The View Is Just Fine at GoldMine Software
Walk into GoldMine Software’s offices across the street from the beach in Pacific Palisades and you’ll find casually dressed employees chatting in their cubicles, heading out for a workout or just admiring the stunning view from the floor-to-ceiling windows.
But make no mistake--this is a serious software company. GoldMine helped launch the market for work-group contact management software, which allows sales teams to automate, coordinate and improve their efforts. The company’s flagship product--also called GoldMine--is used by such well-known firms as Bank of America, Sprint and Lucent Technologies. GoldMine’s sales, which have doubled nearly every year for the last six years, are expected to hit $30 million for 1998. And the software regularly wins industry awards.
Now the company is poised for another major growth spurt. After focusing on individual users and small businesses, GoldMine’s newest release is squarely aimed at the rapidly expanding market of medium-size companies and major divisions of large firms.
If GoldMine is successful--and industry analysts are optimistic--it will validate a strategy that is unusual in the fast-paced world of high-tech companies. Unlike other companies that seek to expand their product lines as fast as possible and cash in with an initial public offering at the earliest opportunity, GoldMine has chosen the more conservative path of solid, steady growth. In the process, it has become one of the most admired software firms on the Tech Coast.
“We’re an overnight sensation after nine years,” said Jon Ferrara, GoldMine’s executive vice president.
Indeed, GoldMine has come a long way since Ferrara and Elan Susser launched the firm in a Woodland Hills apartment. But even with 135 employees, the co-founders still strive to keep GoldMine an easygoing company where work is fun and the entrepreneurial spirit is alive.
The dress code is simple--only printed T-shirts, ripped shorts and bare feet are prohibited. Attendance at company-paid camping and skiing outings is encouraged.
While other high-tech companies scramble to hire hard-core engineers and programmers, GoldMine prefers liberal arts types with good communications skills. And despite repeated entreaties from venture capitalists and other would-be investors, GoldMine has no plans to go public.
“One of these days will be the right moment,” Ferrara said. “It could be in two quarters or two years.”
GoldMine 4.0 allows users to organize all of their business contacts into an integrated database. When a potential customer visits a user’s Web site, his or her contact information is imported into its database via GoldMine, which alerts the user to send out a packet of information. Then it schedules a follow-up, such as a letter or phone call.
The software includes links to Internet sites where users can look up information about prospective customers. It also synchronizes the schedules of all members of a team so that sales efforts can be coordinated.
“It allows us to get an up-to-date snapshot of all of our commercial banking deals at any second of the day and to understand the client better,” said Jim Moore, who is in charge of information systems for Bank of America’s Southwest commercial banking group in Phoenix. He set up 60 people with GoldMine 3 1/2 years ago, and it became so popular that now 400 people in his office use it.
This kind of so-called sales force automation software is increasingly moving into medium-sized businesses, and GoldMine expects to be part of this trend. But selling to larger customers will present some new challenges for the company, including more formidable competition such as Santa Clara-based Vantive, San Mateo-based Siebel Systems and Onyx Software of Bellevue, Wash., analysts say.
“They need to go at it aggressively,” said Judy Hodges, research manager for cross-industry applications at market research firm IDC/Link in Framingham, Mass. The competition, she said, is “much more formidable.”
So far, GoldMine is holding its own. Analysts have not yet measured GoldMine 4.0’s market share, but it has been outselling its predecessors since it came on the market in January. GoldMine added 100,000 users during the first half of the year, bringing the total to 600,000. First-half sales nearly matched 1997’s total of $15 million, Ferrara said.
GoldMine 4.0 stacks up well against more than half a dozen competitors vying to supply sales force automation software to the middle market, said Christopher Fletcher, an analyst with the Aberdeen Group in Boston. GoldMine’s name recognition, its mature reseller channel and reputation for incorporating new features suggested by customers should give it a “head start,” he said.
That’s high praise for a product that went on the market as an afterthought. Originally, Susser and Ferrara started the company to sell accounting software. The two friends--who met in a math class at Pierce College in Woodland Hills--started the company with a mere $5,000.
“We spent $3,500 on the first day buying a computer and a laser printer and paying the rent,” said Susser, GoldMine’s president. For most of the first year, the company was “a week away from going bust,” he said.
Susser, who earned an electrical engineering degree from Cal State Northridge, did most of the programming, while Ferrara, who had a CSUN degree in computer science, focused on marketing. Ferrara asked Susser to write him a program that would automate all of his sales efforts.
“I wanted the ability to manage my contact information, track sales forecasts, have our salespeople communicate between each other about selling to customers, and have telemarketing and calendaring capability,” Ferrara said.
After a trip to the annual Comdex computer show in Las Vegas, the pair realized they could sell Susser’s program. The original version of GoldMine hit the market in 1990.
That led the company to a crossroads. The accounting program was selling well, and at $1,500 to $4,000 per sale, it was producing a reliable stream of revenue. GoldMine, on the other hand, brought in just $149 per user.
But Susser was sure that GoldMine had more long-term potential. He was also afraid that if the company continued to support both products, neither would succeed. After a long debate, he persuaded Ferrara to jettison the accounting program and bet their future on GoldMine.
By 1993, the bet began to pay off. That summer, the influential PC Magazine gave GoldMine its “Editors’ Choice” award, and the phones began ringing off the hook, Ferrara said. The company finished the year with $1.5 million in sales.
GoldMine competed with products from established companies, like Symantec’s Act and WordPerfect’s Office. But Ferrara said GoldMine’s sales doubled for each of the next three years, mostly due to word of mouth and more industry awards.
The company also released a related product called GoldSync that links GoldMine users and synchronizes the data on all of their computers.
Meanwhile, Susser and his core team of developers began two years of work on a GoldMine overhaul that would turn the software into a sales force automation package for small- and medium-size businesses and divisions of large companies.
Now, several GoldMine watchers would like to see the company diversify its product line.
“History shows that being a one-product company is not a good idea,” said Tom Taulli, who follows high-tech companies for IPO Monitor in Calabasas. “Usually someone will come out there and offer something really good and eat into your market share and growth will slow down.”
While the GoldMine founders insist they don’t want to become a giant like Microsoft--"That would be even worse than going public,” Susser quipped--Ferrara said the company might expand through acquisitions.
“We’re getting educated and exploring our options,” said Ferrara, in typical no-hurry fashion. “We have to not get caught up in the hype and get dollar signs in our eyes.”