Personalized Alerts In The Enterprise: xMatters CEO Troy McAlpin (Part 5)

SM: So these companies had different pagers for each IT system?

TM: Yes. It was even more problematic as firms globalized their IT infrastructure. None of the IT management companies focused on the person involved in IT; they focused only on the component monitoring.

SM: Who was helping you to architect this solution?

TM: My cofounder, Desi DosSantos. He had grown up in the IT space. He had built a product called AlarmPoint which was a Windows-based warning tool. He had a small struggling business and a group of engineers who built a flexible tool. He knew the problem area well. I bought his company in 2002.

SM: How did you buy the company?

TM: We bought it for stock, debt, and a small amount of cash. In some ways it was a turnaround story. We inherited some debt, product, and knowledge. We also inherited the ability to gain funds selling an existing product. We spruced it up a bit and brought it back to market, and it was the first product we sold to Nextel.

SM: How big was Nextel in dollar terms?

TM: The licensing was $120,000 and the project total cost about $200,000 total. They paid for the professional services as well. We were selling the other product at an average license price of $15,000. Nextel had more people on the project than I had employees. Other competitors were selling for the same amount. Initial products, including ours, misunderstood the problem. Early generation products just broadcast an event stream. The problem was that a service was impacted and a person with the right skill set needed to be impacted and let others who were impacted by the problem know about the issue proactively. As we came out of the Nextel project working we developed our corporate enterprise product. Our second customer was ConocoPhillips, which was another great early customer.

SM: How did you find those customers?

TM: We were following BMC around and looking for all the areas they were messing up. They had a product that was not as good, so we called customers who used that product and offered a free trial of our product. A year later, in 2003, BMC came to us asked if they could resell our product. We had originally tried to partner with them when we first got going, so we already knew that partnership made sense.

SM: How long did it take you to get from the Nextel deal to a BMC partnership?

TM: Two years. During that time we had sold into enough companies to get on their radar.

SM: Did you raise any additional capital?

TM: We added about $400,000 more, but not from VCs. Our initial angel investors had a right to re-up for another half. We took just over $1 million in total equity. We were able to service the debt that we inherited and operated lean for four years. We still had nice stuff because I bought furniture from dot-coms as they went out of business.

This segment is part 5 in the series : Personalized Alerts In The Enterprise: xMatters CEO Troy McAlpin
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