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Source: Projects@Work
Author: Karen Klein (May 10, 2007)

How does the CEO of a New Zealand-based creative design agency become a provider of project management software? Ask Julian Stone, director of ProActive Software Ltd. Stone created a project management tool for his Palm Pilot five years ago and shortly thereafter began marketing it internationally. But it’s tough for a small firm to build credibility, cater to would-be customers and find its niche in a universe dominated by much larger stars.

Julian Stone was frustrated. His creative design firm was growing, taking on new projects continuously and he didn’t have a way to keep track his work. Stone, a New Zealand native based in Christchurch, brought his creativity to the problem and wound up creating a project-, task- and time-management system for his Palm Pilot.

Stone’s solution worked so well that his team started asking if they could use it, too. He enlisted the help of a software developer friend, Alan Barlow, to expand the solution and put it on the Internet where it could be shared. When it worked for Stone’s team, friends and colleagues started asking if they could purchase it for their companies.

And thus, Stone’s small business was born. Barlow became co-director of ProActive Software, the company he and Stone founded to commercialize ProWorkflow, his project management software tool. Within the company’s first month of operation, they had 50 small business customers, most of them with no more than 20 employees. Currently, their customer base is concentrated at 70 percent in the United States, 12 percent in Australia, 7 percent in New Zealand and 5 percent in the U.K. The rest of his customers are distributed worldwide.

“We are a classic garage start-up operating from the country, with a large global user-base, and are now landing large multi-national clients,” says Sam Law, one of Stone’s sales support staff. “We had no funding investment and only used sweat equity. We are scaling up steadily with annual revenue doubling every six months.”

Stone’s main priority in developing the product was usability. Before they made the decision to put his homegrown solution on the market, he and Barlow crawled user forums at established project management software Websites. What they found across the board, Stone says, were large numbers of unhappy customers who complain that products are unworkable or operate on unsustainable business models.

They decided to emphasize simplicity and the big picture in designing and marketing ProWorkflow. “We aim to make things as easy for the customer as possible, so we’re always looking for ways we can simplify the application, usability, hosted service and billing. It’s all about automating and simplifying processes,” Stone says.

But getting a foot in the door was not easy for a small upstart based outside of North America. “We had no apparent credibility from the customers’ perspectives, so we had to think smart and make sure we had prepared quick answers for any questions they may ask,” he recalls. “You pause and you lose credibility.”

Stone also strove to make his Website particularly slick, with plenty of downloadable sales material. “Instead of looking like a small company that was growing, we had to appear as a solid, mature company even before we were,” he says.

The firm immediately put customers and potential customers into their product development loop through regular telephone calls, e-mails and feedback interviews, Stone says: “We asked what they needed and built it generically. Then we’d sell for a bit, gather more customer feedback and roll out another release. With each release, the product gets more industry-compatible and can offer greater benefits to customers.”

Although the product has appealed mostly to smaller clients, Stone capitalized on larger customers when he attracted a few. “We create customized solutions that perfectly meet their needs. These can range from minor tweaks to large full-scale product rebuilds. As a result, they become long-term satisfied customers,” he says.

As a startup, his personal credibility and his firm’s reliability were the biggest hurdles to be overcome when looking to attract new customers. “We had to prove our credibility to the decision makers. We’d provide all information necessary to do this and now that we have many case studies, it’s much easier,” Stone says.

Another hurdle was price. ProActive overcame the objections of price-driven customers by creating what Stone calls a “lost earnings calculator.” It allowed customers to plug in some numbers and see exactly how much inefficiency was hurting their companies’ bottom lines. His product was presented as a solution to that money drain.

A final major hurdle was deciding how to deploy the software. “Customers have typically been used to complex IT solution rollouts and had preconceived ideas about the dramas involved with deploying new software,” Stone says. “We developed an SAAS (Software As A Service) approach, so customers could simply use or rent the service on our servers based in Freemont, Ca., without worrying about complex deployment.”

Good planning and a firm eye on the big picture of his customers’ needs has helped keep Stone grounded. Although he does detailed planning, he keeps his time frames short – typically no more than six months out. Having short planning cycles makes his goals more achievable and allows the firm to change direction quickly if needed, he says.

ProActive has two offices, the headquarters in Christchurch and a satellite office in Auckland, N.Z. “We are a virtual team and have workers and contractors globally,” Stone says. Technology has made coordination fairly easy. Since the company’s founding in 2002, he counts only 10 in-person days spent with Alan. Mobile phones, MSN, Skype, email and video conferencing have filled in the gaps smoothly, he says.

Because his team is international and virtual, he’s made sure his product addresses those situations. “This tool allows businesses to take advantage of collaboration and globalization trends. The world is moving towards a global community and businesses need to be able to collaborate on projects, not just locally anymore, but across time zones and country borders,” he says.

Stone has recently scaled up his product, so it will be more applicable at the enterprise level, and begun marketing it to companies with 50 to 1,000 users. Because he’d concentrated on selling to small firms in the early years, he says, he believes the company missed opportunities for larger sales. Stone offers some advice on his blog about selling to markets of various sizes.

Meanwhile, he’s proud that a firm with an “accidental” birth has come this far and overcome so many startup hurdles. “Although we are a known solution in the industry now, it wasn’t always this way. Quite often nowadays our leads are referral-based, so there is immediate credibility,” he says.

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About The Author:
Julian Stone begin_of_the_skype_highlighting     end_of_the_skype_highlighting is the CEO of ProActive Software, developers and creators of the leading web based project management software