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REVIEW SUMMARY
Company. OnFast
Industry. Technology
Key. Spend the time to build the backbone of a system before launching it.
Aaron Shepherd is betting $1 million that online social networking is here to stay.
Shepherd launched OnFast a month ago, funding it with $1 million and operating out of the top floor of the Newgate building in Naples with sweeping views of the city and the Gulf of Mexico.
For a flat fee of as little as $39 a month, small-business owners can use OnFast to manage all their online social-networking efforts from a single site. This includes Twitter feeds, Facebook posts, search-engine-friendly press releases, coupon distribution and blog management.
Shepherd, who has started and sold several hugely successful technology companies in the travel industry, is betting on customers like Phil Hadley.
Hadley, 62, has owned Collier Pest Control for 21 years and used to buy two-page ads in the yellow pages of the local phone book. Now, he's spending most of his advertising budget on the Internet to find new customers. “I cut out almost every other form of advertising,” he says.
Hadley isn't a computer wizard and can't post to his Facebook page, relying instead on Shepherd's service. But he's noticed a jump in calls from prospective customers who found his company using the Internet. “I'm excited about it because it's working,” he says.
OnFast joins a crowded field of startups hopping on the social-networking trend. Shepherd forecasts he can gather as many as 1,000 customers by the end of the year and achieve profitability relatively quickly because he doesn't need a huge staff to manage the operation.
“Social networking is for real,” says Shepherd, OnFast's CEO, though he agrees that the nascent industry remains volatile. Facebook and Twitter are well established, but new competitors such as Groupon are also emerging.
The challenge for small-business owners is that there isn't a central service to manage the various components of social media at a reasonable cost. For example, Hadley says he can't justify hiring someone full-time to manage social media efforts and, when he shopped around, other services cost $700 to $1,000 a month.
Meanwhile OnFast performs all these services for $39 to $99 a month. “No one has all the parts and pieces,” says Shepherd, whose company has been building the software for nearly two years. He estimates it would take more than a year for a competitor to catch up.
Click to success
Shepherd is one of the most successful tech entrepreneurs in the hospitality industry, building and selling several companies that provided the foundation for room-reservation systems at thousands of hotels.
In 2007, Shepherd sold GuestClick to Dallas-based Pegasus Solutions, a company he formed to process online reservations for large hospitality chains such as Best Western, Westin Hotels, Wyndham Hotels and Sandals Resorts.
Prior to that, Shepherd built Executive Technologies, which also provided reservation systems to large hotel chains such as Best Western. He sold that company to Micros Systems in 1995.
Shepherd, 47, moved to Naples from Canada with his parents when he was 15 years old. He learned technology from stints as a tape operator with Collier County and later as a programmer with Barron Collier Companies before starting Executive Technologies in 1989. “In the beginning, we struggled,” he says.
Shepherd says reservation systems are hugely complex and starting another from scratch would have been daunting. For example, one reservation system for a hotel chain might have as many as 1,200 different screens. Besides, he remains on the payroll at Pegasus Solutions.
He's now looking out for the future of his three children — Christopher, 24, Katy, 26, and Greg, 20 — all of whom work at OnFast. Christopher is president and Katy and Greg are vice presidents. Aaron Shepherd's wife, Karen Shepherd, is vice president of finance.
“We love building businesses,” Aaron Shepherd says.
In the cloud
The challenge for technology service companies is creating the backbone of the business to handle large volumes of data. Shepherd says basing the system on cloud computing solves that problem, allowing providers such as OnFast to add capacity by using outside hardware providers to handle growing Web traffic.
While it only has a few dozen clients since it launched a month ago, OnFast plans to grow by targeting specific industries such as real estate and golf and small businesses in the Naples-Fort Myers region. “We don't need that many customers to be profitable,” Shepherd says.
Currently, OnFast has eight employees and there aren't plans to hire many more people. That's because the company has spent nearly two years building a system that allows users to do it all themselves.
For example, the company has written about 700 news-release templates that are categorized by industry. Users simply fill in the blanks or use the templates as starting points. The text in these pre-written news releases is full of words designed to attract the attention of search engines.
Hadley, the owner of Collier Pest Control, says his company's name has risen in the rankings of search engines since he started using OnFast. “At first I didn't notice anything, but in the last week and a half we've gotten lots of customers through the Internet,” says Hadley, who also uses the service to blog about the subject.
Hadley uses a calendar in the OnFast system that will post his messages and send out coupons at pre-determined times in the future, setting it all up in advance. “I've got things pre-posted through Aug. 2,” he says.
The market is huge. There are about 6 million small businesses in the U.S. and millions more overseas. Shepherd built OnFast to handle foreign languages, even Chinese.
Still, Shepherd says he prefers controlled growth while he listens to customers to constantly improve. “We produce new software every week,” he says.
Aaron Shepherd has built and sold successful technology companies in the travel industry, including GuestClick to Pegasus Solutions in 2007. Here are some lessons he's learned along the way:
•Adapt to constant change. Shepherd tests every system at OnFast once a week and evaluates the entire business.
•Work hard. “It's not easy,” Shepherd says. “You have to live the business.”
•It's a mistake to depend on a single large customer. At GuestClick, Shepherd's business depended on a single large hotel chain with 4,500 properties. When the terrorists struck the U.S. on Sept. 11, 2001, the customer stopped spending and Shepherd had to scramble to find new clients. At OnFast, by contrast, the plan is for the company to have thousands of small-business customers.
•Be ready to scale the business. Success in technology depends on having the capacity to handle rapid growth without slowing down.
•Stay focused and don't try to chase every opportunity, but take care to diversify carefully.
•It's better to self-fund and grow your business before you seek outside investors. You'll be in a better negotiating position if your business is well established. If you try to attract venture capital too soon, you end up giving away control and potential profits.
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