The startups that often garner the most attention are working on consumer technology or other trendy areas like blockchain, fintech, biotech, etc. But innovation is happening in less-visible industries, as well. Spring Point Solutions is a perfect example.
The Portland-based software developer is operating in a niche occupied by motor-repair shops, of which there are roughly 2,000 in the North America. The company’s flagship product, MotorBase, is a software platform that motor-repair shops can use to streamline their entire operations, from managing customer relationships to payroll to equipment management to tracking the status of jobs. It has also launched other software products in the niche, and has eyes on expanding to other industrial sectors.
Spring Point Solutions grew out of a piece of software first developed in 1995 for Stultz Electric, an electric motor shop in Westbrook that was owned by the father of Locke’s co-founder, Jamie Stultz, who’s now the company’s chief information officer. Locke was the shop’s controller at the time. In 1999, they formed Spring Point as a DBA when they decided to start selling the software under the MotorBase name. In 2003, Spring Point Solutions became its own company.
The company spent 10 years selling the software as a single off-the-shelf product before adopting the software-as-a-service model and instead basing the software in the cloud and charging clients a monthly subscription fee to use it. Since that change, the company has grown to the point where it has 10 employees and has captured 15% market share.
I asked Locke to share his thoughts on entrepreneurship, reflect on the mistakes the company has made, and where he sees it going in the future.
The interview has been edited for clarity and length.
MSI: What was your first entrepreneurial experience?
Troy Locke: I founded and managed The Ice Cream Dugout in Windham Maine. It was literally a dream I woke up with in 1997. I woke up one morning with the name, theme and a bunch of item names. I wrote it all down in a notebook and a few years later pulled it back out and we started the process in 2003. My wife would go in early to open the shop and bake the home made goodies for our sundaes and work until about 5 PM when I showed up, we would have dinner at the ice cream shop and she would go home with our two young sons and I would work until close. We were a seasonal business (baseball season). This was our routine for the first two years we were open.
I was a full-time employee at Stultz Electric when I started the process. We sold the motor shop at the beginning of 2003 and I was promoted to comptroller with the new company who was fully aware of my entrepreneurial endeavor. I sold the Ice Cream Dugout in 2013 to free up time to focus on family and Spring Point.
When you first founded Spring Point, did you feel prepared?
I had my degree in accounting and was already an entrepreneur. Jamie came from a long line of entrepreneurs and had his electrical engineering and computer science degree. Between the two of us we had a great good combination of skills. We started from within Stultz Electric so it started as part time. When the company formed it became a full-time job for Jamie. I left my salaried position as controller in 2005 and started a new sales job. At the end of 2006 I left my other job and came on full time with Jamie. This was the first leap of faith.
What’s been the largest challenge you and your team has faced in growing your company?
Here is the second leap of faith. It came when we decided to move from selling a product at a lump sum to selling a monthly subscription. In 2013 we took less of a salary than we ever had and even hired three people due to the increased demand in our software. At the start of 2013 we had 69 customers across the US/Canada, but very little recurring revenue. Now 80% of those customers have migrated to our subscription service while adding another 120 customers.
How have you overcome that challenge?
Tightened our belts and took lower salaries. We hired people and started selling more product.
Have there been personal challenges to co-founding the company?
There were definitely times when one of us wanted to move on to something else, but we could always get re-energized by what our customers were saying about our product. We are in a niche industry and have a very loyal customer base. We have a greater than 95% retention rate.
What has surprised you about building a company?
Just how our products have evolved based on what we see as a need in the industry. We are always looking at ways to help our customers improve through technology. We started out with a single product and now have a suite of industrial solution software packages.
What mistakes have you made and what did you learn from them?
Trying to please everyone and incorporate all ideas. When it was just Jamie and I, sales meant food on the table. We gave away development for free in order to make the sale. Many of those code changes we came to regret later on when we had gained a lot more knowledge in the industry and in how to better code our software. Thankfully most of those customers realized that we were building a much better product, based on industry best practices that we had either recognized or created in our software, and came over to our standard offering. Now we vet all the ideas and don’t promise anything as part of the sales process.
How did you fund the launch and continued operations of your company?
We have grown the company organically. We did bring on a couple partners in 2007, they bought into the company and did not provide capital for growth. We purchased them out in 2012. This could also be considered a mistake to learn from.
Can you tell me more about how you came to the decision to sell equity to raise capital?
In 2007 there was a downturn in our industry and things were looking bleak. We were tempted to do something different when a customer and the president of the company approached us to buy in. We thought it would keep us going and they would bring something to the table. It did get us through a period, but they never lived up to their side of the deal. Not seeing any growth and the industry not gaining much traction, they offered to sell back our equity at a discounted rate. We bought it back.
What was the lesson you learned from that experience?
We took on partners because we thought it was our way to get out of a financial crunch. We didn’t like the idea of taking on debt. Now, if I were to do it over I would rather take on the debt. The promises made to help us grow consisted of trying to push two guys to work harder than we already were. Every decision we made had to come out of cash flow. They had a no-risk mentality.
How big do you consider the industry that you’re targeting?
There are approximately 2,000 electric motor shops across North America. The market gets bigger when we add pump, HVAC and machine shops.
Related to the previous question, what have you learned about building a tech company for a niche market that other entrepreneurs should know?
Become an expert so that you can demonstrate greater value in your product/service. People don’t like hearing ‘widget’ in place of their actual product.
What are your long-term goals for the business?
With MotorBase, we are at approximately 15% market share in our industry. We have a goal to be greater than 30%. With QM Wizard and Equipment Management, we will expand outside our industry, already reaching several industrial markets this past year. We feel that this is the largest growth area for Spring Point Solutions. We plan to continue to develop a suite of products that improve the efficiency, productivity and profitability for our customers.
If you could give two pieces of advice to someone thinking of starting their own business, what would they be?
- Identify the problems that your business/product will solve and make sure you have a clear solution that you can sell.
- Bring Passion to your business every day and make sure your customers see that.