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7/17/2003

Sixth sense

By Tony Kindelspire
The Daily Times-Call

LONGMONT — Eric Johnson knows a thing or two about starting a company from scratch. He’s done it six times.

“There’s always fear,” said the serial entrepreneur and CEO, president and chairman of the board of AnswerOn, a 2-year-old company that is the latest to set up shop in CTEK’s Longmont headquarters. “The fear I always get when I’m starting something up is, will it work?”

AnswerOn is a business-to-business company whose technology is designed to help companies with traditionally high customer turnover — such as Internet service providers.

Using data such as call-usage patterns, the frequency of calls to certain locations and the types of calls to customer service, and comparing that data with historical customer data, Johnson said, AnswerOn can predict with great accuracy who is thinking about switching and allow the company to take action to keep the customer before he or she pulls the trigger.

“We analyze the people that have already left, we look for patterns, and we compare them with the customers who are still there,” Johnson said. “There’s probably 300 variables that make up a wireless prediction.”

Or as Lorien Pratt, AnswerOn’s chief scientist and vice president of business development, puts it: “We’re playing right into the fear and doubt that telecom companies have that they’re going to lose business.”

With the amount of choices consumers have, Pratt said, companies can’t afford not to keep their customers happy. “We’re trying to be the arms merchants to the telecom wars.”

Telecommunications and the financial-services industry are two natural targets for AnswerOn’s technology.

“There’s a lot of turnover in wireless customers,” said Pratt. “They will very quickly turn around and look for another company. There’s not a lot of loyalty there.”

“Remember,” Johnson added, “in the wireless industry or the financial services industry, the 80-20 rule still applies.”

In other words, 80 percent of a company’s revenues will come from 20 percent of its customers. Identifying and keeping those priority customers is what AnswerOn is all about.

“It’s a foolish company that would dedicate a lot of resources to that when we could come in and do it at a fraction of the cost,” Johnson said.

Currently at eight employees, AnswerOn has yet to land any customers, but Johnson said it did have a successful trial run with a “very large Web-hosting customer.”

“We were able to show a 20 percent decrease” in the company’s “churn rate,” he said, saving the company “millions of dollars.”

Johnson said the idea for AnswerOn was spun out of things he had done with some of his past companies. He said he’s confident in the company’s products and knows how to turn it into a success.

“The way you do it is you go in and do trials for people,” Johnson said. “You don’t go into Verizon and say, ‘We’ll take over your 30 or 40 million clients.’ You say, ‘We’ll do Denver.’”

AnswerOn is “linearly scalable,” meaning its product offerings can be grown to match the scale of the client.

Originally employed as a genetic engineer at the Salk Institute for Biological Studies in California, Johnson left to start his own business. He came to Colorado when recruited to work for a subsidiary of US West, and then left there to start Coral Systems, a company he grew from seven people to 100 before selling it to LightBridge Inc. in 1997.

Following that he founded Athene Software, but that company was caught up in the high-tech downturn when funding dried up. Johnson has taken a different approach to funding for his current company.

“I’ve actually had a few venture capitalists who have been interested in this and I haven’t really pursued them,” Johnson said. AnswerOn is “100 percent funded by individual investors and ourselves” — meaning the management team.

Johnson originally founded the company in Louisville, but he said the building where it was located became an unpleasant place to do business when another large tenant shut down.

“We were one office in 25,000 square foot of space, and it was just depressing. We called it being haunted by ghosts,” he said.

Alex Sammoury heard AnswerOn was looking to move, so he called Johnson and started pitching the recently revived CTEK-Longmont space.

“Since he used to be in the incubator originally, he understood the benefits of what CTEK had to offer,” said Sammoury, director of CTEK-Longmont.

Indeed, one of Johnson’s earlier companies had become the very first company to graduate out of CTEK’s original incarnation, the Boulder Technology Incubator.

Johnson, himself a volunteer adviser for CTEK, said both the idea of coming to Longmont — he lives here — and having access to the hundreds of other CTEK advisers appealed to him.

“I know all the answers that I’m going to give to myself,” he said.

Tony Kindelspire can be reached at 303-776-2244, Ext. 291, or by e-mail at tkindelspire@times-call.com.