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[August 10, 2014]
Minnesota company's simple growth plan: automating complex systems [Pioneer Press, St. Paul, Minn. :: ]
(Saint Paul Pioneer Press (MN) Via Acquire Media NewsEdge) Aug. 10--A rural Minnesota company that started about 30 years ago by automating tractor sales to farmers now counts John Deere as a major customer.
But also Honeywell and Blue Cross Blue Shield and American Express.
What these diverse clients have in common is that they sell complex, customized and sometimes very expensive products. What FPX, with operations now in Mankato, Bloomington and Dallas, does is automate that process through software.
"Simply put, what we do as a company is we help our customers acquire new customers better, retain the existing customers that they've got better and expand their relationship with their existing customers," said Dave Batt, who took over as CEO in 2013. "For us, the more complex a company is, the better fit we are for them.
" FPX is on a triple-digit growth binge. Batt said revenue at the privately held company rose 115 percent year-over-year for the first half of 2014, during which it also acquired Glider, a Portland, Ore.-based software company. Other acquisitions may be on tap for 2015, Batt said.
In 1982, Elbow Lake tractor dealer Jerry Johnson began using a computer to sell tractors. His desktop Commodore 64 became portable after a farmer fashioned an oak box with movable shelves for him to lug it around in. By 1983, Johnson's method of fashioning automated purchasing proposals got the attention of International Harvester in Chicago.
That year, Johnson co-founded the company, then called CWC (Clear With Computers). The company went public in 1999, rebranded as Firepond Inc., and its majority owner, General Atlantic Partners, moved it to suburban Boston.
In 2009, Acclaim Financial Group bought the company, took it private and moved it back to Minnesota.
Batt talked about FPX in a recent interview. His responses have been edited for context and clarity.
Tell us what FPX does.
"Companies use our products to quote complex businesses. It's not sales force automation exclusively; it's running a whole business process.
"I've got a customer that wants a quote, and this quote is not as simple as giving him a price. There are so may different product options and so many different ways of pricing, and then discounting. Now that I've quoted, that's not the end of it. Now the customer wants to end up in a contract and buy it.
"John Deere is an example of that. You think about going in as a farmer, you want to buy a tractor that's got these options, these capabilities on top of it.
"If you're a dealer that's working with that farmer, they generally know what the farmer wants, but that dealer has to work within the parameters of John Deere the manufacturer, what can be delivered, how it can be delivered, based on all the prices, all the conditions farmers put out there." What about for companies like Honeywell or Blue Cross Blue Shield? "It's all the same for us. There's a lot of complexity in products. Tractors versus commercial-grade heating and air-conditioning units that are sitting on top of a building. We're just doing the same thing, but we're doing it with different pieces, products and pricing.
"Probably more interesting than comparing John Deere to Honeywell is compare and contrast Honeywell to Blue Shield of California. How do you go from heating and air-conditioning systems to insurance plans? What we do is manage all the rules, on how, whatever the product or service is, it should be priced, quoted, contracted, renewed and serviced. And that's the whole lifecycle of revenue for a company, regardless of industry.
"With Blue Cross Blue Shield plans, when the Affordable Care Act went into law, they had to change so many aspects of their business, so what are the rules? And in their case, the rules are governed by law, so they run the risk of not being in compliance.
"At Honeywell, they run the risks of making mistakes and having to offer concessions, which cuts into their margins for a publicly traded company." Tell us about the Firepond era for the company and the move back to Minnesota.
"When you get a company that's making an impact in so many markets, usually there's this big sucking sound, like a vacuum cleaner, and they try to bring those companies out to the Bay Area, or they try to bring them out to the East Coast, because that's where the critical mass is for our industry.
"In 1999, we filed for an IPO and had a very successful one. And at the point, it rebranded itself as Firepond Inc. When the company went public, the venture capital firm that was the primary board member made the decision to move the company to Waltham, Mass.
"A tongue-in-cheek way of looking at this was moving the company from Minnesota to Boston was the beginning of the end. In 2009, the company was restructured; a private owner came in and bought the company, seeing a bigger potential for it.
"I won't speak to what Firepond Inc. went through because I wasn't there. That was a different time and a different management regime. But I will tell you, being in the software industry for 26 years, the thing that's challenging about being a publicly traded company is, now your primary audience is Wall Street. Wall Street almost becomes your primary customer.
"And in the software industry, sometimes you're not serving the right customer. And Wall Street is not our end customer. That's why -- lessons learned for the software industry -- make sure you've got the capacity to serve your true customer first." What can you say about FPX's growth? "We don't publish our revenue, being a privately held company, but a big benchmark is when you get over $100 million in revenue, and if you could see the smile on my face, you'd know that this is something we're quite proud of, the direction we're going.
"What I've really enjoyed in my career is the independent software company that is looking to be bigger than $100 million that's not a household recognized brand name. So FPX has very special capabilities in its products, serves a big addressable market.
"It's fun stepping into an environment like that, almost like it's a palette and you're an artist and you get to paint on the canvas. As opposed to, 'here's the blocks that you're working with, now make the round peg fit into the square hole.' " ___ (c)2014 the Pioneer Press (St. Paul, Minn.) Visit the Pioneer Press (St. Paul, Minn.) at www.twincities.com Distributed by MCT Information Services
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