Seeking Business Redemption in the Cloud

Karl Wirth was a man on a mission -- except it was the wrong mission.

Back in September 2010, the co-founder and CEO of Apptegic had a "good" idea for a systems and application-management product based on monitoring and configuring IT environments. That good idea seemed to get even better when Wirth and his co-founder/CTO Greg Hinkle got a couple of big-name companies to sign up as beta customers.

Before long, however, the good idea went bad when Wirth started getting negative feedback from potential users.

"They all liked it and found it very interesting, but they weren't feeling enough pain to move things aside and work with a two-person startup to do something," Wirth comments. "One of the barriers that we found was that in order [for them] to get the benefits we were providing, they had to replace too much of what they were already doing. A couple of companies that were starting from scratch were willing to work with us, but if you had anything in place, it was too much to replace."

Starting over was extremely difficult but they weren't ready to quit. They put their heads down, got back to work, and brainstormed themselves into a "great" idea that tapped into the explosive growth of data on demand via a "customer engagement analytics" product, which enables IT and business people at services providers to see how customers are using the services providers' online applications.

Specifically, the product makes it possible to observe how frequently customers are using those applications, and the patterns they develop. That's important knowledge for services providers to have when customers are so notoriously fickle.

"If you're an online service, if you're a [Software as a Service] business, where your business is really your application, and your interaction with your customers is in that application, then understanding how engaged that user or customer is with your application is key to your whole business," Wirth explains.

The money Wirth made in his second job as a consultant during the product development period paid the bills ,and an angel investor put up enough to pay Hinkle's salary while he coded. But a growing company is always hungry for more money, and the first angel came up with other angels to maintain the young company's gradual, incremental momentum. They may be angels, but they're not philanthropists, and they want their money back -- preferably many times over. In the case of Apptegic, angel investments will be converted into equity.

Wirth offers some advice to startups seeking venture funding: "Don't waste your time going out to VCs if all you have is an idea. That might have been the way 10 years ago, but these days they expect you to be much further along. So take your idea, build something, get something running and get some customers using it."

What about ways for entrepreneurs to maintain their sanity during the stressful startup phase? The 40-year-old Wirth,who says he's never worked harder in his life, says being with his wife and kids between 6 p.m. and 8 p.m. each night keeps him from getting entirely out of balance. He also devotes "a good chunk of Sundays" to his family.

Apptegic's flagship product is currently in private beta, where Wirth has been honing it based on feedback from a passionate group of customers. He plans to launch this spring.