Corrections or additions?
This article by Barbara Fox was published in U.S. 1 Newspaper on
November 3, 1999. All rights reserved.
AnswerNet: Moving Call Centers to the Internet
In the parade of E-commerce companies popping up all
over Princeton, here is one that is easy to understand. It’s the
call center and answering service, upgraded to the Web, and it is
ready to capitalize on the new popularity of online purchasing, which
unexpectedly ballooned during last year’s holiday season.
Gary A. Pudles has joined William Robertshaw and his daughter Barbara
Robertshaw to found AnswerNet Inc. at 345 Witherspoon Street. Pudles,
the president and CEO, aims to make buying on the Internet less like
eating at the Automat, where you never see the face of the person
who takes your money. He quotes surveys showing that half of online
buyers would buy more if a "live person" were at the cash
register. "Even buying online, people want to feel good about
the purchase," says Pudles. "Part of your K-Mart experience
is paying a live person."
By equipping customer service representatives (CSRs) with Internet
technology, AnswerNet fills that gap. Instead of just answering phones
and retrieving faxes, small answering services and order entry
— often mom and pop operations in the hinterlands — can now
respond to customers with real-time E-mail chat. "We have taken
the order entry companies and moved them into the web business,"
says Pudles. After 13 months the partnership owns six call centers,
each with from 8 to 35 seats, and has a total of more than 4,000
"The Internet has created a new paradigm in the way merchants
distribute goods and services, and I am going to be an early
says Pudles, who launched his LiveChat Internet CSR/Operator Service
last month. Three of the services already have web-based equipment.
"We have nice companies doing nice traditional answering service
business and are moving them into new niches," says Pudles.
are buying the technologies that small and medium-sized companies
can’t afford." He points to three Internet products:
to get your messages or responding to a page or a fax, the message
from your answering service can be delivered by E-mail.
file, to be attached to an E-mail. While you read your E-mail, you
can use the E-mail system to hear voice mail messages that were
by the answering service.
your purchase or want to order from a live person instead of from
the automated form, an AnswerNet customer service representative (CSR)
can respond utilizing AnswerNet’s live, secure two-way text
for $25 to $35 an hour, for however many hours you choose. Or you
can share time with other companies and pay about 85 cents per minute
of actual usage or about $50 an hour. Extras come with this. For
you can monitor the E-mail transmissions to be sure you like what
your rep is saying, and you can archive the conversations for later
"It is a very friendly way and a quick way to get a response from
a catalog," says one industry expert, Joan Sitarz of Market Entry
Inc., based on George Davison Road. Her firm does strategic marketing
and represents products in catalogs and on the Web. "A lot of
mail order houses are doing that. You can chat with other customers
about a product or ask a specific question." She reports that
conscientious call center personnel, seeking to get customer questions
answered, are contacting her by E-mail and phone. She forwards those
questions to the manufacturer.
Matthew Powell, a Princeton-based retailing consultant with
Partners LC, points out that most companies respond with automatic
answers controlled by software that searches for keywords to provide
standard answers. "If the response can be more immediate it can
be a plus. People on the Internet expect everything at lightning
If they are ordering anything they want it tomorrow," says Powell.
AnswerNet also pitches services to companies that don’t sell through
catalogs. For instance, if a pharmaceutical firm wants to protect
its sales leads, it advertises just one number and the answering
patches the calls — by phone or E-mail — to the various sales
representatives. For dentists in the Aetna US Healthcare network
offers a wireless paging service.
Even technical questions can be answered with the E-mail system.
are about to launch with a national PC rental company to handle help
desk calls," says Pudles. "We ask a series of gating questions
and patch the caller to the right engineer in the right part of the
The big players in the order entry field include Matrix Marketing,
which has the Pottery Barn account, and Apac Teleservices, which has
UPS as its customer. Also, some mega catalog firms, such as Hanover
and Lands End, provide outsourcing for other catalogs, with a complete
fulfillment service — order taking (including the E-mail
described above), warehousing, "pick and pack," and shipping.
In contrast, AnswerNet does not touch the merchandise; it limits
to the message taking and order taking. "Almost nobody is doing
what we are doing on an outsource basis, particularly for the small
to medium companies," says Pudles.
Yes, there is competition, Pudles admits, from thousands
of answering services and hundreds of web-based answering solutions:
"I am going to be an early entrant, but not the only entrant.
The reality is, if you give good service you will be successful."
One of his competitors, ironically, is a company founded by William
and Barbara Robertshaw, Pudles’ advisors and financial partners.
63, had had a construction firm, and his daughter, 40, is a Brown
alumna who had been an investment banker. With hefty venture capital
funding, including early money from the Edison Venture Fund on Lenox
Drive, they did a "roll-up," a mass acquisition, of answering
services (U.S. 1, August 28, 1996). They grew Procommunications from
1990 to 1996, to $30 million in annual revenues. Procommunications
evolved into another firm called Signius Inc., which moved from
Signius and AnswerNet are number one and two in the market now, says
Pudles. Yet Jim Collins, vice president of sales and marketing for
Signius, does not consider AnswerNet to be his competition, partly
because of size ("If AnswerNet starts to grow, they will pop up
on our competitor list," says Collins) and partly because Signius
is moving away from telemessaging into teleservices for the direct
marketing business community. It has reduced its locations from 40
to 26 and is refocusing the company to grow internally, do branding,
and take advantage of the company’s size.
The Robertshaws have left Signius for the partnership in AnswerNet.
It now has call centers in Pennsylvania (Allentown), Oregon,
Maryland, Illinois, and Canada. One more call center is expected to
be purchased this month and that would bring projected revenues up
to about $5 million.
What might stymie AnswerNet’s growth goal is the paradigm shift from
voice to text. It is a drastic change, and an expensive one, because
the people behind the computer terminals need to be sufficiently
that they can write and spell well. The written communications go
out without editing and are therefore vulnerable. In effect, these
people have to be very proficient at the new art of participating
in the commercial equivalent of an Internet "chat room."
"Live chat is an Internet-centric service, very difficult to cost
and price," says Collins.
Another factor that might hinder Pudles is, paradoxically, that
is too profitable. "We’ve been cash flow positive since the first
day, and that’s a concept that venture capitalists don’t get."
Venture capitalists want to make too big an investment and take too
much control, he thinks. "They are used to big burn rates, so
they can put up their money, get all kinds of equity and interest,
and control every aspect of your company," says Pudles. "We
— the team of Bill, Barbara, and Gary — have the experience,
and they don’t. We are doing things on our own terms. Too many VCs
want to come in and control your company completely."
"Everybody wants equity, and there aren’t a lot of hard assets
— just leased space and a telephone system. The value is in the
customer lists and the people. At the end of the day, I want the money
I raised to acquire businesses that can generate profits, so I can
institute my programs out of the profits."
The partners put up early money, and the first outside capital was
just over $500,000 from Waterside Capital in Norfolk, plus financing
from Progress Bank in Blue Bell, Pennsylvania. Now Pudles is looking
for an "angel" investor willing to take a small basic return,
a preferred dividend, and a piece of the deal. "With that money
I can acquire businesses."
Another requirement for this mythical investor is to also buy into
Pudles’ values. "Answering service people don’t make all the money
in the world, and I don’t pay the highest salary in the world, but
I would like to try to create a nice place to work," says Pudles.
"I am looking for an investor to share that vision."
Pudles has toiled in many workplaces, some that fit his vision and
some that did not. His father worked for Exxon in Linden and his late
mother was a bookkeeper who worked extensively in real estate. He
went to Syracuse, Class of 1984, to law school at American University,
and is a member of the Maryland, Virginia, and District of Columbia
bars. At a traditional law firm he started a real estate litigation
and business practice.
He now realizes he spent his career dragging traditional businesses
into modern technology. His next job was to run Muzak when the
of "elevator music" was changing from an FM radio broadcast
to a one-meter satellite dish, from two channels to unlimited choices.
"I was running the business but there was no risk involved in
Pudles helped launch the first Personal Communications Systems (PCS),
the Sprint Spectrum System. "Because of our success, the IPOs
for similar companies, such as Omnipoint, were huge. We leased, zoned,
and built 350 sites in 18 months, but Bell Atlantic had 400 sites
in 13 years. We gained 25 percent of the market but they are now
down the system we built in Washington in favor of different
Then he participated in a start-up for Apex, a specialty real estate
management company renting rooftop space to telecommunications
His clients were big commercial companies such as Mack Cali, Hartz
Mountain, and Alfieri. "We took what used to be a mom and pop
business and made it the largest national rooftop management
He and his family — a wife with a home-based business and two
young children — relocated to Pennsylvania and he prepared to
buy a business, but in the middle of the due diligence effort that
went sour. "It was January, 1998, and my wife kept telling me
to go out and start my own business. I didn’t want to start from
and one of the major things I liked was telecommunications. I hopped
on the Internet and found the answering service business," says
During his initial due diligence search he had encountered Bill
who issued a standing invitation to come back any time. So the day
the deal tanked, he went back to Robertshaw, who he considers an
mentor "and an even more amazing friend."
"He has a heart the size of Texas," says Pudles. "I have
been around smart business people my whole career, but he’s got to
be one of the smartest strategic planning executives I have ever heard
of. Within three days I put up my entire life savings and we were
in business." The first year, last year, the business did $600,000
and this year the firm’s gross is projected to be $4 million at a
better than average profit margin. "We’re profitable. We’re having
fun. I’m a pretty lucky guy."
Given the statistics his confidence does not seem misplaced. "How
many retail businesses exist in the United States? You are sure going
to need a lot of order taking on the Internet. Unless I am a jughead,
an investor is not in risk of losing everything tomorrow."
— Barbara Fox
08542. Gary A. Pudles, president and CEO. 609-921-7450; fax,
Home page: http://www.AnswerNetNetwork.com.
Pudles harks back to the time in high school when, frustrated by not
being able to help a deaf family at a flea market, he took it upon
himself to learn to finger spell. "I have always had this vision
of an ability to communicate," he says.
"If all my ideas are wrong, I have good solid fundamentals with
100 people working hard for the success of the company. If it doesn’t
work, all my people stay employed, my kids go to camp next summer,
and we have a great business with great people."
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