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Doug Ford had a painful dilemma.
As founder and president of The I.T. Pros, Ford had promised himself that he would always use his own money to grow his solution provider business and would not -- under any circumstances -- take funding from venture capital firms.
And grow I.T. Pros did, and then some. The San Diego-based company, which Ford officially incorporated in 2001 during the onset of a recession, went from a small, one-man consulting operation to a managed services firm that for seven years in a row increased revenue at close to 100 percent or more each year. I.T. Pros became a rising star in the channel and was honored with numerous awards over those years, including rankings on CRN's Fast Growth 100, making the list for the first time in 2007 after reaching $2.6 million in annual sales for 2006 with an impressive two-year growth rate of more than 150 percent.
Ford had conceived I.T. Pros with a firm belief that a managed services offering was a perfect fit for the SMB market. And he most certainly was not alone.
"From 1998 to about 2001, there was a gold rush," Ford said. "And it was absurd. It had gotten to the point where there was no competition for a big client. You'd just walk in, uncontested, give the client a proposal and they'd buy it without any pushback."
Ford's business proposition to small businesses in Southern California and, later on, the Southwest, was simple: Instead of worrying about IT support, security and infrastructure, let us manage your systems and you can focus on what you do best. The formula worked, and soon I.T. Pros was off and running.
"Managed services was no longer a secret," Ford said. "It's a very competitive market, and we realized the differentiator was good, reliable customer service."
Ford's company made a name for itself as a strong regional managed services player that could reduce IT costs for small businesses. I.T. Pros bet much of its business on what was then an unusual vendor partner: Dell. While the direct computer maker was widely seen as an enemy of VARs at the time, Ford made the decision to team up with Dell early on. That partnership grew stronger as the computer maker acquired other vendors that I.T. Pros partnered with, such as EqualLogic and SilverBack Technologies.
"Dell has been a great partner for us," Ford said. "We relied heavily on them, as well as other vendors, for joint marketing opportunities because we did very little strategic marketing or advertising on our own. And Dell really supported us."
Already strong with managed services offerings such as remote monitoring, I.T. Pros began moving more toward virtualization and, later, cloud computing solutions behind partnerships with VMware and others.
"There was definitely a paradigm shift toward virtualization, even at the small-business level," Ford said. "Then cloud computing became huge, and Infrastructure-as-a-Service became one of our specialties. Even when we started seeing a decline in professional services sales last year, interest in cloud computing was extremely high because clients wanted to reduce their monthly IT expenses."
Capitalizing on virtualization and cloud computing served I.T. Pros well as the company continued to increase revenue at nearly 100 percent and earned spots on the CRN Fast Growth 100 list again in 2008 and 2009, finishing 2008 with $4.9 million in revenue.
Fast-forward to 2009 and another recession -- and this one was much worse. A financial collapse had struck Wall Street a year earlier, sending the economy into the toilet. I.T. Pros was continuing to increase its revenue, but the rate had slowed in 2009 and, furthermore, fueling the growth was expensive.
And here's where Ford's dilemma came in. He could keep I.T. Pros as "lifestyle business" -- one content with the status quo -- and settle in as a regional player. Or he could build it out into a nationwide business, which took capital. Taking I.T. Pros across the country was a daunting task, even with the company's impressive revenue growth.
"We found out that banks just aren't going to continue to loan you money like they used to," Ford said. "Either I.T. Pros had to go out and raise capital or team up with another company."
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