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A Better Position


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  • | 10:59 p.m. February 23, 2012
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Review Summary
Company. Position Logic
Industry. Software technology
Key. It may be tougher to build a company without outside investors, but the business will be stronger as a result.

When they started their technology venture in late 2007, Felix Lluberes and Hong Long didn't realize how bad the investment landscape would soon become.

In fall 2008, just as they were actively pitching their idea to investors about growing their newly formed company, Lehman Brothers collapsed and the venture capital markets froze.

But looking back, that turned out to be a blessing.

Now, Lluberes and Long are partners in a growing company called Position Logic that they expect to generate more than $4 million in sales this year. And they don't have to share that success with any investors.

In fact, Lluberes says his experience growing Position Logic without outside backing or debt made the company stronger. His conclusion: “If you're looking at building your business with investors' money, you can't stand on your own two legs.”

Lluberes and Long weren't looking for extravagant sums of money. But they couldn't get any investor to fund the $250,000 they thought they needed to grow the company in 2008. “It was very painful,” Lluberes acknowledges.

But learning the hard way paid off. Revenues from more than 300 clients rose to $2.8 million in 2011, up 87% from 2010. “We built it out with cash flow,” Lluberes says.

Track the growth
Lluberes, 39, and Long, 43, both emigrated to the U.S. at a young age and met while working for MediaBrains, a technology firm in Naples. Lluberes comes from the Dominican Republic and Long is from Laos.

Starting Position Logic from Lluberes' house in Naples, the young entrepreneurs developed software that could track any global-positioning device, regardless of the manufacturer or computer language. At the time, there was no software that could communicate with a wide array of GPS manufacturers and Position Logic jumped ahead of the competition.

The challenge is that the applications for GPS tracking are almost unlimited. So Lluberes and Long focused on three of the most promising areas: transportation, security and niche markets such as tracking criminals, pets and Alzheimer's disease patients.

For managers of trucking fleets, for example, Position Logic's software can track errant drivers and identify the most efficient routes to save fuel. Services that can track criminals, stolen cars and sensitive materials are always in demand.

But instead of selling Position Logic software or services directly to users, the company sells to entrepreneurs who resell them under their brand. “I only deal with distributors,” says Lluberes. “We empower GPS companies with their business,” including investing their own money in promising entrepreneurial ventures.

“What I'm looking for is to be the standard [software operating] platform,” says Lluberes. “We don't get into the hardware business.”

For example, several competitors in the same area may use Position Logic's software to track GPS devices they've purchased from different manufacturers. Position Logic charges a setup fee that ranges from $5,000 to $7,000 and then collects a $5 fee for every GPS device the software tracks, letting competitors mark up the service and battle it out. Position Logic doesn't grant exclusive territories.

Lluberes, the president and CEO, and Long, the chief technology officer, also diversified the company's operation geographically. “We're operating in 50 countries,” says Lluberes, who also established an office in the Dominican Republic to work with Latin American customers.

About 80% of Position Logic's customers are overseas, including a presence in every Latin American country. Position Logic gets new customers from trade shows, word-of-mouth and Google ads. Lluberes also notes that Latin Americans are more entrepreneurial than their U.S. counterparts, setting up new businesses at a faster clip. “In the U.S., they tend to take a little longer,” he says, in part because of permits, fees and other bureaucratic hassles. “We take too much time,” he says.

Still, the company is careful about where it expands, especially in countries that don't respect intellectual property. “We don't do business in China; we don't do business in India,” Lluberes says.

Rival companies have jumped into the market for GPS tracking, but Lluberes says Position Logic built the system to handle growth and plans to be ISO certified this year, the gold standard of industry certification. “Anyone can offer you a product or service, but they need to feel you're right next to him,” Lluberes says.

No investors needed
In retrospect, it's little surprise that Lluberes and Long came up short when they pitched their company to investors in 2008. After all, investors were more worried about the collapse of the global financial system than funding a promising Naples startup.

But Lluberes and Long say the consultants they retained at the time promised to find them investors but never followed through. “They can be a draining resource,” Lluberes says.

Instead, Lluberes says he received invaluable advice from Score, a group of retired executives who provide startup entrepreneurs with free advice. “Stay focused and hook up with Score,” says Lluberes.

What's more, investors demanded a return on their investment within three to five years and that would have meant selling Position Logic. “It's a business you don't ever want to sell; it's a cash cow,” Lluberes says.

The company is adding customers at a rate of 3,000 GPS units per month, Lluberes says. That's $15,000 of new and recurring revenue per month without straining the staff. “We've automated the technology,” he notes.

Lluberes says failing to find investors to back Position Logic in 2008 turned out to be a blessing because it forced him and Long to be more focused on building a lasting business that could stand on its own. “Look at your business model: You don't need investors.”

Position Logic has come a long way since it posted revenues of $250,000 in 2008. It notched sales of $1.5 million in 2010 and $2.8 million last year and Lluberes expects to report more than $4 million this year. The company now has 30 employees who occupy the entire floor of a Naples office building. (Two clues it's a tech company: The conference room is named after Steve Jobs and there's a room with a big-screen TV and Xbox games like Mortal Kombat.)

It didn't come easy, of course. Lluberes and Long start talking business in spin class at the gym at 5:30 a.m. and don't leave the office until late in the evening. “Forget about the weekends,” Lluberes says. “We run 24/7.”

 

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