Gearworks Looks For Niche-Market Success

Heard enough about the devastation the recession has wrought on vendors and solution providers alike? Here's a new kind of success story. Gearworks, based just outside of Minneapolis, is a company that's developing its niche and a foothold in the market as we speak.

Its latest product announcement, etrace 2.0, was made this week at PC Expo in New York.

Gearworks started life resembling a solution provider that also developed productized applications, but is finding its pathway to success on the vendor side of the house, focusing more and more on its wireless applications, which are housed in handheld devices for specific use in transportation and field-service industries, and less on the solution-provider-type services that got it started. In fact, the company is beginning to team up with third-party solution providers, and includes popular names like Breakaway Solutions on its short-but-growing roster of partners.

Gearworks is a private company that has expanded via venture capital and is considering an IPO when the time is right. And while it is still a relatively small organization with 50 employees and $5 million in annual revenue, Gearworks is growing at a rapid pace, despite the turbulent economic times.

"By staying focused on a sound business model and promising to investors only the ability to deliver solutions and products one customer at a time, and by not promising them IPO ability, we're a little bit different as an organization," explains Keith Lauver, founder and CEO of the company. "While so many around us are having to downsize, we've [just] moved into a 20,000-square-foot facility."

Lauver isn't flaunting the company's newfound success, though. In fact, the company designed its new space with a budget-conscious eye. "We're not spending money on oak desks for everybody at this stage, but rather, we're going to continue to stay focused on building one customer at a time," Lauver says. And while the company only boasts some 50 employees today, that is more than double the number of people it employed a year ago. "We'll see growth this year over last year," Lauver promises, "and we'll see significant growth next year over this year." Behind Lauver's confidence is the fact that this year has been a year of building--behind-the-scenes R&D as well as product launches like etrace 2.0, which combines GPS and signature capture in an off-the-shelf handheld device.

Gearworks' initial focus was on the transportation vertical, but it has adapted its application for the field-service industry (plumbers, electricians, telecom technicians) and has plans to announce another etrace product aimed at the hospitality business near-term.

While Gearworks is starting to partner with solution providers and is cognizant of the need to avoid channel conflict, the company does not plan to move to a strictly indirect strategy anytime soon. Lauver says Gearworks learns a lot by working directly with some customers, but will compensate its sales force for working with channel partners instead of against them as its channel strategy evolves.

Perhaps it's the company's vertical focus, or perhaps it's the company's size, but Gearworks hasn't been hit as hard by the recession as some other vendors have. VARBusiness caught up with Lauver at PC Expo and got his take on the economy and its effect on IT sales. Here's what he had to say.

VB: How has the economy affected your business?

Lauver: We're focusing on new and emerging technologies, which introduces a level of opportunity as well as an element of risk. that. Anytime you add new variables of risk, it definitely slows down some of the decision-making, causing opportunities for evaluation of where people are going to get the most bang for their buck. I think the quick answer, though, is that our customers are actually the early adopters of these kinds of solutions and are looking to make investments today when the economy may not be hot because, when things do turn around as we all know they will in a cyclical economy, they want to be the ones to leverage that. Our tools give them that ability.

VB: Are your customers delaying projects that they might have had on their table?

Lauver: Absolutely. One of the largest transportation companies in the U.S. approached us about doing a pilot three months ago. Very interested. They had funded this project and they were ready to move forward. It was a 100-vehicle pilot of our product and likely going to be rolling out beyond that. We were back in their offices two weeks ago. They said this is going to be delayed until the fourth quarter, maybe first quarter of next year.

VB: Are those opportunities going away, or just being delayed?

Lauver: No. I think they're just being delayed. What a lot of the smarter organizations are doing--and this one definitely falls into that category--is scaling back rollout expectations and finding the right way to experiment today so they know the answers to where they're going to make their investment bets and will be ready and willing to make those bets when corporate management says it's a go.

VB: Have we hit bottom in this economic downturn or not?

Lauver: I have no crystal ball whatsoever. But anecdotally, from the evidence I'm getting from customers, I think that people have heard enough about the unspoken "r" word, so I think we're going to see a significant up shift certainly by the end of this year--that's every prediction we're seeing. So if you want to call this the bottom, or Q3 the bottom of it, we're seeing an upward trend and positive signs already.

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