Why I Love Software As a Service

Six months ago I left my position as CEO of Q Interactive an Interactive Marketing Services company that I helped start ten years ago.  I ran it as a public company for the last five years and we took it private in December 2005.  We had 160 employees and last year reported revenue growth of 78% to $68 million.  Within two weeks of leaving in late July, I started a new company called Viewpoints Network and four weeks later had secured the first round of funding for $4.8 million.  This post is some of the nuts and bolts lessons I have learned about how to take advantage of the numerous new companies who offer their services as a “Software as A Service”.

First a little bit of background.  After having raised $100 million to launch and grow my previous company, I wanted to take a more measured approach this time.  I have come to appreciate and value very lean and efficient businesses that “stick to their knitting” and focus on improving their unique value add.  Therefore, I intended to keep the company very small (less than 15 people) for as long as I could.

Step One: Buy a computer and a printer

Opting for the safe choice, I bought an IBM Thinkpad T60 from CDW.com.  I love CDW’s service and an always wowed by their incredibly fast delivery time.  (My laptop came in one day).  Knowing that I would need a nice color laser to print out my business plans and presentations, I bought a Dell Color Laser for $399.  It has served us incredibly well.  A color copy at Kinko’s is $1.00 and the cost of a color page from the Dell is 14 cents.

As we hired more staff we bought the Dell D620 laptops for about $1,200.  The tech team asked for MacBook Pros which come in at about twice the price as the Dell, but I figured it was a small price to pay to keep our brilliant tech team happy.  Now, those of us with a boring old Windows laptop have serious Mac envy…

Step Two: Domain Name and E-Mail Address

Among the first things I did was look for a quick and easy way to establish a “branded” e-mail address.  I went to Register.com, bought a domain that was the working name of the company and then, using Google, found a provider called Intermedia.net that offered hosted Exchange for $10 per user per month.  Compared to the hardware, software and personnel costs, that are typically associated with an installation of Exchange, I thought this was a deal.  I suppose I could have used a standard SMTP/POP3 provider but as you will see later in this post, I like Outlook and value the wireless synch with my Motorola Q Smartphone.  I later learned that Register.com is over priced and started using GoDaddy for future purchases which has worked out very well.

I should also mention that I discovered Carbonite.com around this time.  They provide a great backup service for only $5 a month. I have been using this for six months and it works great and provides a major sense of security knowing that I could fry, lose, drop or otherwise kill my computer and I would be up and running with all my data within hours.

Step Three:  Establish a customer and contact database

I have been a huge fan of Salesforce.com since they launched the product.  We used it at Q Interactive and had about 60 people using it.  I also happen to work hard at keeping my Outlook contact database current so I always need a way to synch Salesforce.com and Outlook.  So one of the first purchases I made was a five person team license for $999 for  one year to Salesforce.com.   So here we are with a enterprise class SFA tool, enterprise class e-mail, scheduling and wireless e-mail, real time data back up and our own domain and website for less than $2,000 per year.  Pretty amazing if you ask me.

In this area, I have been a long time fan of Plaxo as a way to keep my address in synch with others and up to date.  I have more than 600 colleagues who also use Plaxo and every time either of our information changes, it automatically updates on our respective computers. I can also send an update out to the other 3,500 people in my Outlook address book and ask them to automatically update their contact info without me having to enter it into Outlook.  I received about 1,000 responses.

I also re-joined LinkedIn as a way to keep in touch with former colleagues, customers, partners etc.  I had the service search my Outlook address book and find about 600 of my contacts who were also LinkedIn users. As a result I have about 450 “LinkedIn” relationships now which have proven to be a very helpful way to stay in touch.

Step Four: Hire first employees

Previously I had a four person HR department and an eight person accounting department to rely on to make sure we were adhering to rules and regulations.  For payroll, I quickly opted for SurePayroll.com.   After getting my appropriate tax id numbers from federal and state authorities (which my lawyer did for me) we were quickly up and running on SurePayroll.  Having used them for six months, I am a huge fan.  I spend a total of about 1 hour per month thinking about payroll.  Sure Payroll takes care of all the tax withholdings, direct deposit etc.  It works like a charm and I love it.

I also purchased QuickBooks around this time and started using it to pay bills. The software is very, very easy to use and I think is often the case, my accountant knows it very well.  I spent probably 2 hours a month paying bills and keeping the books up to date.  I produce financial statements very quickly after the end of the month that look like they were done by a pro.  I am sure at some point this will not scale, but for right now, the combination of me doing most of the bill paying and payroll and the accountant dropping by once a month for an hour is a great combination.

Step Five: Get the office going

Once we moved into our space, we of course needed a phone system and Internet access which we got from CIMCO. They provided our IP based phone system. Handsets from Cisco.  So far, the system has been totally reliable. They manage everything and there is almost zero maintenance on our part.  At under $500 a month for both Internet access and 12 phone lines with unlimited Internet access this seems like a total bargain to me.

We bought our office furniture by searching for a combination of new and used furniture.  We found top of the line office chairs for 70% off their retail price through a used dealer.  We are using a great “open office solution” called Herman Miller Resolve that we love.

I have found Peapod to be very quick and reliable and cheaper than other corporate coffee services. 

We ordered our some of our kitchen equipment at either AbtElectronics.com or Cooking.com or Amazon. 

We are lucky enough to be in a loft style building that has a FedEx/Kinkos and a UPS/Mailboxes Etc in the first floor of the building. 

4 Comments on “Why I Love Software As a Service”

  1. NetHoster says:

    Incidentally, Intermedia – mentioned above, just began exchange outsourcing.

  2. Tom Hollinden says:

    For those of us that aren’t as savvy about finding software based providers and resources, this helps out tremendously.

  3. David Dalka says:

    Hi Matt!
    Congrats on the blog and the new venture!
    Talk to you soon.

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