Info-tech startup's persistence pays off in bidding wars.

Chandu Shah's face lights up when he talks about starting his own business. And then he talks about failure.

He founded his company, S4 Inc., in late 1999 to bid on a government contract to provide information technology support to the Air Force--and failed. He bid on a subcontract with the winning team and failed again.

Shah next secured a Small Business Administration-backed loan to buy one of the subcontractors on the original project. He bid on seven more contracts in 2001 and failed seven more times.

"Each was a different story. There was a lot of disappointment. We were losing money," Shah says. "This is when any small company is put to the test."

In his clipped Indian accent, Shah relishes telling his story today. $4 expects to hit $5 million in revenue, and Shah oversees seven offices around the country.

Not once did he question the wisdom of starting his own business, despite his travails. On that score, Shah strikes a rather philosophical tone.

"The story is always the same. Everyone has to mortgage his house or go without pay," he says. "You can work 16 hours a day because it's easy to catch up on your sleep. The money part is tough because that's real."

Shah's persistence and success have won raves from his local SBA office, which has him run seminars for other entrepreneurs trying to become certified as 8(a) companies.

That certification, which Shah's company earned in 1999, is for small disadvantaged businesses and brings with it eligibility for business-development assistance from the SBA, including support for government contracts.

"He's unbelievable at what he does," says Mark S. Hayward, director of the Massachusetts SBA district. "He takes people under his wing. When we ask, he's very free about helping."

Shah, 48, grew up in India, studied business at the University of Bombay and came to the United States in 1984 to study at Northeastern University in Boston. After graduation he spent a few years at Putnam Investments. In 1989, he took a job at Summa Systems Inc., a company that provides IT and networking services to the government and defense contractors.

Sumria Systems is owned by Shah's brother, Veni Summa, who is 15 years older. He put Shah in charge of accounting and similar tasks and then brought him along on customer visits.

"He was a great negotiator, much better than me," Summa says. "He has a knack for making people feel good."

Shah's stint at Sumaria Systems proved invaluable. He handled compliance with the SBA and learned how to work with the SBA and government contracts. By 1999, Shah had established and managed a consulting division, supporting financial systems for municipal governments.

"That was a great learning experience for all aspects of contracting;' he says. "It was a lot like running a business"

Shah then decided to start his own consulting business and formed S4 ("systems and software support services"). His first move was to ally himself with TRW Corp. on a $75 million bid to provide intelligence systems support at Offutt Air Force Base, "and we lost. We were back to Square One."

He then found a subcontractor on the winning team that had technical expertise but little interest in business marketing and administration. So, Shah says, "I decided to buy them."

One problem: S4 had no money. Revenue in 1999 was $65,000; the company incurred a $15,000 loss. Shah began the process of getting a $150,000 SBA-backed loan. Nine months later he secured the cash and paid off the owners.

As part of that purchase, S4 acquired three government contracts. That gave Shah's fledgling enterprise some reference customers, and he put them to good use. In 2001, when S4 had $100,000 in revenue, Shah bid on a $30 million defense contract. S4 failed, but was one of three finalists on the project despite its tiny size.

"That's when we said, 'Hey, we can at least bid on $3 million contracts,'" Shah recalls. He endured six more failed bids before winning a U.S. Border Patrol deal in 2002. A contract with the Air Force soon followed. S4 had turned the comer.

Throughout those early years, S4 faced formidable obstacles. Contract proposals routinely cost $20,000 to produce, with no guarantee of success; Shah had to convince workers with government security clearances to work on a contingency basis, when they usually command any job they want.

"You have to go through that, or you'll never succeed" says Summa, who has been in the contracting business for more than 20 years. "And I told Chandu to stick with it."

Stick with it he did. "Even with all these failures, we got a lot of feedback that we were a good company," Shah says.

S4 has not taken outside investor capital, although unsolicited buyout offers have come its way--the ultimate sign that a startup has finally arrived.

S4 Inc. * www.s4inc.com * 1 New England Executive Park, Burlington, MA 01803 [phone] * Founded: 1999 * Employees: 35 * Revenue: $2.5 million * Principal: Chandu Shah