Bootstrapping Using Services: George Anderson, CEO of Ninth Wave (Part 3)

Sramana Mitra: How long did you do the high-end data teaching business?

George Anderson: Up until 9/11. My learning center was in Broad Street in Lower Manhattan. They called it the Silicon Valley. I was in the information technology center during 9/11. 9/11 put it out of business. 

Sramana Mitra: Did your technology consulting business remain?

George Anderson: Yes. 

Sramana Mitra: What kind of numbers were you doing in 2001? 

George Anderson: We were probably in the $20 million range at that point. 

Sramana Mitra: How many people were working for you?

George Anderson: We were probably 85 at that point. 

Sramana Mitra: Was everyone in Manhattan?

George Anderson: A lot of consultants were with on-site customers. Headquarters was in lower Manhattan, but I did have a lot of on-site consultants that were out working with clients. 

Sramana Mitra: In 2001, 9/11 happened and your education business is out. What was the next move?

George Anderson: In 1999, I saw an opportunity to build a software business. A customer, J.P. Morgan, came to me and said, “Hey George, we want to connect all our high net-worth clients up to their accounts over the internet.”

Dating the technology at that time, you are talking about modems, Intuit’s Quicken products, and Microsoft’s money product that people wanted to use. J.P. Morgan hired me and I wrote technical requirements for them. I interviewed the business and wrote up business requirements for them.

We took these business and technical requirements and turned them into an RSP. We sent that out to a number of people and the response was bad. I sent that to a couple of public firms, a couple of the big system integrators, consulting shops, and one private firm.

All their responses were really bad. You would see things like, “Wow, it’s going to cost you $5 million, and it’s going to take 18 months.” I looked at that and said to myself, “Wait a minute. $5 million in 18 months. You don’t have a product. You are building something for me.” I thought, “Why don’t I build this product?”

This was a funny one. This was a real test for me. I looked at it and said, “Wow, this is a really interesting opportunity.” Next, I took a white paper and wrote down how I would solve it. It talked about the business problem, business opportunity, the technology it required, and how I would solve it.

I was really happy with what I wrote on the white paper. I went to a bunch of people and showed them this white paper and they said, “George, you have to do this.” I wasn’t so sure. I looked at it and thought, “Wow, I built a consulting shop and it’s doing great. I also have this education center and that is doing great. I’m actually making a bit of money and paying myself. Now, we are going to go out and start an enterprise software product and it’s probably going to take me a year and a half to build this thing right. There is a lot of R&D dollars that goes into that and there will be no revenue to offset that. How is this a good idea?”

I took one more step. I took a couple of really smart people and I did a proof of concept. We built some technology based on the white paper to make sure that the solution would actually work.

Finally, I said, “You are right. We have to do it.” That’s how I started my third business and my third revenue line – by building software. We sold that software quite successfully. We won a lot of high-profile clients on Wall Street.

One of the first customers was J.P. Morgan and the private banks there. My first client was called Online Resources. They were a public company that was subsequently acquired by ACI Worldwide. They were a service provider. They had a platform – an online banking platform for smaller banks and credit unions.

I sold them the software for banking and bill pay operations with personal management tools. They were my first paying customer. We probably had 700 banks running on it in fairly short order.

Now, I have this business model that I believe strongly in. I have the services company, the learning center, and the software company. I could sell people the software and bring them to the learning center where I can teach them how to use and deploy it. If it’s a complex engagement, I have my own services business and can implement it in the field. 

This segment is part 3 in the series : Bootstrapping Using Services: George Anderson, CEO of Ninth Wave
1 2 3 4 5 6