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CitySoft in the News
Forbes Magazine - Different.com Jay Backstrand and Nick Gleason, two Ivy League-educated thirtysomething entrepreneurs, have begged, clawed, and scrambled to grow their nontraditional startups into viable businesses. In this tight labor market, either one of them could have gone the more typical route to earn equity and a six-figure salary. Instead, they chose not only to go it alone but to start companies that are proving to be high tech trailblazers. Backstrand, 31, left a high-paying job as a marketing manager at Sun Microsystems to create VolunteerMatch.org in the summer of 1997. The not-for-profit Web service connects other nonprofits with potential volunteers. Visitors interested in helping a child learn how to read or in working at a homeless shelter can quickly find their choice of opportunities at VolunteerMatch.org. So far, the site has matched 150,000 people with volunteer opportunities across the country. It has signed up 8,400 nonprofit organizations, which currently list more than 20,000 volunteer opportunities. The cost for the nonprofits and volunteers who participate in the system? It's free. What Backstrand has done, lowering the search costs for both sides in the volunteer marketplace, isn't exactly unique. High-profile--and huge market value--business-to-business e-commerce startups are trying to play a similar market-maker role in industries such as steel, agriculture, and chemicals. What's most interesting is that Backstrand's little not-for-profit has done it better on a shoestring budget than many venture-backed for-profit startups. And VolunteerMatch.org earns rave reviews from its customers. Catriona Rayl, recruitment director for the EF Foundation for Foreign Study in Boston, says, "VolunteerMatch has been our most exciting new tool for expanding our network of volunteer host families. We love it. Last year 20% of our new volunteers came through VolunteerMatch. It's helped us cut our recruiting costs dramatically." Getting VolunteerMatch staffed and funded, however, has been no easy feat. Backstrand has had to convince top programmers to forgo more lucrative Silicon Valley startup opportunities for less money and no options at VolunteerMatch. Cris Perdue, one of VolunteerMatch's top engineers, says, "We are working in uncharted territory, and that's extremely exciting and immensely rewarding. And most importantly, it feels good to create something with tangible social value." How did Backstrand convince skeptical venture capitalists who see thousands of business plans that his nonprofit deserves their "investment"? Backstrand says, "Venture capitalists fund revolutionary ideas, good people, and enduring businesses. We promised all three and offered them the proposition of creating lasting social value." For three years Backstrand knocked on every door on Sand Hill Road looking to fund his company. Many of the venture capitalists didn't write a check but, recognizing Backstrand's talents, offered him a job as an executive at one of their portfolio companies. Backstrand didn't veer off course, but he did make important contacts with moneymen. His persistence paid off. So far, Backstrand has raised more than $1.5 million for VolunteerMatch, letting him build a full-time staff of 10. Not only that, he's signed up 10 paying corporate customers, including Levi's, SGI, Nike, and Bank of America. He recently inked a lucrative deal with America Online that places VolunteerMatch on Helping.org, AOL's nonprofit portal. VolunteerMatch is now generating substantial revenues as a nonprofit startup. How many venture-backed startups can say that? Nick Gleason has taken a different but equally innovative approach to building an Internet business. After graduating from Harvard Business School, Gleason had his pick of job prospects in the new economy and old. Instead, Gleason pursued a startup opportunity that most of his Harvard classmates would have considered more of a social problem. Living in the tough Roxbury section of Boston during his time at Harvard, Gleason realized that his neighbors represented an untapped pool of talent for the city's burgeoning high tech industry. So Gleason started CitySoft, an Internet services company that designs and builds Web sites for large companies and startups. What's unique is that CitySoft created partnerships with urban-based training organizations to recruit and hire many of the company's developers and programmers, who build e-commerce sites for customers such as Reebok, Polaroid, Siemens, and ITT Sheraton. In contrast to VolunteerMatch, CitySoft aims to make big profits. And Gleason hopes CitySoft's success in hiring from a pool of underutilized urban human capital will convince other companies to follow his lead. So far, Gleason's recipe appears to be working. In 1999 CitySoft had revenues of nearly $1 million. Gleason has now raised several hundred thousand dollars from angel investors, and CitySoft expects to grow sales to between $2 million and $3 million in 2000. Hiring from both urban neighborhoods and traditional high tech bastions such as Cambridge, Massachusetts, and Silicon Alley, the company has opened offices in Boston and New York and plans to expand to Baltimore and San Francisco later this year. Why did Gleason take this route? "I wanted to be an entrepreneur and be part of a team that ultimately proves that urban neighborhoods are a source of talent, not a source of problems. This is about looking for talent where others can't see it," says Gleason. In a weird world of quick riches and instant twentysomething millionaires, some Internet entrepreneurs are still showing us that technology can generate more than big market caps. It can be used to make the world a better place. Geoff Baum is a cofounder of Garage.com, a high tech capital firm specializing in startup finance. |