Bootstrapping A 130 Million VAR In The Midwest: Ahead CEO Dan Adamany (Part 5)

Sramana: In your early days when you were just an extension of the EMC sales channel, what king of margins did you operate on?

Dan Adamany: They were all over the board. There was some money made on the front and they also provided back-end rebates. We make money based on the sale of the product, on the volume of sales for the manufacturer, and then on implementing the product. Each transaction is unique in terms of how you will earn a profit. Our of the gate we were probably operating somewhere between 10% on hardware and software sales, sometimes more and sometimes less.

Sramana: To put that in perspective, if you made $3.5 million that first year with a portion of that from sales, then your profit was around $250,000 your first year. That was your cash to leverage future business growth.

Dan Adamany: We did about a million dollars of consulting that first year, but of course that is not net profit because I had to pay people off of those revenues. From there I reinvested in the business and was able to power growth.

Sramana: In terms of growing the customer base, how did you go into the mid-market? I am assuming those were not existing customers. How did you find your new customers?

Dan Adamany: You are correct in saying that they were not existing customers. Out of the 2.5 million dollars we probably had four or five mid-tier customers in our first year. We found them through relationships with the manufacturer or through personal contacts in the industry. I would say half of it was networking or cold calling and the other half was manufacturers, EMC, bringing us in to help them.

Sramana: Where did you base your business?

Dan Adamany: I remained in Chicago after I left EMC, and I started the business here in Chicago.

Sramana: How much of the Midwest TAM for the products you represent have you been able to capture?

Dan Adamany: We have offices in Chicago, Michigan, Wisconsin, Minnesota, and Southern California. I did a lot of business with Farmers Insurance, which is based out of L.A., and I had been traveling there quite a bit. I met a group of people who last year decided to leave an organization and they basically wanted to join our group. We hired five people to start that office right out of the gate.

In terms of the market, I would say that we have barely scratched the surface. We did $130 million in 2010 between all of our geographies. However, we are in storage, server, virtualization and network. The market opportunity when you look across that stack from a consulting perspective in billions of dollars.

Sramana: No doubt about it, and this is not a new industry with deeply engrained vendors. When you get into an account, how do you win? What is your pitch and differentiation? Why would customers want to work with you?

Dan Adamany: I focus on hiring the best people I can. Everybody whom I hire has a great reputation. The company has highly qualified people which has made the company gain a particular type of reputation. We are now getting approached by highly qualified sales people because we offer a unique opportunity for salespeople to be successful financially. We attract great technical talent because we have great technical talent. Technical people like to be around other technical people who are as smart as or smarter than they are. Our resources play a huge role in providing value, specifically from a business model perspective.

This segment is part 5 in the series : Bootstrapping A 130 Million VAR In The Midwest: Ahead CEO Dan Adamany
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