PocketSmith shows power of SaaS, social media for cracking global markets

POCKET ROCKETS: Pocket Smith co-founders Jason Leong (left), Francois Bondiguel, and James Wigglesworth. Mr Leong - currently studying toward an MBA - said the outfit has no job titles, but Mr Bondiguel lists business development on his CV, while Mr Wigglesworth focusses on development and marketing. There is a hint of hierachy, however: "I hold an extra 1% as it was my idea, and I'm older, and am more well-endowed than the other two," Mr Leong told NBR.

How can a company of three people from Dunedin (which, I checked, is in the South Island) create a product that is creating buzz on two of the hottest tech sites in the US?Or score a deal with US-based Workplace Options, the world's largest provider of outsourced human resource services, delivering support to over 18.5 million employees in more than 10,000 organisations?

PocketSmith co-founder Jason Leong told NBR his company’s success was all down to the power of open source development, the software-as-a-service (or SaaS) model for delivering your product over the internet, and the viral power of social networking and professional community sites.

For anybody who believes that software, as a “weightless” export has the potential to help turn New Zealand’s economy around, it’s an inspiring story.

A personal finance calendar
Mr Leong first had the idea for PocketSmith four years ago. The Otago University philosophy grad was frustrated that personal finance software could analyse your spending history, but could not predict your future financial position.

Instead, he proposed a piece of software that eschewed a spreadsheet altogether in favour of an interface that sees income, expenses, savings goals and debt and payment deadlines entered into a calendar format.

Mr Leong wrote up his idea as a business plan for the NBR Audacious 40K competition. “I thought I’d won, for sure,” he said. But it wasn’t to be.

Mr Leong spent a couple of years trying to turn around struggling web development house eMedia. When eMedia was liquidated last year, the Malaysian-born entrepreneur reanimated his plan for PocketSmith, bringing onboard fellow Dunedinites James Wigglesworth (a developer and marketer) and French-born Francois Bondiguel, who specialises in business development in June 2008. All had saved enough money to live a subsistence lifestyle for a year while PocketSmith got on its feet.

In the end, the four-year delay proved a good thing. The world had become amendable for a tiny company with global ambitions.

PocketSmith took the most trendy, community-focussed path from the get-go.

“A lot of start-ups develop a product in secret for months or years, then stay in stealth mode as they solicit funding,” said Mr Leong.

“We took the opposite approach. After just four weeks we put an alpha version of PocketSmith on the web, and relied on the [development] community. We wanted to be as transparent and open as possible.”

Patents? Nope. Just be quick
Angel investors and venture capitalists are not big fans of such a model, Mr Leong admits, because it makes it hard to protect your IP. His answer: don’t bother. Don’t patent anything, or otherwise spend money trying to protect it. Just keep developing and adding new feature faster than your opposition can copy you.

PocketSmith’s next step was to start posting messages about its eponymous software on social networking sites, and forums, like CrunchBase and YouNoodle, that are inhabited by IT professionals.

It helps that the product is easy to check out. Because it’s software-as-a-service, there’s nothing to install. You use it over the web, and store your calendar online. If desired, you can sync PocketSmith with a number of third-party apps, including Microsoft Outlook and Google Calendar.

US HR giant comes calling
So far, the company has relied exclusively on social marketing, spending not a cent on traditional advertising - an approach that seems to be working. PocketSmith was reviewed on a sub-site of the popular Gizmodo then, last weekend, it hit the big-time with coverage on the influential TechCrunch, which claims 5.5 million unique visitors a month (and which is the parent site of CrunchBase).

PocketSmith had been discovered already, however. In May, a representative from North Carolina-based WorkPlace Options - whom NBR understands numbers Apple and Pfizer among its clients - had stumbled on the Dunedin company’s software in a forum. And, unknown to PocketSmith, WorkPlace Options had begun trialling its free version (a Premium pay version adds extra features for $8 month; a Super version costs $20 a month).

A formal approach followed from WorkPlace’s UK team, followed by a meeting between PocketSmith and the US company’s chief executive.

Mr Leong won’t reveal terms of the deal. But he does say it’s based on the concept that single digit percentage of employees at each company that outsources HR to WorkPlace options will use PocketSmith at some point. That is, an employee in financial strife could get referred to WorkPlace Options for advice, which could entail using PocketSmith. To help things along, PocketSmith has engineered a unique option for WorkPlace Options that lets two people access a calendar at once.

Because the whole set-up is SaaS (following in the footsteps of NZ SaaS success story Xero) deployment costs are minimal, and margins are high. In fact, the whole online model is so seamless that Mr Leong is only just beginning to consider bringing another body onboard.

Meantime, staying lean positions PocketSmith well for a possible future trade sale. Right now, Mr Leong says his company has 6500 active customers - most in the US - and is “profitable now and will be comfortably profitable in six months ... by Dunedin standards”.

If you're after a little of the PocketSmith magic, then check out The Distiller, an entrepreneur's support network its trio of founders have set up in Dunedin.