By Carolyn Green ~ St. Louis Business Journal
July 9, 2009, St. Louis
Leaving Ernst & Young behind, partners Pupillo and Matteucci build a million dollar business in a difficult economy
Sitting in the small conference room at Virtual Communication Services (WorkOtter) in St. Louis, Jeff Pupillo and Nick Matteucci explain why they left jobs with the Ernst & Young Big 5 consulting group to start their own business and how, with 20 employees, they have managed to build a $1.4 million business with clients such as New Jersey-based Johnson & Johnson, the U.S. Army and New York-based 1-800-FLOWERS.
The two thirty something entrepreneurs are not distracted by the buzz of activity coming from the next office where phones are ringing and six employees are functioning in shared office space.
“I think what really separated us early on was the analysis we did to determine what our customers wanted,” Pupillo says. WorkOtter delivers one primary product, a software application called the WorkOtter. It is a Web-based project- and resource-management system that increases efficiency by minimizing the number of meetings and the amount of paperwork needed to coordinate workflow in an organization.
A lot of large organizations are buying into WorkOtter. “It replaces what we used to do in Excel spreadsheets that were structured, rigid and took a lot of time and effort to manage,” says David DeHart, vice president of IT Development at Charter Communications. DeHart has worked with WorkOtter for two years.
Excessive paperwork and inefficient meeting time is certainly not a new problem. In fact, it’s a key topic for consulting firms like Ernst & Young, where Pupillo and Matteucci first met. They were both IT consultants that focused on project management for large organizations. They both traveled around the country helping set up best practice processes and methodology around project management. But, although they worked with the same issues, they never worked together.
Their connection came in 1997 when Matteucci was promoting a software application within Ernst & Young. It was a solution for an important client, SBC in St. Louis. SBC staff could access the Web-based tool globally, and it had literally doubled the number of projects each manager could handle.
“I invited a lot of partners and senior executives to a meeting to demonstrate,” Matteucci says. “But it was Jeff, my peer, who was the most interested.”
Matteucci and Pupillo soon agreed that although Ernst & Young was a great consulting company, the organization’s focus was not on developing tools and technology. “It became pretty apparent to us that if this was a dream and a vision we wanted to see happen we needed to be independent. Ernst & Young just didn’t have any way to support it,” Pupillo says.
So in fall of 1998 they resigned and started WorkOtter. Matteucci remembers it particularly well. “My wife wasn’t working and I literally returned from paternity leave with pictures of my newborn son and a resignation letter.”
The business started with general project management consulting work during the day. At night the partners worked on building the customizable management tool they had envisioned. By pumping most of the proceeds back into the company, they were able to begin hiring employees in 1999 and reduce the nighttime hours.
In 2000 WorkOtter also initiated partnerships with consulting companies to provide sales, marketing and implementation support of the product internationally. Currently there are nine international partnerships and one in the United States. The most recent staff additions have been two business managers, one in Houston and one in Denver.
All of the development during the last four years has been through independent efforts. The partners had no seed capital, no venture funding and no angel investors. They invested some of their own money, and then everything was funded through revenue or as Matteucci and Pupillo call it, “the old bootstrapping techniques that this country was founded on.” The business even held its own through the dot-com wave, although they say people were concerned and would call just to see if they were still in business.
The partners say they are financially conservative. They believe in earning money and putting it back into the company. For two years WorkOtter world headquarters was operated from an old dining room table in the basement of Matteucci’s house.
“Nick would have to run out of the room holding a baby with colic so I could take a conference call,” Pupillo says. “And it got very awkward when executives offered to fly down in the corporate jet to meet at our office.”
Besides financing the effort, business ownership has its own set of problems not found in the average consulting job. “We had no real experience running an office, doing payroll or filing,” Pupillo says. “We empty trash cans, make coffee and run to Sam’s for supplies — all the things you take for granted in a big corporation.”
Revenue has grown quickly too. In 1999, the first full year, WorkOtter revenue totaled $200,000. Revenue for 2009 is projected at well over $1.5 million. Not even the resent slump in the economy has had a serious impact to date. The client list is expanding and now includes six Johnson & Johnson companies, Express Scripts, Charter Communications, Ameren Corp., AT&T, Scottrade, Orange Communications in Switzerland, and Banc Mandaria in Indonesia.
The company’s vision is to continue improving project management. Economic downturn lends itself to more efficient project management, says Matteucci. That makes the WorkOtter product more valuable. “Customers want the better solutions. It’s never the cost that wins us customers although we are often seven to 10 times cheaper than the competition,” he says.
And likewise Pupillo and Matteucci say it is not the money that is the most satisfying part of small business ownership. They say it is the fact that some of the biggest companies on earth value their 10-member staff. “They value us for the power of our ideas,” Matteucci says. “They tell us we make a difference in their lives.”
Carolyn Green is a St. Louis free-lance writer.
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