How do you launch a successful business?
Do it twice. And the second time around, make sure you learn from the first time.
That’s the message of David Ossip, founder, president and CEO of Toronto-based Workbrain Inc., the scheduling-software company that last December became the first technology company in years to go public through an IPO on the Toronto Stock Exchange. In a recent presentation to entrepreneurs and venture capitalists at the Toronto Venture Group, Ossip revealed the methodical plan that saw the company go from 1999 startup to 2003 sales of US$34 million.
In 1992, fresh from completing his MBA at Harvard, Ossip founded Business Machine Interface, a developer of employee time-and-attendance software. He grew it for four years before selling it to a Japanese multinational. Three years later, a month after his non-compete contract expired, he co-founded Workbrain, to produce a similar product, but on a much grander scale.
Here are a few of Ossip’s scalable success strategies:
- Know your market. From the beginning, Ossip and his team (six employees, all veterans of his previous company) targeted one niche: enterprise-level organizations with 1,000 employees or more. Only these companies could afford Workbrain’s pricetag of $1 million to $2 million. The benefit: such large organizations could save millions of dollars a year by integrating the data stored in separate databases, in human resources, production, scheduling and payroll.
- Focus on one niche at a time. Rather than be all things to all industries, Workbrain focussed first on time-and-attendance software for manufacturers. As revenues allowed, it developed an employee self-service product for manufacturers, while adapting its time-and-attendance software to the retail industry. As those products generated cash, the company systematically added functionality, such as scheduling, and branched existing products into targeted new industries, such as transportation, health care and financial services.
- Get your product into customers’ hands. From the beginning, Ossip looked for test sites for Workbrain’s prototype software. To sell to Fortune 500 companies, he says, “you need customer references. Without customer references, you’re not going to sell much of anything.”
- Match your growth to your finances. Ossip’s original financial plan proved remarkably prescient. The first stage, with US$1 million in capital (supplied by Ossip and his family), let Workbrain develop a prototype for installation at test sites. On the strength of those demos, Workbrain raised US$4 million from angel investors. (Ossip particularly targeted business owners as investors, so he could use their offices as test sites.)That $4 million helped the company release its first salable product — which led, a year later, to a US$20-million round of venture-capital financing for futher product development.
- Pick the appropriate marketing method. When it started selling, Workbrain knew it didn’t have enough money for a branding / advertising campaign, so it focussed on leveraging relationships. It targeted strategic alliances with international technology consulting companies, firms with established ties to big businesses and a keen interest in installing new enterprise software that creates more billable consulting hours.Workbrain’s key partner early on was Accenture, which landed some of Workbrain’s first customers and later invested in the company. How did this relationship start? Workbrain’s head of sales e-mailed a former college roommate who worked at Accenture in the U.K.
- Work your investors. In mid-2001, when Workbrain was just finalizing its product, it still had only three customers and was burning through $2 million a month. With the VCs getting anxious, Ossip spent 40% of his time reassuring them that things were on track. Addressing the VCs in his audience, he advised them to be more patient. “When you start questioning your investment and management, you put a tremendous stress on the company,” warned Ossip. “Put your money in and wait.”
- Stress stability when selling to global giants. When Workbrain went public in December 2003, it still had US$14 million of the $25 million it had raised. It pinched pennies and raised more money than it needed as a way of convincing customers that the company was stable and ready for the long term. “To get a big U.S. company to buy from a small Canadian company with 90 employees, no customers and no product,” said Ossip, “is more of a challenge than you think.”
- Create a loose-tight corporate culture. Although it now has 365 employees (plus 70 positions open in its Toronto office alone), Workbrain maintains an exuberant, can-do culture. It supports employee sports teams, gets involved in local charities, and selects young, enthusiastic and open-minded employees over older prospects who already “know” how things should be done.At the same time, Workbrain hires carefully (every new recruit is interviewed five to eight times) and uses performance-measurement tools to evaluate every employee. It regularly weeds out the poorest-performing 5% of staff in order to boost productivity and morale.
© 2004 Rick Spence