Sramana: What did you do after you sold LANSafe in 1995?
Jeff Leventhal: As an entrepreneur, I have built my companies based on what I have learned in previous companies. This led me to launch a business called Remote Lojix. What I had discovered while running my previous software business is that companies were having a really hard time solving technology problems once they identified that they were having the problems.
We had some of the biggest companies in the world running our software. However, when they discovered problems in remote locations, they could not get people to show up. With Remote Lojix, we sent up infrastructure so that once you identified a problem, if you did not have anybody, you could rely on us to have somebody anywhere in the US to show up and solve the problem for you within 4 hours.
Sramana: What did that company entail? Did you have to hire people in every single location? Were you using a crude form of crowdsourcing before that term became popular?
Jeff Leventhal: You could think of it like crowdsourcing. This was before HTML web. We ordered the phone books from every single city that would send them to us. We built networks and lists of IT services firms all over the country. We would then call them up, vet them, and ask them what the skills were.
We then went to our previous clients and told them that whenever they used our software to find a new problem, that they could rely on our nationwide list of contractors to get the problem solved. We would then make sure that wherever they had a branch office or retail store, we could get someone onsite within 4 hours.
That company grew much faster. The first company had a lot of R&D. The second company was just a service company and it grew to $12 million dollars in about 2 years. We had 130 employees.
Sramana: What were you charging people for that service?
Jeff Leventhal: We charged $125 an hour to have someone onsite. However, if you bought a block of time from us, such as 10 hours or 100 hours, then we would discount that time down to $80 or some other discounted rate. The more time you bought from us, the more we learned about you. That meant we could make sure we had people in the locations where our clients needed us. That also meant we could deliver a better experience.
Our sales strategy was to just sell 10 hours of time. If we could deliver a good experience, then we knew they would buy more. If they bought 10 hours and had a good experience with it, then they would come back for more hours knowing what kind of service they could rely on. It is pretty easy to spend a thousand dollars to test our service out. In the end, our average sale was $15,000 dollars because everybody renewed, and they all did so with larger chunks of time.