|
|
|
|
| THE WALL STREET TRANSCRIPT | |||
| Questioning Market Leaders For Long Term Investors | |||
|
|||
JOHN
O'KEEFE - FINE POINT
TECHNOLOGIES
sector - Application Software TWST: We would like to begin, if you will, with a brief historical sketch of the company and a picture of the things you are doing at the present time. Mr. O'Keefe: Fine Point Technologies was established in 1997. The company delivers what we call support automation technologies. Would you like me to go over a little bit more about the company background? TWST: Yes. Mr. O'Keefe: A good metaphor for describing exactly what "support automation" is how Robotics has automated the assembly and production of automobiles. Support automation software automates technical support processes for broadband service providers, enabling their end user, the customers, to self-resolve problems on their own without the need for CSR intervention. When Fine Point began 8 years ago, dial-up was our target industry. Since then, our software has expanded to the broadband industry where today we actually have a full gamut of support automation technologies that not only automate the support processes but actually enable service providers to automate the deployment of digital services such as Voice-Over-IP and video through the broadband connection. TWST: You yourself were the founder, were you not? Mr. O'Keefe: Correct. TWST: What were the circumstances, in other words, what you were doing, what happened, what inspired you, how did it all come about? Mr. O'Keefe: That is an interesting question. Actually my inspiration first took flight in 1994 during my college years. The concept came to me when I read that I shared many similarities with EarthLink’s founder. He was young, had similar ideas and actually created a subscriber self-installation solution to enable subscribers to connect to their EarthLink service. I already had the same idea, and decided to market it directly to a service provider. My first customer was a small company called LocalNet based out of Buffalo, New York in 1994. The solution I provided enabled them to expand their service Buffalo to Niagara Falls to Connecticut. That's really how the idea began for Fine Point Technologies, as this experience had confirmed that there was indeed a market opportunity out there. TWST: That's a remarkable beginning. And what were the drivers of your success over these years? Mr. O'Keefe: I believe it comes down to market opportunity. When you examine the amount spent on supporting broadband customers worldwide. The projections are show that by 2008, the number will reach over $9.4 billion per year. The bottom line is that service providers recognize the need to automate the support processes to reduce costs. Within the industry, support automation technology has proven to reduce support cost up to and often exceeding 50%. So, basically, it's the market opportunity and the realization of the value proposition that support automation brings that has been at the root of Fine Point Technologies. TWST: And I think I read that you have a core platform technology, or platform technology? Mr. O'Keefe: Correct. There are actually a number of technologies. Fine Point Technologies has over 14 technology solutions. More importantly, we are able to combine these technologies to implement one solution. For example, we recently implemented an OSS service management solution for Telmex in Mexico. The solution unifies and aggregates all of the back office systems into one single interface. Therefore, a customer service representatives can come into one single interface while on the phone with a customer, the system provides visibility into the customer's e-mail, phone and billing systems as well as other databases in the back office. TWST: So, your technology or combination of technology is quite distinguishable from others? Mr. O'Keefe: Absolutely, today our solutions provide the highest return on investment seen in the market. Additionally, a crucial component to support automation is something the industry calls "Subscriber Adoption". To explain, "Subscriber Adoption" implies that if the subscriber doesn't use the solution then it's not worthwhile. We are seeing in the marketplace that the subscriber adoption rate for our competitor's solution is as low as 25% to 30%. That means 70% of the customers they acquire are not using their software. On the contrary, our clients are seeing as much as a 70% subscriber adoption rate. This is due not only to the number of technologies our solution provides that benefit the subscriber, but also the number of the techniques we've developed in deploying the solutions. TWST: Now you have a higher subscriber adoption rate, have any of them been very specific about tangible results? Mr. O'Keefe: They have, unfortunately when we get into conversations about exact back office results and performance metrics a lot of that information is restricted under nondisclosures. The numbers I have just provided to you are numbers we are seeing from our customers ranging from 50% to 70% on the subscriber adoption rate, which is very high for this industry. And of course we have Telmex which has gone on the record and allowed us to share this information. TWST: Is there any way before we go further for you to give a thumbnail sketch of what the technologies are in terms that a layman might almost grasp? Mr. O'Keefe: Yes, I can do that. I usually explain it as three components. The first component is something we call self-installation. With self-installation the subscriber runs software that enables them to install their broadband service on their own without the need to contact the helpdesk or a support center. This type of software will actually guide the subscriber through the entire installation process from connecting their modem to automating the configuration of their email. Additionally, the software automatically configures their computer, or desktop, for them. The second component to support automation is something the industry calls self-helper or self-repair. This technology is actually able to monitor the broadband connection and determine if and when a problem does occur, what that problem is. With this information this technology is able to automatically resolve the problem or provide step-by-step instructions to the subscriber on how to resolve the problem themselves. Once again, reducing and often eliminating calls to the helpdesk. The third component to support automation is something we call "Service Management" - that is, being able to take all the disjointed systems in the back office. For example, if you sign up for a Voice-Over-IP today, there is probably about nine to ten different systems including the billing system, databases, provisioning system and others that are in the back office that need to be manually controlled by someone within the service provider company in order to sign the customer up for Voice-Over-IP service. "Service Management" unifies those systems and automates this process so that with a flick of a switch, service providers can turn on or turn off subscribers. TWST: Can you give us some sense of the range or gamut of your customers? Mr. O'Keefe: Today our customers range from telecom companies offering DSL to cable companies offering a broadband service over the cable lines. Fine Point is actually very active in the wireless industry as well. Additionally, we work with a number of broadband over power line vendors to help bring this technology to market. TWST: What is on your agenda for the next three years? And do you feel that you can continue to make your technology more and more sophisticated? Mr. O'Keefe: Absolutely. The critical component in everything I talked about thus far is broadband service provisioning. The industry is moving towards a service-based model where companies are looking to determine what services they can deploy through broadband connection. The bottom line is that service providers are not able to deploy any additional services such as Voice over IP or video through the broadband connection, if these additions result in an influx of calls to the help desk. The Return on investment is simply not profitable if additional services mean more help desk costs. So, the real key is to be able to enable these service providers to deploy these services through automated support and therefore reduce the support calls that are coming into their helpdesk. TWST: Well, within your company then, would you have to make some changes in order to keep up or keep ahead shall we say? Mr. O'Keefe: Yes. Fine Point Technologies is always looking at new technologies and when we identify new technologies, just like any other company, , we have the choice to either build or buy. I think one of the best examples is of a recent technology called TR-69 an emerging protocol that has now been adopted worldwide by DSL providers and DSL modem manufacturers. In this particular situation we opted to acquire the technology as well as the expertise. We acknowledged that even if we are going to build this technology ourselves, we didn't have the in-house expertise to support it, therefore the buy option was the better option for us. So, it's that same the approach that we continue to do and will continue to follow as time goes on to look to acquire new technologies. TWST: And may I ask, I read that you were trained as civil engineer? Mr. O'Keefe: Yes, I actually do have a degree in civil and structural engineering. I was a civil engineer first and then actually became a technical analyst. I was doing a lot of market analytics for companies such as IBM, Novell and Intel. And it was during that time, that I actually began to recognize the market opportunity for the support automation technologies and launched Fine Point. TWST: But it must have been quite a stretch to go from civil engineering? Mr. O'Keefe: I actually think it's a natural fit - being able to handle the technology but also having an understanding of the mechanics and how to integrate them into the market. TWST: As CEO, I would guess from the way you are talking that you still have your finger on every aspect of the company and technologies? Mr. O'Keefe: Yes. It does feel like that these days although I pleased that I am no longer still actually programming these solutions, that is because first versions of solution I had actually written myself date back eight years. These days (fortunately for me) I am not the one developing these solutions. We have a team of over 15 development engineers in-house here that develop our solutions. We also have a strategic investor in the company called S-Technology that's a resource of over 500 development engineers for us. So, fortunately it's one part of the business I am not involved in anymore. I'm much more involved in the strategic direction and selecting of new technologies. TWST: Speaking of strategic direction and what goes with it, what about possible challenges or problems that may arise over the next few years? Mr. O'Keefe: The problem such as? TWST: Well, I'm asking you what problems could arise? Mr. O'Keefe: I guess every company goes through its growing pains as well as concerns about the market. The Internet service provider market has gone through many changes even in the past couple of months with the recent SEC and Brand X ruling that's come out. So, there's certainly a lot of flux in the marketplace. The telecom, which has also recently changed, is rated as an information service instead of a communication service by the SEC. So, it's these things that happen in marketplace coupled with such things as consolidation that affect all of the players in this marketplace. So, that's something that we're very careful about - keeping an eye open and keeping ourselves agile enough to adjust to market changes that could adversely affect the business. TWST: You mentioned the brand X question, could you explain that? Mr. O'Keefe: "Brand X" dealt with the issue of service providers being able to resell other company's broadband services, which were ruled down. This had to do with the number of service providers coming together to sue for monopolistic approach by the service provider companies. The "Brand X" case argued that the service providers and cable companies should open up their networks to allow independent service providers to resell their service. So, with that loss of the independent service providers now are facing a challenge just similar to what I described, I mean, they were shut out of the market completely. Now these companies are asking themselves,” how do we stay in business?" It even affects companies such as AOL or EarthLink because they are nothing more than resellers of the large tier-1 broadband service providers. So, these companies now have to look to other markets to go into. And I think a good example of that is Google who is not only moving into the broadband industry, but in the wireless industry as well. So, in essence Google will be competing with former partner companies - the Verizons and SBCs of the world. TWST: What is the role that your company can play within this emerging picture? Mr. O'Keefe: We are really a technology agnostic when it comes to broadband. So, whether it be wireless, broadband or diagnostic problems, our solutions can accommodate. Certainly consolidation can hurt any vendor that is selling solutions or products into the telecom space. But it's our strategic direction to look where the industry is changing and to adjust our business plan and model accordingly and diverge to other market as necessary. TWST: Regarding consolidation, what are your feeling about merging, acquiring, being acquired, alliances, partnership, IPO, etcetera? Mr. O'Keefe: It's what Fine Point is about in terms of the strategic partnerships. And I think one of my favorite quotes of all time is from Bill Gates. When he began Microsoft he stated "If no nobody needs us, we are dead". And that's the philosophy that we live by here at Fine Point. We're certainly not a publicly traded company. I can say that it's on our short-term list of things that we're looking to do (that is, to go public). But the value we really see here is that we have something that not only our customers need, but strategic partners need as well. We've had several recent press releases jointly released between Fine Point, Westell and ZyXEL. These are the types of partnerships that Fine Point is acquiring within the marketplace - those specific companies that need our technologies to bring their technologies to market. And we are going to continue to forge alliances with those types of companies. TWST: How many employees do you have of your own right now? Mr. O'Keefe: We're running at about 40 people full time right now and that's actually spread out amongst three offices that's our headquarters is in New York. We have an office in London in the UK and office just south of Paris in France. TWST: You told us a little bit about yourself, perhaps you could add something on the backgrounds and the expertise of a couple of your colleagues. Mr. O'Keefe: Absolutely. It's a good question because when we raised our first round of financing back in December 2003, as the CEO and founder of the company, I recognized one of our shortcomings was industry expertise in terms of leadership in the company. And so that was one of the first initiatives that lead out on in the early 2004 was to find some more industry experts to bring into the company. The first to join us was Todd Ruelle who now serves as the company's President and Chairman. He was the former CEO of Sonic Telecom as well as a company called Access PAS. He is also a former Senior Director for MCI. Additionally, we brought on Bill Kurnath who was the former Vice President of Sales from a managed software service company and held Senior Management positions at AT&T in the past. So, it's this experience that makes these two individuals a good fit for Fine Point. Their initiatives are on target, so we are talking not only about helping to increase our market penetration, but also to improve our strategic alliances and build these strategic alliances within partnerships. TWST: You have been (?) of some of key things that you do in the course of the day, could you just add a little bit to that and give us sense of what occupies most of your own time and thinking during the process typically? Mr. O'Keefe: I would say today, it's predominantly sales and marketing that's taking up my time. Our major initiatives right now is the strategic alliances. So, that combined with sales is my focus. This is directly in line with the new technology of TR-69 that I mentioned earlier. Every DSL service provider on the planet is considering this technology today. Every DSL modem vendor is scrambling to get this technology into their modems and Fine Point Technologies has this technology to offer to both the modem vendors and the service providers. So, we're recognizing this market opportunity or this window of opportunity I should say, and that's really what the main focus is right now. TWST: Is the company open to external investors? Mr. O'Keefe: Absolutely. We're actually coincidently looking to raise our second round of financing right now. TWST: Then what would be the two or three best reasons for a long-term investor to take a serious look at Fine Point? Mr. O'Keefe: I would sum it up by saying that it is established that there is a huge market opportunity of about $9.4 billion per year by 2008. Fine Point Technologies has a strong and growing customer base. We're recognized as an industry leader in this marketplace and we have formed strategic partnerships with companies that need our technology. So, what does this sum up to for an investor? It means that at the end of the day Fine Point Technologies is a very attractive target for acquisition by either our publicly-traded competitors or our publicly-traded strategic partners. TWST: Is there anything that you would like to add particularly with regard to your strategies and your long-term objectives? Mr. O'Keefe: I would say right now, our "thumbprint" in this industry is our advancements in today's market and keeping in line with the industry changes such as the TR-69 technologies, Now that TR-104 enables the provisioning deployment of Voice-Over-IP devices, our advances in this area and others provide a simplicity and return on investment for the world's Internet Service Providers. It's precisely these types of advancements to look for from Fine Point in next year. TWST: Thank you. JOHN O'KEEFE The Wall Street Transcript (TWST) interviews are published verbatim, and TWST does not in any way endorse or guarantee the accuracy of any information or opinions expressed herein and all opinions are subject to change without notice. Nothing herein constitutes a solicitation to buy or sell any securities. TWST interviews with CEOs or other senior executives may include "forward-looking statements", which are based on factors that involve risks and uncertainties. Actual results may differ materially from those expressed or implied. TWST shall have no liability whatsoever for any trading losses arising out of use of this information. Copyright 2005 Wall Street Transcript Corporation. All Rights Reserved.
|
|||
| Copyright© 2009, ITelagen®, Inc. All Rights Reserved. |