Signius Inc.

Out below

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

old-fashioned

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

companies

— 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

clients.

"The Internet has created a new paradigm in the way merchants

distribute goods and services, and I am going to be an early

entrant,"

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.

"We

are buying the technologies that small and medium-sized companies

can’t afford." He points to three Internet products:

E-mail message delivery . Instead of having to call in

to get your messages or responding to a page or a fax, the message

from your answering service can be delivered by E-mail.

E-vox voice mail system converts voice mail into an audio

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

forwarded

by the answering service.

Live chat operator service . If you have a question about

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

dialogue-based

system.

Your company can get a dedicated customer service representative

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

instance,

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

study.

"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

Renaissance

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

speed.

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

service

patches the calls — by phone or E-mail — to the various sales

representatives. For dentists in the Aetna US Healthcare network

AnswerNet

offers a wireless paging service.

Even technical questions can be answered with the E-mail system.

"We

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

company."

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

techniques

described above), warehousing, "pick and pack," and shipping.

In contrast, AnswerNet does not touch the merchandise; it limits

itself

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.

Top Of Page
Signius Inc.

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.

Robertshaw,

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

Princeton

to Bridgewater.

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,

Washington,

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

educated

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

AnswerNet

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

delivery

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

my life."

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

shutting

down the system we built in Washington in favor of different

technology."

Then he participated in a start-up for Apex, a specialty real estate

management company renting rooftop space to telecommunications

companies.

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

firm."

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

scratch,

and one of the major things I liked was telecommunications. I hopped

on the Internet and found the answering service business," says

Pudles.

During his initial due diligence search he had encountered Bill

Robertshaw,

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

amazing

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

AnswerNet Inc., 345 Witherspoon Street, Princeton

08542. Gary A. Pudles, president and CEO. 609-921-7450; fax,

609-921-7632.

Home page: http://www.AnswerNetNetwork.com.

Top Of Page
Out below

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."


Next Story


Corrections or additions?


This page is published by PrincetonInfo.com

— the web site for U.S. 1 Newspaper in Princeton, New Jersey.

Facebook Comments