Corrections or additions?
This article by Barbara Fox was prepared for the February 25, 2004 issue of U.S. 1 Newspaper. All rights reserved.
Life in the Fast Lane
A dozen years after Glenn Paul developed a sales-quoting software tool, QwikQuote, he has sold it to a private Seattle-based firm. The sale comes not a moment too soon for Paul. QwikQuote belonged to the fourth company started by this serial entrepreneur, and he is hunkered down with his sixth company, DotPhoto, for which he just received $4 million in venture funding.
The Seattle firm, Aptus Corp., recently raised a similar amount, $4.5 million, and it plans to go public, says Paul. "They are purchasing a lot of different accounting packages and taking them online."
That strategy bodes well for Paul’s quoting software, which has been humming along with 20,000 users over the years, each user paying from $75 to $250. But sales were limited by the need to use an intranet, and an Internet-based tool will have more appeal. "In today’s market, you don’t want to be selling packages," says Paul. "If they put it on line, the model will change to a price per month, a better solution for the user."
"QwikQuote is well positioned as a niche application for a potential mobile workforce," says Joanie Mann, executive vice president of Aptus Corporation. "A lot of the applications that QwikQuote integrates with are available in our web-delivered on-demand model. If it were just the software with no client base to go along with it, we would be buying just another application. But this customer base has the potential to be introduced to a new model, so we could deliver additional applications." Along with QwikQuote, Aptus bought Appgen, a 4GL relational database. Aptus also has the master license from InsynQ, a related firm, for E-accounting services and other online application services.
Among the partners at QwikQuote (which began life as the Electronic Business Universe) are Win Straube, builder of the Straube Center, and Wyeth scientist Alan Katz, who came up with the first version of the software. Tim Heath and Gene Baldassari have been operating QwikQuote from a small office at the Straube Center, and the deal is supposed to let them keep their jobs.
"QwikQuote was a nice small business that went for 12 to 13 years. It created some employment that was used by a lot of people and I am happy that it sold," says Paul. "For the past 3 1/2 years I have been running DotPhoto. It is kind of surprising that the company has continued to move along."
"VisualBasic was new then," remembers Paul, as he talks about why QwikQuote never "made it big" earlier. "The problem was that we could never really execute on the vision. We never found the right people to create the product we needed to make. I learned that if you let other companies get ahead of you, you are in trouble. Our competitors were on our website all the time. They copied the things we wanted to do. My people said it could not be done, but my competitors did it."
"That was one of the reasons that compelled me to raise money for DotPhoto," says Paul, trying to turn the interview to his current favorite topic. "In the next couple of months there is some great stuff we will be rolling out."
Paul thinks the sale is a harbinger of an economic turnaround; he had listed the QwikQuote for sale with a broker last summer. "Two years ago, you couldn’t have sold anything to anyone."
The sale is a done deal now, so he can talk about it, but Paul remembers the cliffhanger moment when he thought he had made the sale to a different company. He had an over-the-phone handshake on Saturday morning, but by Saturday evening it had slipped away. "It was sold for $1 million, and they were all set to pay us that money. But that day the company had a meeting in Chicago, and the CFO called to say they had just bought another company who claimed to be able to come up with the same product. The deal was off." Paul notes with some asperity that the perfidious groom never did acquire a product similar to QwikQuote’s.
Paul declines comment on the financial impact of the recent sale. "Selling that company means it won’t distract me anymore. We are in a very competitive market and I need to focus."
"I am not really great at raising money, but I am not bad at running a company," says Paul, pointing out that his competitors have either gone bankrupt or ripped through $50 million. A man with wide interests, including writing poetry, he also does an effective job of keeping his contributors loyal, partly by writing a monthly newsletter. "DotPhoto has had a lot of angels, and they seem to enjoy it," says Paul. "They say whether or not they get their money back – and I am hoping they do – that they really enjoy the newsletter."
DotPhoto’s angel funding of $2.5 million is an atypically low figure, and he raised his first venture capital money, $4 million, on December 31. "In earlier days, that would have come earlier. That was very frustrating. We started when venture money was drying up, and even though these firms call themselves `venture capital’ they want companies with sales, technology, and cash flow."
Paul says that when he went to venture capital and entrepreneurial meetings, he could not compete with businesses based on wireless technology, "which people saw as a great margin opportunity. They didn’t want to invest in a commodity/printing business. But it made a huge difference when we were cash flow profitable."
Glenn Paul was 25 when he opened his own computer store, Clancy Paul, and built the business to more than $35 million in five years. Like most computer retail businesses it had a cash flow problem in the mid ’80s and he sold it in 1988 to a national firm, ValCom, and took a salaried job as regional president. He left ValCom in 1990 and bought back the Clancy Paul retail store, saying that it is "more fun to do it your own way."
In 1993 he added a firm called Accelerated Systems, trading as Lexar Systems, to market computers with expansion slots. It was one of the early virtual companies, in which the resources of the company are spread out over other companies. Before the computer business closed he had started Electronic Business Universe a.k.a. QwikQuote at the Straube Center.
Somewhere along the way this serial entrepreneur had invested $80,000 in an atypical business, Rosa’s Cafe, an Italian style coffee shop in the nook now occupied by the Princeton Shopping Center’s Mexican eatery. Paul put money in it. "I’d been to Seattle. I’d seen the coffee thing coming," he says. He hoped to refine the model and franchise it nationwide.
Paul says he tries to learn something from every business, and what he learned from his brief stint with Rosa’s Cafe was to accept in-kind investment. "We were approached by Michael Graves. He liked the Italian cappuccino shops, and he wanted a place to showcase the new things he was making. I thought here’s a chance to get another guy involved and get cash and expand it. I asked for money. I should have just given him a share and let him put his stuff in," says Paul, who realizes now that Graves’s accouterments would have been as successful in his cappuccino shop then as they are at Target now.
Paul likes to tell a Last Straw story. "It was hard to do business in such a small space, and the cafe was always running out of things. I was running the software business, but one morning I called to ask, ‘Have you got everything you need’ and the answer was ‘Oh yes.’ ‘Is there anything I can do for you?’ and the answer was ‘Oh no.’ That day a customer called to tell me that the cafe had closed at 4 p.m. The entire staff had decided they needed to go to a Grateful Dead concert. I realized I didn’t want that in my life."
He doesn’t regret trying. "It was a good idea. It was early for the cafe business, but it wasn’t my business. A lot of intelligent people think they can run a restaurant but a cafe business has difficulty getting suppliers, whereas Starbucks is integrated all the way back to the coffee plantation."
"And everybody I hired for the cafe in Princeton was waiting to be discovered by MTV."
Paul’s hiring practices, for his current company, are stringent. He won’t be turning to overseas programmers, at least not in the near term. After the initial programming for QwikQuote, the follow-on programming was done in China. But having tried offshore outsourcing, Paul does not like it.
"When you are developing software you need to be able to walk over to someone’s desk and say let’s look at this together. You get into that situation where they say ‘We think this is great, go away, and leave us alone.’ I have found it hard to manage a creative process around the world. It might be good for managing corporate applications. But DotPhoto is being developed in the United States."
Corrections or additions?
This page is published by PrincetonInfo.com
— the web site for U.S. 1 Newspaper in Princeton, New Jersey.