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Program helps local startup land U.S. deals

By Ottawa Business Journal Staff
Wed, Dec 8, 2004 1:00 PM EST

Ottawa — December 8, 2004 —

When bitHeads Inc.'s Ted Burnett joined a trade mission to California earlier this year, he hoped to discover a way to kickstart his sales efforts in Silicon Valley.

While the vice-president of business development made some inroads into the lucrative American market, they came only after months of effort and countless hours in voice mail purgatory.

But that changed after Mr. Burnett attended a seminar hosted by entrepreneur Alfredo Coppola, who was about to bring a California-based program called KickStart to Ottawa to help smaller companies figure out their place in the United States.

"We had great U.S. clients already, but we were looking for more and, as a small company, you can only afford to invest so much. The best way to do that is to have a warm reference and that's what (Mr. Coppola) has done for us," Mr. Burnett said.

"It wasn't impossible to get in to see the right people, but this fast tracked it. I could make calls all I want and either never get anywhere or take six months to get into a company, whereas by this route it can take a couple of days."

Mr. Coppola, who heads the Canadian arm of San Francisco-based e-Storm International Consulting, teamed up with California partner William Gaultier to bring the KickStart USA program to Ottawa.

Targeted at technology companies with five to 25 workers, the program helps clients get a leg up on the competition with market data, while also securing five to 10 solid customer leads.

While KickStart officially launches tonight with a reception at the U.S. embassy, the company has already been working with two lead customers. The outfit now has Flick Software, Global IQX, Liquid Computing and Montreal's Wavesat as clients.

Before going to talk to potential customers, Mr. Coppola took a year to survey about 30 chief executives, investors and other technology experts and research the market to explore the needs of Ottawa's emerging technology companies.

Once he had the lay of the land, he began to adapt the U.S. offering to match Ottawa's needs with a service that was affordable and would bring a strong return on investment.

"It really boiled down to the fact that there was a lack of contacts and strategic networks and we've heard many times in the past that Canada, in general, lacks aggressive marketing and sales expertise," Mr. Coppola said.

"We saw a way to bridge that gap with some good customized market and competitive intelligence and then a method of getting traction in Silicon Valley."

Aimed at emerging companies that are either making their first move into the U.S. after some success in Canada or looking to meet sales numbers that venture capitalists and investors expect, KickStart is a four-part program for technology companies.

Market analysis gives the company an overview of the U.S. climate for the product, including a customized understanding of the buying criteria of customers, chief pain points of U.S. companies as they relate to the product and the specific segments to target. The next phase is to identify any competition on the horizon.

"The U.S. market is a very competitive and fragmented market, so we really identify the individual market segments and competitors," said Mr. Coppola, adding that the company would announce a second model aimed at smaller, earlier stage companies before the end of the year.

"A lot of companies claim to be the first to do something and it's great to believe in that, but it's also good to know who you're competing against."

A by-product of the market study and competitive analysis is a list of companies that may be potential targets for sales, which takes shape as the researchers speak with more than 50 advisers in four sectors.

In bitHeads' case, KickStart returned about 20 customer leads.

"They did the market analysis to confirm what we were hoping to be true, that there are companies in a certain geographic area that we were interested in helping," said Mr. Burnett.

"Then, you have people there that have worked in these companies, sold to them before or had the existing relationship who make the phone calls and find out whether they take advantage of the outsourcing programming services that we provide."

At the end of the consulting process, KickStart guarantees up to 10 meetings with possible buyers.

bitHeads hasn't made a sale as a result of KickStart, but Mr. Burnett is confident, saying it's too early to gauge the complete success of the program.

"We didn't really get into it until late September or early October and we had the leads in about 10 weeks. Without it, I'd be working three months to get the call to the right person and then they may take my call or they may not. It may be six months of effort to get nowhere," he said.

"It just takes one sale to make this a good investment, so to have 20 introductions that result in eight proposals is a high percentage. I really wish I could make 20 calls and get the same kind of results myself."

KickStart reports cost $14,000 to $17,000, based on the number of advisers that need to be brought into the specific project. The company keeps costs down through partnerships with San Jose's International Business Incubator and a number of California Universities, including the University of California's Berkeley campus and Stanford.

Although MBA grads do the research and students at the schools contribute as interns, the work is overseen by an experienced industry analyst.

While analyst firms' reports from outfits such as Forrester and Gartner remain helpful in the early stages, they focus more on general forecasts and trends and not the real market data that comes from KickStart, Mr. Burnett said.

But just having the cash to pay for the service is not enough. KickStart examines each company applying for the service and only takes on a customer after determining that the program will actually help. That's why the company confidently offers guarantees that its service will lead somewhere.

"It's not just a one-time fee and off you go. We guarantee that if the company is not satisfied with the quality of the market research, we will work with the company until they are satisfied with the work," Mr. Coppola said.

"We also guarantee the quality of the meetings, so if the individuals we've located don't fit the definition of what the company would define as a qualified lead, they do not pay for that portion, which represents about $3,500."

By Jeff Pappone