Building The Small Business CRM Solution: CircleDog CEO Charlie Crystle (Part 3)

SM: What was the evolution of ChiliSoft?

CC: We started with the store and after a year left that business. The retail level was just too tough at the time. Software was way too hard for most people because it required DOS and Windows 3.1 had a terrible interface. I never studied board design, but I did learn low-level programming. I studied assembly and packets, and I was obsessed with knowing the details of how things worked. The challenge was teaching others. We would give classes and people would give us glassy stares when we were teaching them word processing.

We evolved ChiliSoft into a services business for commercial operations. We got a programming contract with a local insurance company, and another one for a local manufacturer. We then kept doing contracting programming work. When we spoke with businesses about their goals, I began to understand the link between technologies and businesses; businesses did not know what they needed. They looked at technology too optimistically and felt it was a strategic way to advance their business. The capabilities at that point where not that great, and most businesses had bigger business process problems than the technologies could resolve.

SM: What did you do with that understanding?

CC: Once I started to see the problems it did not take long for some of them to start begging me for solutions. Getting data out of an enterprise database was an expensive process back then for a small or mid-sized business.

SM: The application layer was not sophisticated enough.

CC: The gaps are closing now, but then there were very big gaps in available talent to do custom programming and the plug and play stuff. You could not just buy business objects, plug them in and analyze your business data. This is back when there were three-year ERP rollouts. That was crazy to me because in three years their entire world could change.

SM: In any case that is way too expensive for a small business to deal with.

CC: There is no way they could afford that. Small businesses are the majority of businesses, yet the large players have abandoned them and are not serving them. Microsoft has gone upstream; their CRM is too complicated for small businesses. SalesForce.com is an enterprise software company. Anytime you have an industry leader that only has 47,000 customers it is enterprise software. Intuit has moved upstream. What is left are the 1–10 person businesses, which are not well served. That is where we are trying fit in.

SM: That is what you are doing now, right? What happened with ChiliSoft?

CC: After two years of business we had an idea about getting data from a database and writing to a pre-formatted spreadsheet as a report writer over the web. This was probably right around ActiveX was announced by Microsoft, so there was no web integration with Excel at that point. The Web browser was pretty static at that point, mainly just static HTML. You could produce tables but not much else.

We built an application server that was essentially an application report writer. It was interesting in that the financial world companies like Solomon, Morgan Stanley, and others would have racks of servers running a single instance of Excel against data to generate different reports. It was one server per report. We created an object which could have multiple instances run.

SM: So with ChiliSoft you were serving enterprise customers?

CC: Yes, with ChiliReports. There was a break. The guy I started it with left the day before my dad died. That was really classy. At that point I had wanted to go after software, and he wanted to go after services. My basis was on ChiliReports. Around the same time I got a call from a kid who just graduated with a masters in mechanical engineering and was looking for a programming job. I hired him and it turned out he had already built an application server. It was probably the first one, probably before Netscape.

SM: That is the problem with Pensylvania; it is out of the fray and you don’t get to plug into the system.

CC: That aspect was bizarre. Our server was called slip script, and then Microsoft came out with Active Server Pages. Dave did a couple of weeks’ work and got it running ASP on Netscape servers. We showed it to Microsoft and they flipped. They asked where we got our object model, so we started with that. We were not sure if it was substantial. We had a choice to build the business on reports or go after ASP. We were selling the reports stuff largely over the web and tried to build a story around the ASP engine.

We then raised money from DFJ, moved the company to Seattle, grew it to about 70 people and sold it to Cobalt Networks in 2000 for $70 million.

This segment is part 3 in the series : Building The Small Business CRM Solution: CircleDog CEO Charlie Crystle
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