Just Managing: Building Evidence
Digital Paper CEO John Cronin shares his
philosophy on how to build a successful company.
Apr 06 2001 01:50 PM PDT
Cronin were to write a business book, he'd call it "Building Evidence."
The 30-year-old CEO of Digital Paper (dossier)
believes that the secret to his company's success lies in his practice
of basing all decisions on clear and direct proof that something
"You get to the next step with the business
only after you've built the evidence that you can actually get there,"
he says. "Most customers don't buy concepts."
Evidence translates to customers who buy products
and services, Cronin says. His company's shareholders, who invested
because of the cash the company generates rather than its promise
to create insanely great wealth in the digital economy, clearly
believe in hard proof, as well.
Digital Paper is succeeding today because the
seeds of the company's success were laid prior to the market slowdown.
The company might be a brainchild of the Internet, yet its core
business practices are decidedly old-economy.
Digital Paper, which converts complex technical
documents, such as engineering blueprints into digital files so
that clients can manage them online, has grown steadily since 1996.
During the past year, the company scored more than $24 million in
venture money. It has 72 employees and last year did more than $5
million in sales. It has been growing at a rate of 100 percent annually
for the past four years.
Cronin says Digital Paper is reaping the success
it sowed through the early days of bootstrapping its growth, dealing
intimately with customers and learning about its market. The infusion
of venture capital will help the company scale its existing profitable
model - in contrast to all the money thrown at pie-eyed schemes
during the height of the Internet boom.
As the company has grown, Cronin and his colleagues
have stayed rooted in the nuances of the market, never trying to
expand their product into random markets. Like many major players
such as Hewlett-Packard (HWP)
or Sony (SNE),
Cronin started his company with a simple mission instead of a product.
Having worked in the engineering trade, Cronin was frustrated by
kinks in the work process, and he went solo with a simple premise.
"I would focus on the way people worked and
how they get work done - and try to find simple ways to implement
things in a more effective manner," he says.
He hung out a shingle for his consulting company,
Strategic Working Solutions, in May 1995. While advising the enterprise
document-management steering committee for the Florida department
of transportation, Cronin had an epiphany. He'd been tracking the
emergence of the Internet, and in one of those "pull the car off
the road and write it all down" moments, he envisioned helping clients
by digitizing documents, sending them over the Net and printing
them on the other end. He figured his model could reduce the hassle
of packing up and shipping cumbersome papers, and improve efficiency.
Cronin initially approached a local company
to develop the product, but when they scoffed at the promise of
the Internet, he ended up hiring one of their employees on a consulting
basis. That person eventually joined Cronin as a partner. From 1996
to 1999, the two built the company by following the simple path
of devoting themselves to learning their customers' needs. Cronin
didn't get distracted by seeking outside financing; instead, he
chose to focus solely on the activities that generated cash from
Digital Paper customers.
Whenever a problem with a customer arose, Cronin
would immediately get on a plane to meet with them - always shifting
the conversation from flaws in the product to the customers' needs
that were not being met. This applied-learning mode helped him move
up the food chain with customers, winning subsequent sales while
funding the R&D of the evolving product.
He raised serious venture money only toward
the end of last year, when he felt that the company was ready to
grow. Cronin believes that the current market climate was advantageous
for his company because Digital Paper had a proven model, so he
didn't need to persuade his suitors of the company's potential.
In fact, he had different investors competing for the best deals.
Today the company has more than 250 clients, including blue-chip
players like UPS, Eastman Kodak (EK)
and Boeing (BA).
Cronin says the key to his company's success
has little to do with its killer application. "At the end of the
day, I am a technology cynic," he says, "because it's really about
your people and how well you are solving the problems for your customers."
This is the last Just Managing column I'll
be writing, as I am focusing my time on completing my first book,
titled "The Startup Garden: How Growing a Business Grows You," to
be published later this year from McGraw-Hill. I want to thank everyone
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