When Matt Nachtrab realized other IT systems managers had an interest in his homegrown remote management software, he knew he had a market. Now he pulls business from the big boys.
In 2010, Matt Nachtrab and his five-person software company were faced with a difficult decision. Nachtrab always wanted to have full control of his business, but he was invited to partner his IT systems remote-monitoring and management software with ConnectWise, a provider of professional IT services automation software. The partnership would mean diluting ownership and ultimately losing some of the control.
“We took a leap of faith with Connectwise,” says the 37-year-old CEO of LabTech. So the company moved from Toledo, Ohio, to Tampa in February 2010. “At this point, I know it was a good decision, but at the time, it was like going on a blind date.”
The strategic partnership provided the fuel for LabTech's growth. Over the last three years, the company has grown from 59 employees to its current 210, and to more than $23 million in revenue. The partnership, which was an exchange of an undisclosed amount of cash for equity, has faired well for ConnectWise as well, as it has grown from 75 to 240 employees.
“Actually partnering with someone in the industry, the amount of synergies was astronomical. That's what exploded,” Nachtrab says.
Since he was 14 years old applying for his own vendor's license to sell baseball cards, Nachtrab has always been interested in running his own business. “I like building businesses; I like building things,” Nachtrab says. With a bachelor's in electrical engineering and computer science from Vanderbilt University and an M.B.A. from Indiana's Kelley School of Business, he has used the coupling of a technology background and business know-how to make ideas a reality.
In 2000, one unlikely opportunity came along, when Nachtrab's father's company was in dire need of IT systems support. Nachtrab, who was working full-time in IT, partnered with his neighborhood friend, Drew McCallum, to help his dad. From this first client, McCallum and Nachtrab formed Nemsys, which provides services for companies that want to outsource their IT needs.
In 2005, Nachtrab started to see a gap in their business. Managing IT for a number of small businesses was difficult; the tools available to remotely monitor IT for big businesses didn't support managing multiple systems and networks. So Nemsys hired a programmer to develop software that allowed them to monitor many small businesses' IT remotely.
Greg Buerk, a Toledo programmer, developed a similar program after seeing Nemsys' software. In 2008, Buerk went to Nachtrab to pitch his finished product, which Nachtrab realized was much bigger than Nemsys.
Nachtrab then formed LabTech Software LLC with McCallum and Buerk. Using Buerk's software, LabTech offers a way for IT outsourcing companies to monitor and troubleshoot their clients' systems remotely. This makes IT providers more efficient and allows them to help clients more easily from a distance.
Nachtrab emptied his personal and business checking accounts, created a website, and bought Google advertising and a tradeshow booth. “Before I knew it, we were getting leads around the world,” Nachtrab says.
LabTech's first big sale was to a Netherlands-based company. The customer emailed Nachtrab 45 questions about the software. The next day, after receiving answers and a quote, the man wired a check for $10,000. “That was the moment when I realized, holy shit, if I can do this once, I can do it a thousand times,” Nachtrab says. Within the year, LabTech passed Nemsys in revenues.
Analyzing his competition, Nachtrab offered LabTech at a lower price to make the product more affordable for small business. He also began to build strategic partnerships with complementary products that he could integrate into his software, including ConnectWise's professional services automation (PSA) software. He continues to build partnerships with other PSA providers, to gain a bigger share of the European market where ConnectWise doesn't have a large presence.
Nachtrab forecasts the main generators of growth through 2014 will be from international expansion and partner add-on sales, building off the revenue from existing accounts. For 2015, he wants to leverage his current market to bring his product to IT departments, moving LabTech one step closer to the end-user.
Both Nachtrab and McCallum continue to own Nemsys today, which has helped them develop LabTech's services. “We are our own customers,” McCallum says. “We continue to eat our own dog food, so we understand the challenges our partners face on a day-to-day basis.”