November 29, 2011

Five years ago, when Eric Fortenberry quit his job at a boutique investment bank in Dallas, his employer was less than supportive. “They chewed me out, told me that I was going to fail, and that I’d be begging for my job back in six months,” the 28-year old Texan recalls. Today, his company, OrgSync, an online community management system for the higher education market, is on track for $3.1 million in sales in 2011.

It was at his job, though, that Fortenberry (pictured) learned all about software as a service as a business model. His ex-girlfriend made a snarky comment that since he was so obsessed with his work, he should contact her ex-boyfriend, who was equally devoted to all things digital. A gregarious Texan, Fortenberry thought why not? “He was a senior at the University of Rochester and he had built an online group management and networking application for his National Honor Society,” recalls Fortenberry, who thought the idea had broader potential in the academic market. So the two decided to partner informally.

In typical young entrepreneur style, they worked together virtually before finally meeting in early 2007. A formal partnership was forged, Fortenberry quit his job, and the two set up shop in a five-bedroom rental house in Austin with a handful of friends who signed on as the company’s first employees. Fortenberry negotiated a $40,000 line of credit with his dad, who is a serial entrepreneur, in exchange for 5 percent equity and the CFO title. His original partner eventually left the company to work for Microsoft. First, the team targeted individual student organizations, but it soon became clear that their software could be used to manage and oversee all student organizations on campus, tracking which students belonged to each organization, as well as offering the individual groups the ability to manage membership, events, communication, etc.

To get their first customers, “we did a lot of smilin’ and dialin’,” quips Fortenberry. Their big break came when the University of Arizona paid them upfront for a five-year contract and custom software development. But selling to colleges and universities was no cakewalk. Here are few of Fortenberry’s tips for businesses looking to tap into that potentially lucrative market.

1. Find the right price. “When we first came out of the gate, there were a couple of companies ahead of us,” says Fortenberry. “So we priced our product similarly to theirs—$10,000 a year.” It wasn’t until he dropped the price to $2,500 that the phones started ringing. Now, OrgSync has a tiered model, according to the size of the portal; the average price is (again) $10,000 a year, but this time, there’s little resistance.

2. Get student buy-in. “What we learned is that the students aren’t the decision makers, but it’s important to have student evangelists on campus,” says Fortenberry. The director of student life may be the person who writes the check, but without input from students, the deal won’t happen. So OrgSync’s team takes a “grass roots plus top down” approach, indentifying student leaders on campuses and at gatherings such as the American Student Government Association Conference.

3. Use satisfied clients to convince hot prospects. If you think big companies are skittish about doing business with entrepreneurs, try ultra-conservative academia. Some universities even wanted Fortenberry to put OrgSync’s code in escrow, for fear that the company would go out of business. He never did that. But when he landed the University of Arizona as a client, “we told the whole country,” he says. Nothing speaks to your staying power like a multi-year contract from a big client.

OrgSync recently moved back to Dallas, and landed a $500,000 round of private investment capital. With 32 employees, the company has 800,000 registered students and does business with more than 200 colleges and universities. Note to former employer: The only thing Fortenberry might now beg for occasionally is a few more hours in the day.

Image credit: Courtesy subject

Join the conversation ( 1 )

• Byron Wolt 2 months ago

  

  Very cool story that gave me some needed inspiration! My position of 13 years was eliminated recently. i have NEVER been unemployed in my life. However, for the last few years of my job i was thinking of going out on my own but the comfort and security of being good at what i did and having benifits for my family made me hesitant to leave. I know i know how to reach a college and high school market and have a proven record of being successful at it for other companies. i have no choice but to put into practice ideas of going on my own that i had held only in theory.
  
  it's good to hear that good things can happen for people with a good idea and the intititive to put it into action. Thanks for sharing your story.