Career Decisions: Rising Stars' Rebound Rocket

The calendar had just flipped to 2005 when Michael Thompson stood facing one of those classic career forks in the road: Play it safe or take a big chance.

Michael Thompsonwants to drivehis way to thechannel kingdom.

Safe meant staying put at well-entrenched solution provider Helio Solutions (No. 215), where Thompson successfully helped grow top-line revenue during his tenure. The risk? Participate in the buyout of another channel player, financially strapped Groupware Technology (No. 431), then bear the responsibility of turning the ship around as CEO and equity partner. A true entrepreneur, he took the risk, but it was hardly a no-brainer decision. Circumstances in his life--his pregnant wife, Renee, was one month away from the birth of their first child (a son)--kept that what-about-job-security bug buzzing in his ear. "Great opportunity; difficult timing," Thompson says. "But this was a chance to get the keys to the kingdom and also drive the car." After nine years of working for others in the channel, go-getter Thompson relished the opportunity to run his own company, especially one such as 14-year-old Groupware, which was on the verge of closing its doors and needing serious resuscitation. Thompson and his partners--Scott Sutter, vice president of sales, and Anthony Miley, vice president of strategic operations--sealed the deal to acquire the company in early 2005. The terms of the buyout remain undisclosed, but Thompson says the trio assumed and eliminated Groupware's existing debts and began their tenure cash-flow-positive. And here's the kicker: Groupware is the top-growing solution provider of the 2006 VARBusiness 500. Under Thompson's stewardship, the company leapt from $2 million in revenue in 2004 to more than $30 million in 2005, a 1,624 percent increase. The company projects its sales will double by 2006 to about $60 million. "My biggest challenge in 2005 was [that we were] growing so fast that it scared our creditors, and I had to do all I could to prove I could sustain growth," says Thompson, who now employs 21 staffers. Almost all of them are new. Just how did the company achieve such a remarkable turnaround? It was a combination of factors both obvious and intangible, say Thompson and witnesses to the metamorphosis. Groupware's executive team has been focused on diversifying its technology base, taking on storage and databases, and expanding its vendor-partner roster, teaming up with Cisco Systems, Oracle and Symantec (Veritas). The team credits much of its success to mining a massive customer database that languished for years at the company. They used the database as a foundation for returning to former clients with a new message and new offerings. It paid off, landing them several major deals that boosted annual sales, including one with Magma Design Automation. The company has also been aggressive with marketing and branding--tools often overlooked by solution providers--while investing heavily in an engineering team that provides presales technical support and solutions selling. "Mike's organization provides technical expertise and guidance to the customer throughout the sales process," says Nina Taneja, Sun Microsystems' channel account manager for Groupware. "Having that strategy and understanding what a customer is trying to accomplish give [Groupware] the notoriety with customers that they aren't just there to sell product and leave." NEXT: How Groupware's approach differs from other VARs.

Taneja says Groupware's approach differs from that taken by many channel partners, who tend to view engineering as a cost center and don't make presales initiatives a priority. And the technical team's focus on designing solutions has enabled Groupware to increase its storage-server attach rate, she says. Within three months under the new management, Groupware had achieved Sun Storage Elite certification, requiring significant training and investment, and underscoring the company's commitment to high-end technical skills. "It's a huge differentiator for [Groupware]," Taneja says. Groupware even beat out storage giant Network Appliance in a deal with a major Silicon Valley IT-components firm. That company, whose name Thompson won't disclose, was buried in Groupware's customer database as having done $100,000 worth of business with it. Groupware revisited the firm and did a storage assessment to figure out the best way to solve the company's backup problems. The storage architects recommended the Sun Storage 6130 SAN Box over the customer's existing NetApp installation. The customer bit, and the ensuing deal encompassed everything from servers and storage to implementation. "That one win progressed, and we've done an additional 50 to 60 terabytes with [the customer since]," Thompson says. "That business grew to $2.5 million in 2005, and we've already done $2.5 million with them in the first quarter of 2006." Revisiting former clients is just one tactic Groupware employed to beef up its bottom line. The company also found Sun marketing co-op dollars in the Groupware coffers, left over by the previous regime. Groupware used that money to create a pipeline of joint marketing activities with Sun that has already generated a steady stream of leads, Taneja says. One notable example: a quarterly direct-mail campaign that the two companies aim at specific accounts. The objective is to bring customers into Sun's executive briefing center, where the vendor and VAR product teams brief them on new products and technology solutions. The lone major expense comes from the direct mailing itself, so the ROI has been significant, Taneja says. Thompson describes his company's culture as customer-centric, and he believes it's paramount to create an atmosphere that supports and mentors employees and breeds loyalty. In the future, managing growth still looms as his biggest challenge. Thompson says he turns down deals if he thinks Groupware lacks the skillsets to deliver, or if he thinks the customer isn't a good fit. And by continuing to show results, he hopes to build a good track record with creditors and finance several regional offices along the West Coast. Security and VoIP practices are on tap for Groupware to build out its portfolio. "I know the growth is phenomenal," Thompson says. "But I think as technology changes, as long as you understand the business issues of your customer base, you're in a good position." It's looking as if Thompson chose the right direction.