Hood River, OR 97031
This story appeared in the June
1998 Oregon Technology special edition of Oregon Business
Rocket in the Office
By Stu Watson
As you would with an onion, peel back the layers of the sweet, hot, tasty little Portland tech startup that only a few people so far know as PlusFactor Software.
Peel back the septet of angel investors drooling at the prospects of fat returns.
Peel back the industry analysts eager to have founder and president Pete Grillo show off Office Pack, his pet office information management product. Peel back the evangelical fervor of the VARs and advisers and market strategists.
Peel back the consistently glowing assessments of Grillo and his team. Peel back the close-knit team of software developers and their years of shared experience. Peel back the cautious skeptics and the positively ecstatic folks out at networking giant Novell Inc. in Provo, Utah.
Peel it all back, and standing here inside the doorway of his company's downtown office on an early April morning, next to the water cooler and the wall that in two weeks will get a new door into new space for new hires, Pete Grillo is poking at the keyboard of a balky microwave oven.
"I wish I knew how to use these things," Grillo quips.
Such are the ironies at the heart of the buzz at the soul of the rocket poised -- to hear these many expert minds tell it -- for a steep and rapid ride into the small business market stratosphere.
Grillo likes the ride. By all accounts, the ride likes him. "Pete is a very tenacious guy," says G. Gerald Pratt, one of the seven angels who bankrolled PlusFactor's first $800,000. "Nobody gave any money until I did. We talked at least sixmonths until I gave. His tenacity is what impressed me in the beginning. He's one of those guys that can't be beat and won't be beat."
High praise for a product not yet in the marketplace. PlusFactor this summer will release its first version of Office Pack. In brief, it's a Post-it note and a white board and a meeting room scheduler and a company calendar and an in/out board and a messaging utility and an employee contact Rolodex. Because it's built with Java, it runs on any operating system. Because it's designed to run off the office server, individual computers need only an Internet browser to see and instantly modify shared information.
The optimism swirling around PlusFactor stems in part from the product, but also in part from Grillo and his team. They have been down this road before. Very successfully. Donald Kinzer, founder and president of Premia Corp. in Beaverton, worked with Grillo in the early 1980s. He recalls a deeply curious, hungry learner, tenacious and proud of what he did. "That type of person generally becomes a technical leader and innovator," Kinzer says.
Remember ProTools? With Jeff Erwin, now at Kaspia Systems, Grillo helped found that developer of network analysis tools in the late 1980s.
Pratt was impressed with Grillo then, and even though he lost out to a group led by Olympic Venture Partners of Lake Oswego on an investment opportunity that led to a $30 million payout when ProTools sold to Network General, Pratt kept Grillo in his sights. "He was always bouncing around," Pratt recalls.
A rolling stone, Grillo took a hike from ProTools in 1993 when investors brought in new management. "This isn't my company," Grillo recalls thinking, "and this isn't fun anymore."
Back to consulting, Grillo began a phase in which he would husband a series of major projects for and through Intel. "I decided I wanted to be an architect and make an impact on the world," he says.
Imagine a table. Seated around it are Intel, Novell, Sun Microsystems, Digital Equipment Co., Hewlett-Packard, IBM, Microsoft and Synoptics (later Bay Networks). Imagine trying to get them all to agree on a standard for managing computers.
"Pete got all these people to sit down at the same table and create an industrystandard," says Alvin Pivowar, a colleague of Grillo's then and now PlusFactor's chief engineer. "He's using that same ability to do this."
Pivowar calls it the ability to "schmooze." In this sense, he means Grillo's strength in forming successful relationships.
Once that group had adopted Grillo's proposal -- one of three to come before it --"his baby" began the inevitable migration from the personal to the corporate. Grillo checked out. "I liked being the inventor of it," Grillo recalls. "When it got mundane, I lost interest."
What held his interest was another nagging idea. He wanted to equip a computer to handle all the routine tasks that link the workers in a small to medium sized business. Plenty of products target the large corporation--think Lotus Notes, or Microsoft's Outlook -- with a complex array of features and a steep learning curve that often leaves user cussing and swearing and not getting much work done.
Grillo had in mind a product that would take us back to the future. In this new world, simpler is better and easier is more attractive. Think Quicken. This product should employ the basic functionality of a word processor in a pleasing, graphical environment such as you find in a web browser.
Built with Java, the cross-platform tool du jour, its surface simplicity would deliver a practical and familiar suite of utilities. It would serve the needs of everyone from the CEO to the receptionist. Actually, it would serve those two positions in particular, because they are often the least technically adept people in an office.
Grillo shopped the idea around to three valued advisers. Gerry Langeler, a partner at Olympic Venture Partners, saw the potential of the technology. "But the fact that you build it doesn't mean they will come," Langeler says.
He advised Grillo to go out and talk with his potential customers. Wisely, Grillo took the advice. "That was really smart and very rare," says Vicky Hastings, who knew Grillo from his days at Intel and joined him early on as a market leadership strategist.
"He saw that existing software for big business was too complex for small business. He found out that, yes, customers do need a new set of software."
From his own bankroll, Grillo hired another Intel colleague, Steve Hanrahan, in October 1996. They began work on what would become Office Pack, each -- in classic startup fashion -- from their own homes. In early 1997, Grillo lured Pivowar to head the programming team. "We're all pretty crotchety old guys," Pivowar says with a wink, referring to himself and later arrivals, veteran code warriors Willy Mills and Robert McKenzie.
Crotchety, and good, and tight. "We worked well together," Hanrahan says. "Pete has the big ideas. Alvin is a good architect, software designer and programmer. I do a lot of the low-level stuff."
Perhaps second only to the high gratitute he offers for the support of his wife, Michelle, and kids Jeff, Jennifer and Chris, Grillo loves his troops.
"I hire senior people, because I'm not into a lot of micromanaging," Grillo says. "What I like about these senior guys is I ask what I want, they tell me what they can do, and they do it."
They're all free to challenge each other. "The fact is, Alvin (Pivowar) has saved my butt so many times by second-guessing me," Grillo says.
Hang around the offices of PlusFactor long, and it quickly becomes apparent that all egos stay in the hallway. These guys all respect each other, they all answer the phone (yes, Grillo, too), they all have fun.
"Without them, I'm a circus barker without a tent," Grillo says.
A small but growing audience has crowded beneath the bigtop. Among the original investors, Jim Tiampo, president of Verbier Management Corp. in Boulder, Colorado, speaks for many when he says he was impressed both by themanagement and the product -- simple, easy to install, easy to use.
He especially applauds the fact that Office Pack is jacked up on Java. If that whets his wallet, it leaves the people in Provo downright effusive. Jim Greene is director of solutions marketing for Novell Inc., the dominant force in networking. Novell has been crowing about recent test results that show server-based Java applications running more than twice as fast on its NetWare 5 as on competing Microsoft and UNIX systems.
Nearly two years ago, Grillo approached Greene at the point that Novell was wrapping its arms around Java. In PlusFactor's work, Greene saw a mutually beneficial relationship. "Because we're trying to let the world know that NetWare is a good application platform, any applications like this (Office Pack) that we can show is a good proof point," Greene says.
Or as Grillo put it once, "We're the poster child application for Novell."
Greene says Office Pack "is just so easy to understand. You don't have to sit there and say, 'This is why you need this.' It's something where the light can go on immediately."
For Novell, Greene says, "Pete's product will be a tool to help us sell our product."
Greene says Office Pack gets Novell past the sales pitch based on faith. He simulates the pitch: "We're not asking you to believe that we're the best Java platform. We'll show you."
Such effusive praise has helped ease some of the widespread initial concern among PlusFactor's backers about the distribution hurdle. Complementing OEM partnerships of the sort PlusFactor would like to secure with players like Novell, PlusFactor's marketing strategy puts equal weight on the value of close relationships with the value-added reseller (VAR) community.
David Weisong, president and CEO at Relational Inc. in Portland, has been an early and enthusiastic supporter of Office Pack. He says getting it bundled withservers shipping in a steady stream from, say, someone such as Dell would be a major coup.
Beyond that, the key link to the marketplace is through VARs such as himself. They introduce customers to cool tools. They ensure correct server installation. They make sure desktops have browsers. Once the employees of a businessdiscover OfficePack and start using it, Weisong says, it will "spread like candy through the office."
He likes it because it's a no-brainer solution for his clients and their office information management, and he likes to make clients happy with simple, low-maintenance, easy-to-learn solutions.
Weisong knows the competitors. They are either shooting for larger markets (Oblix; www.oblix.com), or use less robust and universal development languages (IntraNetics; www.intranetics.com). He sees no one attempting what PlusFactor is, by using Java.
Beyond its network of friends, PlusFactor has gotten huge exposure through a couple of key technology events, exposure that's critical in Grillo's search for about $2.5 million in second-round financing.
From hundreds of applicants, Demo Letter editor Chris Shipley selected PlusFactor as one of two Oregon companies (Fluent Speech Technologies was the other) among 60 to strut their stuff for the VC crowd, tech world and media at Demo 98 in February. And in April, Grillo took the show to Red Herring's Venture Market West Conference in Monterey, Calif.
"Those are important strategies to rise above the noise and be unique," says marketing strategist Hastings.
Amid all the huzzahs, about the only cautionary note comes from venture capitalist Langeler. Customers want Band-Aids for their two or three most painful problems. Just how painful, though, are the problems that Office Pack will bandage?
"It's really a marketing and a market problem," he says. "My worry for him has nothing to do with his ability, but as to whether the customer will behave the way he hopes. He has no control over that."
With customer support, though, Langeler says PlusFactor has "breakout potential," a sentiment echoed by another longtime observer of the startup scene. Les Fahey, a partner with KPMG Peat Marwick in Portland, provides financial advice to PlusFactor, and says venture money has been actively sniffing around.
As Grillo himself says, if and when the company reaches the point of a public offering, it will need to bring in experienced management to lead that charge. And if the market stays as hot as it has been, Grillo sees PlusFactor in the IPO zone--a complete 180 from his original thought that an acquisition would be itsexit route.
Should it come to an IPO, Grillo says he would gladly step aside and focus on the vision role he most enjoys. Right now, though, thoughts are focused on product launch, a long time and a load of work from the stratospheric air of an IPO road show.
"I see the rocket on the launch pad," says Novell's Jim Greene. "I've reviewed the fuel plan, and it looks like the rocket has the potential to take off."
Grillo, however, shuns stargazing. "You don't want to do anything like this if you're thinking about four years down the road," he says. "It's about enjoying what you're doing right now, every day."
Then Grillo pauses to rummage through a huge, motley pile of business cards. "Something tells me I'm missing a pile," he says and grins. "My life, it's pathetic." Ben Earle, director of support services, answers Grillo's phone, leans out the door to see if someone is there, then grabs a Post-it pad.
Hmm. Anyone here see the value, the crying need for a networked copy of ... Office Pack?