Pacific Edge Projects Itself

Scott Fuller keeps what he calls a "stress board" in his office. It's a corkboard to which he tacks competitors' ads, so that he can remind himself of what Pacific Edge is not about and of how the company can better serve its customers. If users have problems with the software, Fuller often visits them without charging a consulting fee. "You can more than recoup the cost of a fire drill by making the customer happy," he says. And Fuller takes developers with him on sales calls so that they can see what type of problems and advantages customers encounter with the product. "The magic isn't in the software but in what customers do with it," says Fuller. Meanwhile, customer-care manager Terri Inglis drills the technical staff to make sure that the company is delivering changes to the product on time. She makes random calls to customers to ensure that they're still happy with the company.

About 70% of Pacific Edge's sales are uncontested, a sure sign that the company is tapping an underserved market. Even customers like agribusiness-powerhouse Cargill Inc., which tried to build its own project-management tools, scrapped their work once they discovered Project Office. Business Logic Corp., an online financial provider in Chicago, abandoned a long-standing development project in favor of Project Office. Pacific Edge installed its product in two days, and it took another two days to train Business Logic's staff. The software gave the company a better idea of how much time workers actually spent on a project. And as new employees joined (Business Logic grew from 35 to about 75 people in a year), the company used the software to help them become as efficient as its veterans were. "Even as we expand in the future, we won't outgrow the value of this product," says Amy Weaver, a former Business Logic Corp. project manager.

Big Plans, Small Budgets

Who says that you can't think big and spend modestly? Who says that you can't grow fast and stay frugal?

Talk about a bootstrap operation. Hjorten and Fuller went without salaries for the project's first year and financed the company by mortgaging their property and by taking on credit-card debt. They always planned six weeks ahead to cover their payroll and their rent. If they were low on cash, Hjorten and her small team would sell to yet another customer. From the beginning, the company was committed to the old-fashioned idea that revenues should cover expenses. Indeed, to counter the excesses of Seattle's boom times, the company's CFO and vice president of finance, Nikki Adams, started meeting with Hjorten on a regular basis to discuss Pacific Edge's spending philosophy.

That philosophy paid off last spring, when Hjorten and Adams went on a road show to raise a second round of funding. The trip happened to intersect with the dotcom collapse on April 14 -- NASDAQ's worst single-day point decline in history. High-flying startups were suddenly taking nosedives. Investors were getting jittery; some were downright panicky. So when Hjorten showed slides to venture capitalists, revealing that Pacific Edge had suffered minimal losses for the previous year, investors were positively giddy. And the growing stream of marquee customers, such as Boeing Co., HUD, and Roche Pharmaceuticals, helped too.

"Before the market corrected, it was tempting to follow the advice of people who told us to spend more," Hjorten says. "But having a storehouse of money helped us decide who we wanted our investors to be, rather than jumping at the first firm that offered us money."

That interest in security doesn't mean that the company hasn't taken some risks. Hjorten decided to lease a new 15,000-square-foot floor of an office building when the company's then-current 15,000-square-foot building was only half full. But such a move showed investors that Hjorten had confidence and a defined growth plan.

Pacific Edge managed to maintain the industry standard for 80% gross margins, and the company has reinvested its profits to stay ahead of the curve. And, once the company secured its second round of a $26.4 million funding from brand-name firms such as Foundation Capital and Sequoia Capital, there were no billboards or staff parties -- just a higher commitment to listening to customers and the addition of some necessary features.

All of this discipline has obviously paid off. Pacific Edge is more in control of its destiny than are the fast-growing, money-losing startups that have to beg for their next round of funding. But the payoff is also personal. This is a company in which even the most senior executives insist on being in control of their own lives.

For example: Director of account development Chris Broyles took four weeks to climb Mount McKinley, thanks to an agreement he struck with Hjorten before he joined the company; Hjorten and nearly half of the staff are training for a 10-K; and many employees go fishing and boating.