Expansions

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Crosstown Moves

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This article was prepared for the August 13, 2003 edition of U.S. 1 Newspaper. All rights reserved.

Life in the Fast Lane

When they started their software business — Simple

Solve Inc. — three years ago, Antony Xavier and Sam Serrapede

did almost everything right. The one mistake they did make almost

put them out of business.

The mistake: trying to defend themselves in an intellectual property

lawsuit filed by a Massachusetts-based company. "We learned the

hard way that emotions rule the process," says Xavier. "When

the lawyers come in, they say your chances are pretty good, and you

don’t pay attention to what it will cost you. You are wrapped up in

the emotion of proving yourself right and your opponent wrong, and

then you get the bill. The expenses were very damaging to us."

"It has been a financial struggle and an emotional struggle,"

says Xavier. "We had staked all our personal assets to get started.

We are in the process of getting funding to start up again."

The son of an aircraft engineer, Xavier grew up in the Kerala section

of India, went to Loyola College in Chennai, Class of 1976, and also

earned his law degree there. Married, he has three school-age children.

Serrapede is a first-generation Italian American who went to City

University of New York, Class of 1964. His wife directs the work/life

initiative at KPMG.

Xavier and Serrapede had started Simple Solve Inc. at 600 Alexander

Road in 2000. They did contract work on a reporting database for a

medical malpractice insurance company and also came up with their

own product, an insurance administration system software called SimpleInsure.

This manages the book of business of an insurance carrier. The software

takes care of issuing and managing policies, invoicing, premium accounting,

managing receivables, recording claims, and event customer service

functions related to policy receivables and claims. Using Chennai-based

programmers they were able to finish the product in two years, and

they launched it last summer.

Then came the law suit. Under the presumption that Xavier and Serrapede

had used trade secrets to develop SimpleInsure, a Massachusetts-based

firm filed suit. "We did not take it as seriously as we should

have," says Xavier, "in terms of the technical expertise required

in managing the litigation." Legal proceedings escalated and expenses

mounted.

Finally the court turned the case over to a mediator and the two had

a chance to meet directly with the plaintiff, their former employer.

The next part of their story will be music to the ears of those who

advocate for mediation instead of litigation. "When we met, that’s

when things came to light," says Xavier. "Both parties decided

to eliminate the attorneys. From that point on until the final settlement

we did not involve the attorneys.

"We were very pleased at the mutual reasonableness of the settlement,"

says Xavier. "The overall objective for both of us was that both

companies could co-exist in the market without hurting each other

or paying a lot of money to the attorneys. Both sides concluded that

it made a lot of sense to settle out of court, that it was an unnecessary

expense to go through trial. Maybe logically it was not justified.

Maybe morally it was not justified. But it made business sense."

Simple Solve estimated the total cost of going through a full trial,

complete with hiring technical experts, would have been a minimum

of $500,000. And timing was crucial. Says Xavier: "We would have

had to declare bankruptcy, business and personal, if this whole process

had been delayed just two or three months. The settlement cost was

nowhere near what it would have cost to go to trial."

The lawsuit settled in April. Meanwhile, they had exhausted the financing

available to them from Fleet Bank. So their current business attorney,

Steve Cohen of Morgan Lewis & Bockius, referred them to a funding

firm that is now doing the due diligence process required before making

a commitment. "Xavier and Serrapede are veterans of the insurance

industry in the IT space who identified a business niche that was

unfulfilled and sought to develop a program to fill that niche,"

says Cohen. So far, their product has received rave reviews from the

experts who look at it.

The principals plan to launch the second version of their software

product this month. More than 50,000 offshore programmer hours have

gone into SimpleInsure, which will be marketed to small and medium

insurance companies for a five figure price.

All the pieces of this rescue puzzle were coming together nicely until,

at the end of last month, they had one more piece of bad luck: burglars.

Burglars broke the window of an adjoining office, kicked through the

wall, and made off with two laptops. Fortunately the company is insured.

"We have not lost anything that would disrupt our business, because

we have backups and copies. But," says Xavier in a masterpiece

of understatement, "it has been a testing time."

— Barbara Fox