Links
in the Chain
by
Melissa Wells
High-flying Interlink
Communications Systems
Inc. listens to its
customers.
The
entrepreneurial bug hit Martin Poad, chairman and chief
executive officer of Clearwater-based Interlink Communication
Systems, later in life. An industrial management graduate
at Carnegie Mellon University, for 20 years he was content
wielding command from is executive offices at IBM. In 1981,
when he exchanged IBM's gigantic corporate structure for
an executive position at Paradyne Corp., a much smaller
technology company in Largo, he liked the dynamics of a
more entrepreneurial organization.
"Seven
years later it was purchased by AT&T," Poad says with a
tone of regret. "I didn't want to go back to that same bureaucracy
[of a large corporate setting]."
He did
his tour of duty as vice president of international distribution
at the newly merged corporation. And then in 1990 the idea
of going out on his own came on strong.
"Here
I was at age 50," says Poad. "I had a good job that paid
me well. And I thought about my grandfather. He was 65 when
he started his last business. I knew I wanted out of that
bureaucracy. It's not nimble. They wouldn't take risks."
Poad
tried to convince colleague Tom Straub, also an executive
at AT&T Paradyne, to join him in his new venture. But Straub
was enamored with the opportunities the merger offered.
"When Paradyne was sold to AT&T," says Straub, now president
and chief operating officer at Interlink Communication Systems,
"I led the group that sold the technology to AT&T. I stayed
there for years."
But
Straub discovered that Poad's prediction of what was ahead
in that corporate setting was accurate. He joined his friend
at ICS when AT&T disposed of Paradyne. "I had significant
challenges as an AT&T executive," Straub admits. "There
were high levels of bureaucracy and the decision-making
process was unbelievably slow. Contrast that with the management
style here. We make a decision and implement it the next
morning. There are no committees to approve what we're doing.
" During
the years that Straub was taking his course in the disadvantages
of operating in corporate bureaucracies, Poad went on to
establish Interlink Communication Systems Inc. "My original
concept was to provide the same service as I had in the
larger corporations, but as an independent," says Poad.
"I thought I'd be a systems integrator, but vendors kept
sending me leads to build networks. In the first 90 days
I had 320 customers and that took my company down the path
to be systems integrators with resellers."
Interlink
is a distributor of data communications and LAN/WAN inter-networking
products and services to resellers, systems integrators
and Internet service providers. "We sell equipment to establish
satellite and terrestrial land lines to other systems integrators
who sell their products to an end user," explains Poad.
Annual
sales the first year reached $1.3 million. By year three,
sales had climbed to $5.6 million. "We needed more management
infrastructure and I hired a general manager and chief financial
officer in 1994. Then the company really grew."
In the
decade since Poad founded the company, Interlink has grown
to provide services to "58 countries outside the United
States with annual sales of $30 million," he says. "We've
grown because we have the right management. Combined, our
executives have run tier businesses in excess of $1 billion."
Customers
buying the firm's data communications products include Ameritech
Inc. [since merged into SBC Communications Inc.], Lucent
Technologies Inc. and IBM. "We supplied some of the data
communications equipment for the previous two Olympics,"
Poad says. "The scoring systems at Atlanta and Australia
used our products."
It's
about the customer
Poad attributes the firm's success to meeting the company's
primary objective.
"We
have a simple mission statement," he says. "Help the customer
succeed. We've given our employees a lot of authority to
that end. As a result, we've had very low turnover. In our
initial five years the first person left because his mother
had a medical problem."
It doesn't
hurt that the company is "at the high end of the pay scale,"
adds Poad. "We place a heavy emphasis on our tech staff.
We use advanced tools that techies love. And our marketing
employees are MBA graduates. The University of South Florida
has been a good source of recruiting."
Having
laid the foundation for success, Poad is now enjoying the
accolades. It is ranked among the Inc. magazine 500 (for
the second consecutive year), the Deloitte Touche National
Technology Fast 500, the Florida 100 list of fastest-growing
privately held companies, and 23rd on the Tampa Bay Technology
Fast 50 list. Interlink has appeared on the Tampa Bay Fast
50 list for five years now. "Being ranked among the top
technology companies in this area is quite an achievement,"
says Poad. "But winning it five years in a row is just incredible.
It's a matter of keeping longstanding customers happy and
bringing new customers to ICS every day."
But
Poad hasn't been content to focus all his attention on one
company. He formed Netlink Technologies Inc. in Denver six
years ago "to sell data communications in that region to
end users," he says. "It has three employees and annual
sales of $2 million to $3 million."
In
1996, before business-to-business commercial websites became
widespread, Poad was exploring ways to take advantage of
the opportunities the Internet offers. "We were working
to develop a system to better provide information to our
vendors, customers and employees," he says. "We used the
Internet to distribute information. We created a 25,000-page
virtual catalogue. It generated phone calls, first as a
portal for people in data communications to get information
and second as a means of attracting new customers. In 18
months we went from zero to 50,000 user sessions per month.
We had two to three new customers daily and our base went
from 700 to 2,800 customers."
With
such tremendous results, Poad was ready to expand his company
into e-commerce. But first, Straub suggested, it was time
to integrate the company's accounting system with the website.
"The last thing I ever wanted to do was convert our accounting
system," says Poad. "There's no return on investment. Very
few companies permit customers to view their records. Everything
was exposed for any customer or vendor, integrated into
one system."
With
this conversion, not only did the company provide extraordinary
amounts of information, "we had built a jet system and ICS
was the Piper Cub," Poad says.
At that
time ICS also saw its market being eroded by new competition.
"That was a dilemma," says Poad. "ICS was in a battle with
competitors entering data communications. We had pressure
on our margins and had to evaluate the business we'd be
in. And here we were sitting on this jet engine that was
overkill for where we were. We had to decide where best
to apply the technology we had built."
Having
created the technical infrastructure for entering e-commerce,
"we decided to go after state and local government entities,"
says Poad. "This would be a business separate from ICS focused
on government segments. We started with the expertise we
knew: information technology. But our intent was to develop
a strategy with leverage and loyalty. We wanted our customers
to come to our site and use it over and over again."
On
to GovStreetUSA
Poad formed GovStreetUSA, his third company, and arranged
affiliations that would guarantee access to government officials.
"The International City/County Management Association and
Council of State Governments became exclusive sponsors of
our system," he explains. "They have 24,000 members and
a database of 139,000 managers and officials we can market
to."
He
decided not to touch the top 30 metropolitan markets. "The
IBMs and Microsofts have that market," he says. "Our aim
is metropolitans with a population of 130,000 and under.
We call on smaller markets for these big players."
Thomas
Davies, senior vice president at Sterling, Va.-based Current
Analysis Inc., in Washington Technology magazine (January
2000), explains the edge that Poad's concept brings to government
officials in charge of purchasing. "This is an on-line government
store which aims to boost the purchasing power of local
governments across the country. Building on the business
model pioneered by other e-commerce sites, GovStreetUSA
is a members-only buying service. There is no cost to join.
Membership entitles local governments to take advantage
of favorable pricing and special discounts. The site allows
local governments to buy IT products much as consumers purchase
books on-line. Buyers can create a market basket of products,
track orders and review account status. In addition, they
can issue requests for quotations as well as receive responses
to these solicitations.
"Perhaps
more importantly," he adds, "the service allows local governments
to obtain special pricing from IT companies on a real-time,
minute-by-minute basis. This opens up the possibility of
auctions for IT products, with local governments leveraging
their collective buying power."
The
e-commerce site opened in February and during the first
seven months, "we signed up 5 percent of available jurisdictions,"
says Poad. "We have an aggressive business plan for 2001."
The
site was designed with the objective of customers being
able to shop unassisted.
"Eighty-four
percent of our orders are placed independently," says Poad.
"Our competitors do no better than 10 percent."
Now
that the commerce side of GovStreetUSA is in place, Poad
and Straub are designing additional enticements. "I see
it becoming a Main Street USA for government," says Straub.
"We'll provide services where government officials can get
information, so that it becomes more of a portal rather
than just a store."
It
is just this kind of aggressive strategy that attracted
Washington, D.C.-based ICMA to its affiliation with GovStreetUSA.
"We
sponsored the site because it provides an interesting introduction
to electronic commerce for local governments," says Bill
Hansell, the association's executive director. "We knew
that ICS was very solid as a reseller of information technology
products. They researched and built an e-commerce site that
seemed effective to us. We checked other sites that were
looking at local government as a market and, frankly, didn't
see anything we liked as much. They weren't as far along.
ICS is an Inc. 500 company. That spoke a lot to be selected
by a business magazine as a premier company. Our due diligence
worked out fine. They had a reasonable track record and
an indication that they knew how to make money in business."
Having
served as a local government official earlier in his career,
Hansell has an eye for the advantages he sees in the GovStreetUSA
website. "I like that they have created a site that combines
high tech and high touch," he says. "It's very user friendly
in the way it provides the ability to shop, find products
and get prices. Complement that with the 800 number and
staff of customer service operators who will literally walk
customers through the shopping process. We thought these
were pretty good reasons to go with them.
No
dot-com bomb
"I hope for all the reasons I've articulated this will be
a dot-com that doesn't become a dot-bomb," Hansell adds.
"This is an entrepreneurial world. There's no guarantee
of success. But we're pleased with what we've seen so far.
We set a goal of 1,000 potential customers joining the site
in its first year. We passed that within seven months. We're
now at 1,200 to 1,300."
Of
those members "232 have purchased products," says Poad.
"Ninety-four percent were repeat buyers. That says they
like the site."
Teaching
City Hall
The challenge Poad and Straub face is educating government
officials to this new purchasing mechanism. "We're trying
to change the manner in which government does business,"
says Poad. "Our system profiles different authorizations.
If a manager's spending level is exceeded, our system sends
the request automatically to the next level in government
for approval."
It's
easy to understand the eager anticipation with which Poad
and Straub speak about the potential of the GovStreetUSA
website. "Government in the United States is the largest
single vertical market," Straub says. "They spend $100 billion
a year for IT alone. That is a staggering figure."
As to
the future, "ICS is growing and doing well," says Poad.
"It's the bank providing seed money for GovStreet-USA. We're
doing a private placement to allow GovStreet to grow."
Poad
anticipates that the combined staff of 50 in his companies
will grow to 80 by the end of 2001. Operating from 28,000
square feet in five facilities spread around Clearwater,
he's currently researching options for consolidating into
a 40,000-square-foot space in the area by 2002. "We'll be
bursting at the seams by the end of first quarter 2001,"
he says.
And,
clearly, further developing the potential of the GovStreetUSA
website is the first priority. "We'll get this one running
before shifting focus," Straub says. "First, we'll focus
on growth within the government market for other services
such as office equipment, public safety and transportation
products, public works equipment and network security. GovStreet
will have government news, job postings, store services
and lots of different points of interest so officials will
come to our site every day. If they're in our mall, they'll
shop at our stores."
These
ideas don't all emanate from Poad and Straub. "Our customers
are saying what they have to have," Poad says. "We're letting
our customers lead us to the sweet spot of our business."
