In the not-so-distant past, becoming a giant success required a giant organization with all the accompanying rules, bureaucracy, politics — and slowness. Then came the mid-1990s and the rise of the dot-coms with big budgets and bloated staffs. Not anymore. Today, technology and nimble development can act as great equalizers, letting a small company become a big player quickly.
Even Rupert Murdoch, whose media empire is certainly big by anyone’s estimation, has said, “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.”
BizTech profiled three lean and mean startup software companies that develop and manage IT based on slight variations of the same philosophy.
Each makes use of just-in-time resourcing, stays focused on opportunities and earns a profit by taking a nontraditional approach to IT.
It’s pretty hard to do business without meeting with others — customers, partners, investors or co-workers. Yet making a connection often takes Herculean efforts and wastes a lot of time. And sometimes opportunities are lost because the right people couldn’t connect before a deadline.
Everyone has encountered the meeting time sink, especially when meeting with people outside of the company who don’t have access to internal calendar and e-mail systems. Although most people simply accept that it takes an average of seven e-mail or voice-mail messages to schedule a meeting, Hari Shetty and Rajesh Setty refused to do so. Two years ago, the former classmates put together a development team to begin doing something about it.
The resulting company is iPolipo (pronounced EYE-poh-LEE-poh — polipo means octopus in Italian). Shetty, the company’s CEO, says the name reflects the extra hands the scheduling tool gives its users to manage their limited time.
The startup produces a Web-based scheduling tool that offers limited-time invites, sets time-slot availability by groups and priority, includes selective calendar access and allows calendar linking to select individuals.
“We see iPolipo as both a technology enabler and a business driver because it can be used for setting up meetings for both small and large companies, and even inside companies,” says Shetty. “To conduct business, people need to meet, and iPolipo helps business professionals schedule meetings with maximum efficiency and minimal impact on their valuable time and resources.”
To achieve the company’s goals, Shetty and Setty organized iPolipo as a just-in-time organization. Typically, development plans are made from four to six months in advance. The trick is in knowing what is needed and the best possible source for those tools.
That emphasis has helped keep costs low, Shetty says, while getting the best features to market first. With technologists, marketers and developers around the globe, the company began as a virtual operation from the get-go with an offshore strategy.
“Moving from Connecticut to California has had absolutely no impact on the company because we’re not stuck in any particular location,” Shetty says.”
Relationships play a large role in selecting virtual staff. IPolipo takes recommendations from previous jobholders and companies. By asking the best people in a specific area if they have sources in other areas, the company takes advantage of its network to identify who can best take on a coming project. Shetty also credits the board of directors, who weigh in regularly.
To keep IT costs down, the startup uses Web-based software as service applications instead of managing its own technology resources. Virtual staff members receive a listing of the tools, companies and people available for each project.
“In the future we’d like to use the same virtual company model to start other companies,” Shetty says. “We make decisions very fast. We’re very agile, and we’ve been able to do a lot in a short time.”
37signals operates on the principle that it’s OK — smart even — to let someone else do what he or she is good at.
“You’re better off doing what you’re great at and leaving the other stuff to people who are better at it than you are,” says CEO Jason Fried. “This allows you to focus on your core competency. That’s one of the best ways to build a great business: Focus on your strengths.”
This startup develops Web-based collaboration tools with intuitive and lightweight interfaces, designed for small businesses that have neither the money to nor the interest in maintaining these tools on their network infrastructure. Its tools are free, but additional features are available for a monthly subscription fee.
For example, its flagship project management application — Basecamp — provides a portal for making to-do lists, sharing files, communicating between team members, monitoring tasks, tracking milestones and identifying next steps. It also includes real-time group chat and file sharing.
“You log in, sign up and start using the product in just a few seconds,” says Fried. “There’s nothing to install, nothing to download, nothing to configure, nothing to slave over. It just works through your Web browser like any other Web site. Not one single ounce of technical knowledge is necessary. Our customers aren’t tech-savvy and aren’t interested in becoming tech-savvy — they just want to get stuff done.”
Besides Basecamp, 37signals also has created three other Web-based applications: Backpack, an organizational tool; Campfire, a real-time chat portal; and Highrise, a customer relationship management program.
Everything 37signals offers, it first built for itself. The company began as a consulting firm but became an application developer out of necessity, Fried says. Basecamp, for instance, grew out of a need to manage consulting projects. “We didn’t like what we saw, so we built our own” tool, he says. “We’re not unique; there are millions of small companies out there. Within a year, Basecamp was generating more revenue than our consulting business. We added Backpack, then Campfire and then Highrise. We recognize that our own needs are universal in many cases.”
The latest product, Highrise, is billed as a “simple CRM” tool. Last year, when 37signals received a lot of media coverage, it wanted to keep track of interviews with journalists — follow-ups, history of interactions and next steps — and create a common workflow. The same type of information can be used for vendors, partners and clients. A year after it created the in-house app, 37signals began selling it.
“We don’t look at five- or 10-year plans,” says Fried. “I think of that great Wayne Gretzky quote: ‘I skate to where the puck’s going to be, not where it’s been.’ If you have a five-year plan, you’re skating to where the puck has been.”
Only three employees are college graduates, and those three aren’t working in the fields for which they hold degrees. “Curiosity, motivation and passion are what we look for,” Fried says. “Curious people like to learn about things. Face value is more important than paper value. Especially in this day and age, there are a lot of people roaming around doing things they may not necessarily have gone to school for.”
Smallthought Systems began as a consulting firm that helped large companies, universities and nonprofits build Web applications. In every case, regardless of the size of the organization, company consultants found in-house applications that had been cobbled together to manage data in the way the customer wanted.
Ultimately, however, these organizations couldn’t justify the expense of custom database programming, and their nontechnical decision-makers found traditional database programs, such as Microsoft Access and FileMaker Pro, intimidating. Yet each of Smallthought Systems’ clients still found they had specific needs that weren’t being met by off-the-shelf tools.
“On the one hand, we were looking for interesting ways to scale the business,” says co-CEO Avi Bryant. “And on the other, we wanted to answer the question: How should a non-IT person who is intimidated by traditional applications build a solution?”
Experienced at developing custom apps for clients, Smallthought began work on its Web service solution as a side project, slowly increasing the amount of time and resources devoted to it. About one year ago, it obtained venture funding to focus full time on the Web database product and launch Dabble DB. Although Smallthought tested the program using its consulting clients, the plan always was to create a hosted and publicly available service.
“Having seen that these were problems the traditional IT organization wasn’t solving, we wanted to let users make an end run around IT,” Bryant says. “It’s a hosted app. Software runs on our servers with no client site install, and it’s priced so someone can put it on their credit card at between $10 and $150 a month.”
Dabble DB runs on a custom database engine built by Smallthought. Its application-servicing and load-balancing platform is integrated with the customer database. The app is written on top of Seaside, a Web framework the company built years ago as the core of its original consulting business.
“We believe in choosing the best tools and are not afraid of using unusual technology,” says Bryant. “The application is written in Smalltalk, which most people haven’t thought about for 20 years. Ideas that are now mainstream, like virtual machines, pure object orientation, sophisticated integrated development environments with refactoring, and just-in-time compilation were pioneered by the Smalltalk world. It may not have the mindshare that Java does, but we see that as a competitive advantage.”
Dabble DB boasts a wide variety of customers, including symphony orchestras, government departments, retail stores, small businesses and smaller departments within larger organizations. All of the customer sets have in common a need to collect project data, schedule events, manage assets and often build custom reporting. Dabble DB makes it easy to accomplish these tasks in a shared Web-based collaboration environment.
“You can view us as an anti-IT organization,” says Bryant. “People ask if we plan to build up an army of consultants to offer service around Dabble DB, and we would consider that a failure. We’re trying to offer our customers a product they formerly would have needed consultants for, but now they can use themselves.”
As much as possible, Smallthought Systems outsources noncore competencies. Dedicated servers reside in a first-tier facility in Ottawa, Ontario. The company uses 37signals’ Campfire group chat application for internal communication among designers in North America and the United Kingdom.
When Bryant started the company with co-CEO Andrew Catton, they decided to share all aspects of running the business: product development, marketing, business development and getting venture capital backing. That attitude extends to all employees. The Web designer does customer support work and researches future feature enhancements. Developers who also write well communicate with customers and update the company Web site.
“We have the philosophy that applications and databases our customers build should evolve over time because even professional developers are never going to make the right choices up front,” Bryant says. “Over time, as you realize what you actually need, you can refine and evolve it, and the product will support you.”