Popular Articles

Sweet marketing music

Tanner Montague came to town from Seattle having never owned his own music venue before. He’s a musician himself, so he has a pretty good sense of good music, but he also wandered into a crowded music scene filled with concert venues large and small.But the owner of Green Room thinks he found a void in the market. It’s lacking, he says, in places serving between 200 and 500 people, a sweet spot he thinks could be a draw for both some national acts not quite big enough yet for arena gigs and local acts looking for a launching pad.“I felt that size would do well in the city to offer more options,” he says. “My goal was to A, bring another option for national acts but then, B, have a great spot for local bands to start.”Right or wrong, something seems to be working, he says. He’s got a full calendar of concerts booked out several months. How did he, as a newcomer to the market in an industry filled with competition, get the attention of the local concertgoer?

read more
by Andrew Tellijohn
February 2007

Related Article

Recovery

Read more

Small world


small world

Evolve Systems builds business with Russian partners

by Sarah Brouillard   A MEMORABLE TV COMMERCIAL from the holiday season shows hungry shoppers spinning like Busby Berkeley showgirls in a kaleidoscopic cafeteria. Without missing a beat, each pays for a  meal by swiping a Visa check card — except for one man who puts a snag in the well-oiled production line when he gives the cashier a handful of dollars.

The ad exaggerates what most consumers have begun noticing over the past couple of years:   plastic payment options are taking over in-store and online financial transactions. Paper checks are becoming scarce. Cash can be cumbersome.

As merchants increasingly rely on credit cards for payment, Evolve Systems is there to provide the necessary machines. The Roseville-based company sells the point-of-sale terminals as well as the complex technological processes that enable credit-card transactions for Visa, MasterCard, Discover and American Express.

In a separate but related vertical market, the company develops Web sites, including simple informational online billboards, elaborate e-commerce sites and content management systems.

CEO Marnie Ochs-Raleigh and her husband, Don Raleigh, who is president, were so sure of the continued emergence of these two technology markets that they pulled out their money from their various 401(k)s, retirement plans and savings accounts, and reinvented their company in 2001.

Evolve was one of more than 300 Minnesota companies that responded to the Upsize Small-Business Survey, and was selected for additional coverage to explore how its owners continue to reposition the company to take advantage of growth trends. That is a trait that can give an advantage to small companies.

Also, Evolve is unusual among small companies because it is outsourcing business to partners in Russia, creating 24-hour service. While 7.9 percent of the Upsize survey respondents say they’ll outsource to other countries more this year than last, 77 percent say they do not outsource any functions to other countries.

Out of midstream
When the company was incorporated in 1993, Don was building computers — fitting work for an alumnus of Control Data.

As bright as the future looked for computers even back then, the couple determined that the Internet had much more potential.

We had an “understanding that business was really going to be done over the Internet — that the typical brick-and-mortar evolution was going to be changing,” Ochs-Raleigh says. “We wanted to start a business ahead of that curve rather than midstream.”

The couple thought Evolve Systems would be an e-commerce site developer, providing credit card- and check-processing on the back end. “That’s where those two business verticals were originally meant to cross,” she says.

But Minnesota companies have yet to invest their marketing dollars in e-commerce sites in the same aggressive manner as their coastal peers, she says, prompting the company to pursue Web development and merchant processing separately.

The company has created more than 700 Web sites; a typical workload is 30.

Paul Cummings, vice president of marketing for Impression Management Professionals in Eden Prairie, says his company’s first Web site was “full of great information, but not organized well.” It was difficult for visitors to navigate, especially because the company is involved in several different markets, including keynote speaking, and training seminars for communication, presentation and negotiation skills.

Through a referral, he approached Evolve Systems. The company immediately brainstormed a solution — one that involved creating a separate Web site for each market.

Marketing professionals usually discourage companies from using multiple Web sites because it can cause confusion. But by using an identical boilerplate and different background colors, Evolve Systems created an integrated, cohesive package. Simple one-letter icons at the top of each page allow visitors to move quickly between pages; clicking on the “A,” for example, will whisk you to a page containing information exclusively on Anne Warfield, the company’s certified speaking professional.

“Now I have four paths into the Web sites,” Cummings says, “where before I had maybe four search keywords, but they were all going into the same Web site.”

Outsourcing
In the last couple of years, Evolve Systems upped the ante when it began outsourcing overseas.

Instead of exporting entire projects, Evolve Systems works cooperatively with 15 subcontracted developers in Novosibirsk, Russia. Each month they agree to a set monthly minimum of projects.

Russia was at the top of the company’s list because Raleigh was a linguist in the U.S. military during his early years and knew the language.

The developers work 12 hours ahead of their American counterparts, so “somebody’s on the clock all the time,” Ochs-Raleigh says. “While we’re sleeping, they’re able to get a lot of work done.”

The two teams post online notes to keep track of each other’s progress. There is a language barrier, for the most part, so Evolve Systems' nine employees make sure their notes are exact, often transmitting information at “an elementary level,” she says.

Ochs-Raleigh is also planning to flesh out a similar relationship with a company based in India in 2007, to help build Evolve System’s presence in event-management systems.

The company is aggressively pursuing business associations as a prospective customer base. Many existing products are geared toward high-volume sales, leaving a void in the middle market, Ochs-Raleigh says. Association members will be able to log in to such sites to register for classes and seminars, book a hotel room, order marketing materials, or even peruse a lunch menu and select a meal.

By co-developing Web sites, Ochs-Raleigh says she’s able to keep her costs down and her prices low, allowing Evolve Systems to compete with much larger Web companies.

Not everyone is a fan of such arrangements, which can be fraught with complications, says A.J. Meyer, CEO of Artropolis Inc., a Golden Valley-based Web design and online marketing company.

He says he receives weekly e-mails from similar overseas design and development shops that promise increased profits and quicker turnaround times. One company told him it could cut his costs by 50 percent. But “I believe it's not quite that simple and the entire process is difficult to manage.”

Communication problems can lead to “starting, stopping and re-working,” he says. A dedicated project manager on the American end is needed to assure quality, but the expense may cancel out any potential savings.

For Evolve Systems, the systems are working, and as is the case for Web development, merchant processing is on the upswing as well. “It is a booming industry, and it’s something that we see continuing to grow,” Ochs-Raleigh says. “The technology is truly just starting out.”

The company’s 2006 revenue ranged between $600,000 and $700,000, split evenly between Web development and merchant processing. Between 2005 and 2006, the company increased sales by 133 percent, and a similar jump is expected for 2007.

As written checks become obsolete, merchants that hadn’t used credit-card machines in the past are now getting on board. Her clientele is becoming more diverse. “Our customers can vary from artists who use merchant processing three times a year when they have an art show, to somebody who’s running $1.5 million a month through their Web site,” Ochs-Raleigh says.

Also, some of the stumbling blocks that lengthen the credit-card process are being eliminated, such as the signature. That “swipe and go” reality has already come: as a cheap fast-food run through a Burger King drive-through will demonstrate, many purchases under $25 rarely involve ink and paper these days.

Micropayments, in particular, are an area of huge potential in the merchant processing industry. Rather than fish out a crumpled dollar bill to buy a can of pop, consumers will be able to use a credit or debit card to pay a vending machine.

An area of growth, but also re-education, is in the proper use of debit cards. Most are processed as credit cards, which is why cashiers at Target or Best Buy are always asking customers to press the “credit” icon on their touch screen.

Merchants pay a small fee for each card transaction. Because debit-card payments are cheaper than credit-card payments, merchants could save money by insisting customers type in their 4-digit “debit code” when using their debit cards, Ochs-Raleigh says.

Most people don’t know their code, but that will change as merchants start asking for it. “We see in the next few years that whole industry changing,” she says.

And merchants are switching from clumsy dial-in terminals, where information is keyed in and transmitted via phone lines, to high-speed Internet.

[contact] Paul Cummings, Impression Management Professionals: 952.921.9421; www.impinstitute.com. A.J. Meyer, Artropolis Inc.: 952.545.8488; aj@artropolis.com; www.artropolis.com. Marnie Ochs-Raleigh: 651.628.4000; marnie@evolve-systems.com; www.evolve-systems.com.