Deal Radar 2009: Avidian Technologies

Avidian Technologies is a software company that specializes in cloud-based and on-premise software solutions for users of Microsoft Outlook and Exchange. Prophet, developed by Avidian, is a contact management and CRM software built inside Outlook. Prophet helps small and mid-sized businesses to organize their customer information better, gain greater visibility on sales activities, and achieve their company sales goals.

Avidian was founded in May 2002 by James Wong, CEO, and Tim Nguyen, CIO. Prior to Avidian, Wong held various positions with Arthur Andersen and Chevron Corporation. Wong was also co-founder of three successful start-ups, including Foci Technologies, an e-business systems integrator that focused on designing and implementing Outlook and Exchange Server to small and mid-sized enterprises in the Pacific Northwest. After Foci was acquired, he thought of using Outlook as a platform rather than an application, since there are around 400 million Outlook users in the world. Seeing that people used Outlook for 50%-60% of their sales and customer interactions, he decided to incorporate the sales feature inside of Outlook and Prophet, the idea of CRM in Outlook was born. Wong had started Avidian with the aim to develop a business that provides more revenue per employee than any other organization rather than to create a mega-company. He was named to the Puget Sound Business Journal’s “40 Under 40” list and received the NW Asian Weekly’s Entrepreneur of the Year Award.

Tim Nguyen, CIO, was the brain that built Prophet. He previously worked as a technical engineer, technical architect, software developer, consultant, and entrepreneur and has been named the NW Asian Weekly’s Entrepreneur of the Year. Avidian has been funded by an undisclosed angel round of funding in addition to $300,000 of personal funds by the owners. The founders are considering raising money to accelerate their growth.

When Avidian was founded, all other CRM applications were run as separate applications with none as plug-ins built into Outlook. This is in fact still the case, and Avidian’s integration into Outlook is its primary competitive differentiator and benefit, because it means that customers do not need to learn to navigate a new user interface and they don’t have to manage an additional application opened on their desktop.

Just a year after establishing the company and investing their money into it, Avidian’s founders faced a challenge in the form of Microsoft, which was going to release Outlook 2003 with Business Contact Manager (BCM). The founders had expected this to happen, but thought it would take place a few years later.  It was too late to turn back, and they decided to go ahead with their plans. They got hold of an early beta version of Outlook 2003 with BCM and were pleasantly surprised to see what they considered two major limitations to it. First, it only worked as a single-user application, and information can’t be shared with a team. Second, it did not work with Exchange Server, which precluded  most companies from using it.

Avidian’s Prophet has three main competitive advantages. Since it is built into Outlook, there is no need to flip between two applications all the time or manage multiple contact databases.  Second, Prophet is simple and can be up and running in a few days or even a few hours if the SaaS version is used.  Third, it is built to leverage existing Outlook data. 

The CRM market is estimated by Gartner to be worth $9.2 billion in 2009 and will grow to $11 billion by 2011. According to the SMB Market Opportunity report, the total available market for Avidian’s SMB CRM market is about $2.2 billion in 2009. Avidian’s target market is SMBs with sales teams of 5 to 25 users. Avidian also sells to larger divisions and groups at Fortune 1000 companies and single user clients, but the SMB space is their main target. The top market segments that Avidian sells to are professional services, insurance, manufacturing, financial services, IT & software, real estate & mortgage, and call centers.  Customers include Akamai, AT&T, Ariba Inc., Citrix, Coldwell Banker Bain, Dell, GMAC, GE, HP, Microsoft, Motorola, and Nextel Partners.

Some of Avidian’s top competitors are Salesforce.com, Act Software, Goldmine Software, Siebel Systems, and Microsoft CRM, but Avidian differentiates its product through its simplicity and ease of use as well as the feature that it is built inside of Outlook. Avidian used SEO and PPC advertising to initially penetrate the market.  Word-of-mouth advertising and other Internet marketing strategies have also helped Avidian to grow its client base.  Today, a search for “CRM software,” “contact management,” or “sales software” on Google, Bing, or other major search engines will typically bring Avidian up as one of the top three natural and paid results.

In the past six years Avidian has grown at a compounded average growth rate of 49%. Gross revenue for 2007 was approximately $2.8 million, in 2008 it was $3.5 million, and the company expects similar growth for the current year.  In 2009, the average number of visitors per month was 48,900 and absolute unique visitors were approximately 39,900 per month.  Avidian has over 2,800 server customers with an average of 10 users.  The retention rate for its cloud-base solution, Prophet OnDemand, is 97%, one of the higher rates in the industry.

Avidian has won several awards, including the Seattle Mayor’s Small Business Award; one of the “Best Companies to Work For in Washington State” by Washington CEO magazine, and it was named by the Puget Sound Business Journal in 2006 and 2007 as one of Washington’s 100 Fastest Growing companies. The company has been named to the Inc. 5000 List two years running and this year was also named to the Red Herring North America 100 List.

On an exit, Wong says that “as both co-founders have exited companies through acquisitions in the past, there is a high likelihood of Avidian being acquired or going into an IPO situation. However, we are a growing and very profitable company, so there are many options.”

Recommended Readings:
Building the Small Business CRM Solution: CircleDog CEO Charlei Crystle
Deal Radar 2009: SugarCRM

This segment is a part in the series : Deal Radar 2009