Michael Proper is the CEO and entrepreneurial vision for the fast-growing DirectPointe, a provider of managed computing services that make technology simple, manageable and affordable for small and midsize businesses.
The following interview is a transcription of a vidcast published on RockyMountainVoices in January 2008.
BB: Hey this is Brad Baldwin with Michael Proper from DirectPointe. Welcome to the vidcast.
MP: Thank you very much.
BB: Now I have to apologize because we have been trying to get together for what feels like two years now to get DirectPointe in a podcast here at Rocky Mountain Voices, so thanks for your patience. I know one thing and that is you guys have been on an acquisition spree at DirectPointe, so my goal today is to tell me a little bit about DirectPointe and what’s going on. Why are you fueling this big machine so much?
MP: I don’t know that we’re fueling it by acquisitions. We’re fueling it by really focusing on what we do best which is manage IT life-cycles for companies. We’re in the business for managing it for a predictable, monthly fee. And our reality is there are certain parts of it that we don’t have core competencies in. such as print, such as some of the security around identity management within users coming into networks, such as actually managing the home. And so these are core acquisitions that made sense for us and know that it’s really our perspective that you don’t grow by acquisition. You really grow by focusing on what your core capabilities are. For us it’s managing IT remotely for businesses and now homes.
You know, I kind of got into the industry before Windows was even out, I think 3.1 had just launched. I started understanding why technology was used by businesses and started understanding the reality that certain businesses shouldn’t use it. It’s too early, the ROI—the return on the investment—wasn’t there. And I spent about five years consulting for the enterprise: Chevron, Wheeler, ICM, Tenfold, etc. And really gained an understanding of how efficiencies, economies, scales and standards were used. And at the same time there were a lot of destructive technologies, such as wireless, remote control, remote backup, and all of these distributed asset-management systems, etc. And the reality is, through that, as well as a lot of clarity and soul searching, the DirectPointe basic model which is still true today, it was very clear for me that it was important to go out and start a business, cleanly from the ground up to make sure what we talked about, making technology simple, management affordable, could actually be realized. Back then we didn’t know what those three words meant. We knew that there were better, faster, cheaper ways to do it, but we didn’t really understand what the core message to the industry would be. But our reality was there was a better way. And that’s really what DirectPointe is and does today.
Our bread and butter is what we call our Complete Solution, which is really network, server, PC layer and hardware/software services, monthly fee per user basis/per network basis/per server basis. That’s our bread and butter and really through doing that, delivering that service, we’ve really come up with specific things that manage those layers better and cheaper—not just for us, but also for other companies that are out there that want to do it, whether it’s for their customers or whether it’s to manage it internally. And you’ll see continually over the next probably six months a continual launch of different products that will make a lot of sense, consistent with what we launched in 2007: January 17, 2007 when we unveiled what we called the Central Pointe Server, which really fits into what we call Small Office Solutions.
Businesses want things that are affordable, so they don’t want to pay for a ton of capital expenditures upfront, maybe a large piece of software, or upgrading all the hardware for their environments. They want to actually pay something that’s a monthly fee that’s palatable from a finance standpoint, but on the flipside because we listen to that and it’s difficult to build a business on that, it really creates a lot of barriers for other companies that come into the environment, but more so, it creates opportunity for us to build recurring revenue, which is really what is appealing, whether it is to venture whether it’s Wall Street, and really it helps to build a solid and stable business from a recurring revenue, keep-the-lights-on type standpoint. We’ve worked hard over the last almost eight years now to build that base, that infrastructure. And once it gets rolling, it’s somewhat difficult to kill. I mean, a good example would be you shut down really the sales and marketing engine and continue to sustain the business and it can actually flip out additional cash without continuing to grow from an operation-support standpoint, if that makes any sense.
BB: A couple of the acquisitions, let’s talk about a couple of those that you’ve made in the last year and how it’s actually strengthened your portfolio and developed services and products. Because it’s not just about a sense of Geek Squad that’s out servicing computers, you’ve got a full operation backing up and software installation and everything else. Tell me a little but about it.
MP: Well, so there’s numerous things and it’s not just security or other things, but it’s also around IP. When you look at it there are certain things you should own and certain things you shouldn’t own and DirectPointe is really in the business of leveraging a lot of the momentum that the open source community has built. Namely leveraging today about 42 different open source technologies to manage a server-network layer and there’s a critical piece to that on how users—PCs, laptops, doesn’t matter what flavor—how they connect in to these back-end systems. A company named Sweet Spot Solutions which started up in Washington and primarily headquartered out of Phoenix, just over five years and four million dollars and about three and a half years to really get two of their patents that are really agent-less, client-less, USB or Flash-memory, if you will, VPN technology. So that was a real key for us to shore up what we believe in the future is these client access devices, whether it’s a PC that runs of Flash memory or whether it’s a thumb-drive that’s used for a two-factor authentication for PC users to authenticate to networks. Pretty important there, and that’s probably from an IP standpoint. And then you’ve got other companies such as iTalk, italkhelp.com, italkhome.com, that really focuses on the consumer and managing basically the PC at home. Same model, centrally-managed, using economy as a scale, using standardization tools, etc. They built over a million lines of code primarily out of Australia to really develop the technology to do it better and cheaper for that specific target of market at the home. They have a marketing channel that is very consistent with ours on how we plan on rolling out some of the technology, infrastructure, central point server, what we call end-point client, as well as an iTalk platform, so to speak. Does that make sense?
BB: Yeah, lots of stuff happening, in fact you keep talking about home, home, home and I know that you probably want to talk a little bit about that, because you have a new angle, it’s not just these small and medium businesses, but it’s growing out into peoples’ houses.
MP: Well, our reality is, yes it is all about small and medium businesses and what I mean by that is there’s over 5.8 million businesses throughout the United States, continentally. Over 5 million of them have less than 20 users per location—that’s our target, that’s the market that we’re focused on. Not just us, but enabling partners to be focused on it. But the key is: where do those users go? They go home. And when technology continues to become more distributed, so it goes to the cloud, so to speak, Google Apps is a perfect example of this. Other applications, what they call ASP applications, are good example of it. As they continue to go to the cloud, these access devices, whether PCs or PDAs will become more important to support them no matter where they’re at. And DirectPointe core’s business has been directed on delivering that support for businesses, but the reality is these businesses go home and say, “Can you support us at home?” And we say, “We can’t. Not today. We don’t know that we’ll ever get into that industry.” Really until we had the opportunity to meet iTalk.
We look at it as, if you can for 24 hours a day, if you can deliver support and if you can do it with a consistent response time – over the last five years our average response time well under 30 seconds – there’s a very valuable disruptive service there for the home markets.
BB: I was actually walking through CES a few weeks ago and I saw a guy approaching me wearing one of those shirts that makes me laugh every time I see it: “I will not fix your computer”. You know, it seems like anyone who has a computer and knows how to turn it on becomes a support agent. So, more power to you, Michael, get out there and solve that need.
MP: Really our message is: You want support, you push the button, we call it E-Support, and somebody is there that can do more remotely for you, it’s tracked, it’s quantified. And with the home model it’s pretty simple, it’s based upon your satisfaction, based upon response as well as the time it took to solve it equals your bill. There’s two simple products, one that’s called PC Care that’s really a pro-active based product that every certain amount of time, usually in about a 90-day increment, they come in and actually manually speed up our systems using different technologies that are automated. But you still need that human intervention to be able to make sure that it’s finely tuned, not just some software package that thinks that it’s working, especially with home users where they are usually individually pocketed. You just need that human touch and it doesn’t cost a lot but it can add a lot of value, so you don’t have to keep replacing those PCs as often as you do.
The platform specifically for home, we will be targeting broadband service providers, pretty much exclusively to go after that channel. We have different channels for different industries and verticals, so to speak. We’ll also target hardware manufacturers, as well as generic service providers, other managed service providers, other IT service providers. There’s really a channel that’s evolving around that and also independent software providers. Those last three that I mentioned are primarily around business services. But the home users that we can actually service, they actually have to have broadband and internet connection and the reality is we can layer our services on the broadband service providers to help them provide a more sticky solution to their client and at the same time, have a more stable PC, less chatter on their network, better utilization of their bandwidth, there’s many, many synergies that make sense for the broadband service providers to partner up with DirectPointe to provide a service to their clients.
Our goal is to take our service to the masses, whether it’s OEM’d or bundled and kind of think of it as an additional triple play, so to speak.
With virtual technology, you can do it from a central location, again using economy as a scale, centralization, etc., to really be able to manage those environments centrally. So you can have anti-virus, back-up services, and I’m talking remote back-up services, things such as grayware, malware, spyware, any of those types of things as well. Also, if they need email, whether it’s configuration, or archiving, or back-up, or support, or any of those generic things they can buy that as an on-demand service at basically 15-minute increments.
You know, when you look at DirectPointe, you talk about it’s been two year since I’ve been able to connect with you, Mike, and it’s really what we’ve been focusing on, what our core business is. When you go back to the inception of DirectPointe there are three things that we wanted to accomplish. Number One: we wanted to make sure we could actually deliver it and the market was there to get adopted. Number Two: that it was actually sticky and would be retained. Number Three: that we could actually make money at it and we accomplished those within the first three years. First year we went to market, built a management team, wonderful management team, some of the team members are still here with us almost eight years later. Raised a little money, perfected the technology a little bit and went to market, that’s all the first year. Second year hit cash flow positive, third year hit profitability and we have been focused, really heads-down focused, on how you actually create systems that scale. How do you actually create systems that do things centrally, using processes that are really simple-based processes, but put together very complicated to be able to centrally manage IT better than any other organization in the world. And that’s what DirectPointe is.
To the central point server, which will do intrusion detection, content infiltration, asset management, lots of different things that are features and benefits. But really, manage that customer’s location better and cheaper than it’s currently being managed with different tools that are out there, such as Microsoft, SonicWall, Cisco, etc. With a centralized system that will actually do all the basic functions and things, feature-wise, that these other applications do, all from one console, that’s tied to a service-delivery network around the world: London, Toronto, Houston, Dallas, Lindon, that can really scale to deliver these remote services.
BB: Where can we tell people to get more information about what you’re up to?
MP: Best place is just directpointe.com. You’ll also see some of the releases that we’re popping there. But primarily, you’ll see some additional product launches, whether it’s with partners, like you’ll see one tomorrow with a company called MStar, or other specifics around channel-based plans. We’ll have some additional modules, look for VOIP, that will be included in the central-point server this quarter, as well. So, just directpointe.com, it’s right there.
BB: And the spelling of DirectPointe?
MP: DirectPointe or without the “e”.
BB: Oh, you’ve got it all.
MP: Got it all.
BB: You’ve been lucky enough to be in long enough to get it all.
MP: Lucky is the right way to put it. Almost any way you spell the name and almost any country you spell it in, .com, .net, .org, I mean it’s directpointe.com.
BB: Good. Well, Michael, it’s been good talking to you and best of luck.
MP: Thank you.