Wall Street Reporter
June 28, 2001

Interview with Ly Tran
By Hope Vaughn

Interview With: Ly Tran
Co-Founder of AtHoc, Inc.

Dated 06/28/2001

AtHoc, Inc. enables e-businesses to significantly strengthen the critical relationship between the business and its customers. Using AtHoc, Inc.’s products, clients gain additional revenue generation opportunities; increase customer loyalty and improved experience during online interactions.

Interviewer: Hope Vaughn, senior analyst for the Wall Street Reporter

Interviewer: Today I’m with Ly Tran, co-founder of AtHoc, Inc., a privately held company. Ly, welcome to the show.

Ly: Thank you, Hope. Good afternoon to you.

Interviewer: Ly, what is AtHoc, Inc.?

Ly: We have a terrific technology that we call Persistent Communications(tm). It’s a platform that allows a company to do three things: send alerts and notifications directly to their end users’ desktop, push dynamic content feeds right to the browser on the desktop, and finally also to have a persistent presence on the end user’s browser. What this does, effectively, is it allows the customer to always be in touch with his or her preferred web services, at all times, even when they’re not surfing the web.

Interviewer: Not surfing. Okay, so give me an example of how your technology is used.

Ly: I could be, as an end user, on my word document typing away, and my bank could send me an alert right to the desktop, say an instant message if you will, saying that my check has recently cleared, and I could go ahead and make the transfer or the wire that I wanted to make. I could also be doing an Excel worksheet, and an alert could appear right on the desktop telling me that my stock has hit a certain limit and I should make a transaction. The problem that we’re solving is that a lot of financial institutions, as well as corporations, build amazing extranets and invest millions in these extranets just to discover very little usage. So, what we do is help them increase significantly the usage of their online services by bringing their functionalities outside of the website, thus we call our technology Persistent Communications.

Interviewer: And how strong is your customer base?

Ly: Well, it’s actually very strong. On the North American side we have several customers in the financial services area. We have Dreyfus Brokerage Services. They’re a retail brokerage site. They’re a part of Mellon Bank, as you may know already. They’re a wonderful customer. They love the product. They are deploying this to their online brokerage customers. We are also partners with a terrific software vendor for the financial space, called Multex. Multex is not only a vendor but also a reseller of our product. In other words, they are selling our product to their 80 ASP customers who are all financial instutitions. They include Piper Jaffre, Putnam Novell, Putnam Investment, and so forth. Then, of course, in Europe we have big name customers as well. There’s an online brokerage called SelectBourse. They are a unit of HSBC which is one of the largest European commercial banks. They are out in France - SelectBourse is out in France - and they are using our product. Now, I’m leaning this conversation toward the financial institution side, but we also have customers who are not financial institutions, including companies from the media space such as ABCNews, Wired News,as well as companies in the B2B marketplaces such as VerticalNet.

Interviewer: What do you believe is the overall market opportunity for this, in terms of what institutions and companies are willing to pay for this?

Ly: That’s a good question. Effectively, whenever a company needs to build an extranet or a portal for their customers or end users, they’re always looking to increase the effectiveness of the return on the investment of these sites, and our technology enhances that. For a minimal investment, you can effectively double the usage of the site for those who install and use our product. So, the market is actually huge. The companies that are in the portal space include BEA Systems, a multi-billion dollar market cap company. Epicentric is also in there, and certainly a lot of providers of portal-enabling solutions. We’re an extension of that. We have a product that compliments these technologies very well, by bringing their core functionalities to the desktops, such that if the users are not visiting the website – the extranet or the portal – the functionalities can still be reached, thus giving everyone a continuous relationship with each other.

Interviewer: What kind of a year do you expect it be for AtHoc, Inc.? Obviously we’ve seen a bit of a slowdown.

Ly: Fortunately, we are a private company, so our projections are shared with our private investors. We will be hitting the numbers that we told them we will hit, which is a blessing for us, and hopefully in a couple of months we can be at cash flow break even, like any other private software company. We are trying very hard to penetrate the market in a very slow IT spending environment right now. It’s very fortunate that we have a product that market needs, so there is a very long pipeline and once the IT spigot gets opened just a little bit, I think we’ll be just fine.

Interviewer: But, in terms of penetrating the market, what about competitors? You certainly established the need for your technology, but why should a company look at AtHoc, Inc. instead of a competitor?

Ly: We found that initially the competitors in our space - and our space again has been desktop alerts as well as notifications and persistent presence on the browser – we found that our previous competitors, and I say previous because they’re not around anymore, they focused their business on the consumers directly. They sold directly to consumers, trying to brand themselves as a consumer product. It’s a very difficult business to build a brand, as we have all discovered in the past year and a half, and they used a lot of their capital on marketing efforts that, unfortunately for them, have been fruitless. For us, we are techonologists. We’ve never been a consumer company. We provide solutions, and thus we build a platform that is very flexible. We sell it to companies who would rather lease it from us because it saves them time and money, than build it in-house. Our competitors have similar good technology, but their focused on a different implementation, and in this downturn where consumers are not driving the market, they’ve gone out of business.

Interviewer: So, really, it comes down to a more effective business model.

Ly: I believe so. I certainly believe so. We were fortunate enough to recognized that our strength was not in the consumer space, but in the technology space and thus we focused our offering as a solution. So the business model was certainly a key factor in us being the effective market leader today. In fact, one of our potential customers in the UK did a thorough research of this space, of the persistent communication space, and wrote to us and said listen, I’ve looked at everybody and you guys are the clear market leader.

Interviewer: How well capitalized are you? Obviously that’s a big issue right now.

Ly: Actually we have strong support from our investors. They include Greylock, one of the leading VCs in the country, Weston Presidio Partners - a 1.3 billion mezzanine fund - a terrific investor. Greylock has been here forever, and they’re certainly backing us as we move forward.

Interviewer: What is on your agenda in the next 12 months to execute on?

Ly: We have two key objectives. The first is to grow sales. We will be opening an office in London. We have a large customer base in London. It’s funny, Europe was not affected as heavily by the economic downturn as the United States. Maybe Europeans over there didn’t build up as much as the Americans. And so, as the US was slow, our business picked up dramatically in Europe, so we will certainly open a London sales and support branch. We will be hiring new sales people out of New York City to penetrate the financial sector and Europe. So that is the first, to grow sales, and the second is to possibly look at different acquisition opportunities to grow the business. Now that we have a customer base, we can certainly look at different product lines down the pipe for that customer base. As you recognized, a lot of companies right now have great technologies, but no customers, and this could be a unique time to consolidate some of the players out there to complement our product offering.

Interviewer: So, then, we should really be seeing a lot of growth from AtHoc, Inc. both organically and through acquisitions possibly.

Ly: Absolutely. Absolutely, it just makes sense. I think a lot of companies grow organically forever. I think a lot of companies take initiative to acquire new product lines or new businesses and create a stronger entity as a result of that.

Interviewer: And what is this all leading up to? How do you think AtHoc, Inc. will be positioned long-term?

Ly: Our long term vision is to position AtHoc, Inc. as the entity that can lead this Persistent Communication space, so that enterprises and major corporations can really enhance the value of their extranet to their customers and employees. We know that there’s a problem out there. That problem is very low usage of a corporate extranet and intranet; and, we know that problem needs to be solved. Otherwise all these investments will be put to a level where the return is not acceptable. We are going to be the leader in the space that can enable corporations to continuously connect with their end users and enhance the value of their websites to them.

Interviewer: So then, why, in the meantime, should Wall Street keep an eye on AtHoc, Inc.?

Ly: One major reason is that right now is a unique time for Wall Street to look at early stage companies because those that can survive through this downturn will indeed be the market share leader in an up market. As a company proves its resiliency through a downturn market, just think what they could do during a normal market, and that’s where we are. We believe that Wall Street should look at us because we’re one of the very few companies whose business model has shown resiliency through any market conditions, and not many people would argue that this has been one of the most difficult times to build a business. But, we’re still here, and we have customers, and we have great great paying customers, and we’re growing, and that’s the reason why I think Wall Street should have a look at us.

Interviewer: Well, certainly good to hear. We need some good news here. And where can our audience go to find out more about AtHoc, Inc.?

Ly: AtHoc, Inc..com

Interviewer: Well, terrific, Ly. Thank you for being with us today. We look forward to having you back on the show.

Ly: Hope, you’ve been terrific. Thank you very much.

Interviewer: And I’m Hope Vaugh, senior analyst for the Wall Street Reporter, and today I’ve been with Ly Tran, co-founder of AtHoc, Inc., a privately held company. Have a good day, from Wall Street.