 20 people.

For a company with a name chosen somewhat at random—“It’s just a name,” Scharf says. “So many names were already taken.”—Protokraft has made quite a name for itself.