Companies such as Harvey Software that grease the wheels of American commerce often work quietly behind the scenes. But they're going to be the stars of Florida's economic resurgence and economic development groups ignore them at their own peril.
Online used-book seller Alibris ships more than one million packages a year, so which carrier it chooses is critical to managing its huge volumes.
To do that, Alibris uses the services of a small Fort Myers company called Harvey Software. The shipping software Harvey has developed helps companies select which carrier to use depending on factors such as size, delivery time and destination and then lets customers track their packages online.
Harvey Software is one of those companies that most of us have never heard of but is one that makes American commerce run more smoothly. It's the perfect example of the kind of company that Gulf Coast economic development groups should celebrate and promote but rarely do because they're not a large employer with big name recognition.
“We love those guys,” says Mark Nason, Alibris' vice president of operations. “We can't afford to lose a dollar because we chose the wrong shipping service.”
The man behind Harvey Software, Bert Hamilton, is a low-key but driven entrepreneur who almost shut the company's doors when the firm had just $10,000 left in 1987. But he persevered and his shipping software caught the eye of United Parcel Service in the early 1990s, just as the Internet was taking off.
Today, Harvey Software is well known in shipping circles. The company's customers range from a bicycle shop in Niagara Falls, N.Y., to retailing giant Wal-Mart. Its software can decipher the huge, complex pricing strategies developed by FedEx, UPS and the United States Post Office to figure out the best deal for customers. “It's the Rosetta Stone of the shipping world,” Nason says.
What started out as shipping software is now evolving into a business that helps companies sell more products online. “We created an industry. Now, how can we make it a tool to help entrepreneurs be successful?” Hamilton says.
For example, Harvey Software is helping companies manage their shipping rates so there's less “shopping-cart abandonment.” That's the industry lingo for when online customers don't complete their orders because the cost of shipping may be too expensive.
To keep customers from abandoning their virtual shopping carts, Harvey has developed software that equalizes shipping rates over a wide geography. Without the software, for example, a person who lives 1,000 miles from a shipment's origin pays more than the person who lives 200 miles away. Harvey Software smoothes out that expense so both customers pay the same for shipping. That means a company is less likely to experience shopping-cart abandonment from the greater number of people who live far away, vastly expanding the pool of prospective customers.
“This shows you there is the ability to do technology in Lee County,” Hamilton recently told a group of computer-science students at Florida Gulf Coast University in Fort Myers.
But Hamilton warns that just because you have a great product today doesn't mean customers will buy it tomorrow. “It's like a never-ending project,” he says. “We have to be constantly on the cutting edge.”
Despite the sophisticated technology, human interaction in business is still essential for growing companies. Hamilton plans to create regional development centers so he can send out people to customers' businesses to help with sales and support. The first center will be in Asheville, N.C.
Invisible in Fort Myers
Harvey Software is exactly the kind of company economic development recruiters are desperate to attract to diversify the Gulf Coast's economy from its dependence on real estate and tourism.
In the case of Harvey Software, they need only look in their own backyard. Aptly named after the invisible rabbit in the 1950 movie by the same name, Harvey Software is largely unknown in Fort Myers.
Hamilton, now 57, moved to Fort Myers in 1975 from Indianapolis. He started working as a perfusionist, operating a heart-lung machine during cardiac surgery. Armed with a computer-science degree and later a business degree from the University of
South Florida, Hamilton started Harvey Software in 1983 and developed a help desk for the DOS system. The system worked invisibly on a computer, hence the reference to the rabbit.
But bigger competitors nearly put him out of business. “Windows blew us out of the water,” Hamilton says of the Microsoft computer desktop operating system. “Lesson number one: You'd better know what's going on around you and don't be a me-too product.”
At the time, one of Hamilton's biggest aggravations was shipping and making sure the software was delivered on time. So he created software that would let him create electronic shipping labels that he could track using his computer. He had the blessing of UPS, the giant shipping company. His first customers were Indiana monks who shipped bread and nuns who shipped caramel.
But Hamilton and his investors had just $10,000 left after Windows nearly put him out of business. “Should we kill the company?” they wondered. “Let's give it one more try with the shipping software.”
So in 1989, Hamilton headed to the huge Comdex computer trade show in Las Vegas to sell his shipping software. Unfortunately, every box that contained the software had a big typographical error that said UPS was a registered trademark of the United States Postal Service. “We made a horrible mistake,” Hamilton recalls.
UPS noticed right away and sent Hamilton a terse “cease and desist” letter demanding he destroy every box. Upon receiving that letter, Hamilton flew to Atlanta and personally apologized to the lawyers at UPS.
But the UPS attorneys were so impressed by Hamilton's act of contrition that the shipping company funded Harvey Software to help customers track packages to Mexico and Puerto Rico. The software did everything from print labels to provide financial reporting. “Then they asked me to do Canada,” Hamilton says.
Eventually, Harvey Software was developing shipping and tracking software for all of UPS' customers. Over 200 other companies tried to muscle into Harvey's business in the 1990s, but almost none of them survive today.
One way Harvey Software survived was by being “carrier neutral.” That means Hamilton has resisted tying his software to any single carrier and he now provides customers with shipping services for FedEx and the United States Postal Service.
That turned out to be a blessing because UPS developed its own shipping software in the mid-1990s. Initially, Harvey's investors resisted Hamilton's efforts to remain carrier neutral, citing the good business relationship with UPS and the reliable profits that resulted. “By 1995, I told the stockholders the party's over,” Hamilton says.
Harvey Software stopped paying dividends in 1997 and Hamilton reinvested profits in the company to expand with FedEx and the U.S. Postal Service and to provide customers with the ability to track packages on the Internet. He also used a portion of the profits to pay down debt, a good decision in retrospect. “They all reluctantly agreed,” Hamilton says.
Now, more people order goods on the Internet every year. Even with the economic downturn, Hamilton says his customers' shipping volume is up 2% to 10% so far this year. The software costs a few hundred dollars to several thousand dollars to install and run, depending on the size of the company and how many computers it has.
Harvey Software's dozen employees generated $800,000 in revenues last year, a slight decline over the previous year. But Hamilton says sales could more than double to $2 million this year with regional development centers where the company can provide in-person customer service and sales.
After the first center in Asheville, he plans to open four more in undisclosed locations over the next five years. Western North Carolina provides easy access to Knoxville, Tenn., Charlotte, N.C., and Atlanta. “We have over 200 businesses within 50 miles of Asheville,” Hamilton says.
Hamilton, who is training to eventually compete in an Ironman Triathlon, is always thinking of new ways to improve on his technology, which includes new applications for handheld devices. He doesn't spend much time trying to defend his work with lawyers. “By the time you get a patent, someone's already thought of a better way,” he shrugs.
“You have to be constantly innovative,” Hamilton says. “Someone once told me if you don't have a problem in business, you're out of business.”