wpe3.jpg (15694 bytes)

RightNow Technologies Inc. (RNOW-NASDAQ)
Interview with:
Greg Gianforte, Chairman, President, CEO and Founder
Business News, Financial News, Stocks, Money & Investment Ideas, CEO Interview
and Information on their
on demand CRM solutions to build customer-focused businesses.

Members Login

Become A Member!

Cover Story

CEOCFO Current Issue

Cover Story Archives

Private Equity Review

CEOCFO Interview Index

Analyst Interviews

Corporate Financials

Contact & Ordering

This is a printer friendly page!

With over a billion customer interactions in 2005, most people that have interacted with a customer service department, either on the Internet or via phone, have used RightNow Technologies’ CRM solutions

wpe8.jpg (9849 bytes)

Enterprise Software

RightNow Technologies Inc.

40 Enterprise Boulevard
Bozeman, MT 59718-9300

Phone: 406-522-4200

wpe9.jpg (10029 bytes)

Greg Gianforte
Chairman, President, CEO
and Founder

Interview conducted by:
Lynn Fosse, Senior Editor
March 9, 2006

Greg Gianforte, CEO, President, Chairman and Founder

Greg Gianforte has led RightNow from its founding in 1997 to 32 consecutive quarters of revenue growth, 15 consecutive quarters of cash-flow positive performance and a successful IPO. His market vision, leadership, entrepreneurial philosophy and commitment to ethical business practices has enabled RightNow to consistently grow—during a period when many other software companies have stumbled—and to achieve remarkable levels of customer loyalty and satisfaction.

Ernst & Young awarded Greg the Pacific Northwest 2003 Entrepreneur of the Year for the software category. A panel of independent judges evaluated the excellence and extraordinary success of outstanding entrepreneurs in such areas as innovation, financial performance and personal commitment to their businesses and communities.

Greg founded Brightwork, a pioneering developer of network management applications, in 1986. With 75 employees and software installed on more than 150,000 Novell systems nationwide, Greg sold the company to McAfee Associates in 1994. He was retained by McAfee to run its North American sales operation, which he grew from $25 million in revenues to more than $60 million in under a year. During Greg's tenure, McAfee was selected by Fortune Magazine—based primarily on its Internet selling approach—as one of the "10 Coolest Companies in America."

Greg is also the author of Bootstrapping Your Business: Start And Grow a Successful Company With Almost No Money.

Greg holds a BE in electrical engineering and an MS in computer science from Stevens Institute of Technology.

Company Profile:
RightNow (NASDAQ: RNOW) provides organizations with industry-leading on demand CRM solutions to build customer-focused businesses. RightNow's acclaimed technology, comprehensive services and commitment to customer success deliver high returns on investment for its customers. More than 1,400 organizations worldwide use RightNow solutions including British Airways, British Telecom, Cisco Systems, Continental Tire North America, John Deere, Nikon and the Social Security Administration. Founded in 1997, RightNow is headquartered in Bozeman, Montana, with additional offices in North America, Europe and Asia.

RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark of the NASDAQ Stock Market.

CEOCFO: Mr. Gianforte, please tell us how RightNow Technologies has developed and where you are today?
Mr. Gianforte: “We began in the late 90’s; with the premise that the internet was changing the way companies interacted with their customers. We pioneered in an area called E-service, which is the ability for companies to interact more effectively with their customers and in a little less than two years, we have now handled over a billion customer interactions on behalf of our clients. That was our initial fore and then we realized that all companies were really struggling with the increasingly competitive market place that exists and looking for ways to differentiate themselves. It was a general consensus that quality of service was the only sustainable strategy that a company could pursue. Competing on price didn’t work because there was no way to make money and continually innovating was difficult as well, because competitors copy your ideas. There was a problem because even though people recognized that quality of service was the way to win, they couldn’t just throw money at the problem, because they didn’t have money. It was really a quality/cost conundrum, and that’s the problem that we solved.”

CEOCFO: On a day to day basis, what is it that you bring to a customer that will enhance their sales and make a difference in their customer relations operation?
Mr. Gianforte: “The reason that we exist as a business is to help our clients better serve their customers, however they serve them, whether that is in a post sales environment, if it is in a marketing context with customer communications or in a presales environment where we are actually identifying opportunities and fulfilling them. For example, we work with many clients like Medicare (U.S. Dept. of Health & Human Services), The Black & Decker Corporation (NYSE: BDK), travel companies and financial services companies. We are typically the capability that is on their website to handle all customer inquiries, both presales and post sales. We are the software that is in the contact center on the agents desktop that gives them reference tools to be more responsive to clients and answer their inquiries. We are also the software that the marketing department uses to do outbound communications such as newsletters and up-sell and cross-sell; as well as on the desktop of a sales agent. This is generally characterized as CRM software, which is customer relationship management, except that where as previously CRM has focused on internal process improvement, which is making a customer service rep more efficient or a sales rep more efficient; our focus has always been external in terms of helping companies improve the interactions that they have with their customers. This drives a higher ROI (return on investment), increased customer loyalty and ultimately more revenues for our customers.”

CEOCFO: Where will customers see the ROI?
Mr. Gianforte: “We are able to deliver very tangible ROI and our ROI comes in one of three areas; the first is cost reduction. It is generally the case that a client can implement our multi-channel service capabilities and eliminate somewhere between 50 and 70% of incoming customer inquiries and 10 to 30% of the incoming telephone calls, while improving quality of service. The second area that we help in is in improving revenue and here we help companies really make knowledge about their customers actionable and allow customers to target outbound communications for up-sell and cross-sell in a very personalized way that maximizes the return that the companies get from them.”

CEOCFO: Do you sell to smaller companies as well as larger enterprises?
Mr. Gianforte: “It is a mix! Last year (2005), 40% of our business was with companies with greater than a billion dollars in revenue, about 45% was with middle market companies and then 15% was with public agencies, such as the Army Corps of Engineers, the Department of Homeland Security, the Social Security Administration and the EPA (Environmental Protection Agency).”

CEOCFO: Whom do you find it harder to get the point across to, the larger or smaller companies?
Mr. Gianforte: “Their needs are common. Any organization that has customers is doing everything that they can to provide higher quality service and reduce the cost of delivering that service. I would say that the only thing that is a little different is that in government or public sector environments, there is less of a profit motive and more of a public service orientation. Therefore, it is less about cost reduction and more about doing more with the available budget.”

CEOCFO: Do you work with governments all over the world and tell us about your presence in the U.S. government offices?
Mr. Gianforte: “Yes, we work with governments all over the world; we have about 40 clients in the U.K., both at the central government level as well as the borough council level. We work with many states in the U.S. such as the New York State Department of Tax, the MTA (Metropolitan Transit Authority) and the Department of Revenue in Colorado. However, most of our government business in the U.S. is at the federal level, where we have well over 100 agencies. Therefore, we have a significant presence there. Understand, we handle over a billion customer interactions in the last year and a half or so and that is everybody in the U.S., 4 times. I would venture to say that most people that have spent any time on the internet have used our solutions. Our clients include people like Orbitz (a wholly owned subsidiary of Cendant Corporation – NYSE: CD), Travelocity (a wholly owned subsidiary of Sabre Holdings – NYSE: TSG), Expedia (NASDAQ: EXPE) in Europe and 15 Airlines such as U.S. Airways (LCC: NYSE). If you ever use a digital camera, companies like Minolta (Konica Minolta Holdings, Inc.), Sony Corporation (NYSE: SNE), Cannon Inc. and Polaroid Corporation (Polaroid Holding Company – OTC: POHC) are all customers of ours; The Procter & Gamble Company (NYSE: PG) is also a client. This is very broad based and we’ve been very fortunate in that we’ve been able to save our clients as much money as we have, while improving their quality of service and they’ve honored us with their business.”

CEOCFO: For the end user purchaser, I don’t think they realize how much things would cost without CRM.
Mr. Gianforte: “I think that there is an interesting point here, because a lot of people have had a very bad experience with CRM. In fact, in many large company environments, CRM is a four-letter word. The reality is that we have really changed the entire approach. I have talked quite a bit about the value proposition we have for customers, but the other thing that is very interesting about our business is that we are leading a revolution in the way companies consume software. If you go back 20 years ago, there was a transformation going on then too and at that time, we had what they call ‘Green Screen Application’, these were Main Frame Application software and a new thing came along called Client Server. Client Server provided a much better user interface, but it took much longer to deploy and it cost a lot more to deploy. Yet, none of the companies that had traditionally provided Green Screen Application software, were able to successfully make the transition to Client Server and those companies by-and-large are shells of their former self or out of business. These client server companies are people like Siebel Systems Inc., Oracle Corporation (NASDAQ: ORCL) and SAP.

We are now at the threshold of another transformation in the industry from Client Server Architecture to what is being called, ‘OnDemand’. This is hosted delivery software as a service and these were all names relating to the same phenomenon. The value proposition of Client Server was better user interface, but it cost a lot more and takes a lot longer to deploy. The value proposition of OnDemand software is that it goes in 5 times faster, cost 80% less to own and the result is more reliable; further, it delivers a better business result. Therefore, we are on a very slippery slope and it is interesting that IDC (International Data Corporation) has stated that this OnDemand software market is growing in excess of 40% per year. We’ve been very fortunate as a company, in that we had 32 consecutive Quarters of revenue growth. In large part, because of the value proposition that we provide and in addition, because of this OnDemand delivery model, we are one of the leaders in the marketplace having in 2005, surpassed $100 million in bookings for the first time. We believe that this is really the future of the software industry and in 5 to 7 years, the vast majority of corporations will be consuming Enterprise Application Software on this OnDemand model, so that there will be a changing of the guard. The Oracles and SAPs of the world will then fade into the woodwork, just like the old Green Screen Application companies faded into the woodwork and dried up and blew away. Therefore, it is an exciting time and we are thrilled to be part of it.”

CEOCFO: What is your primary delivery method?
Mr. Gianforte: “Our primary delivery method is on a hosted basis and in fact, if a client comes to us and says, ‘we would like your help in lowering cost and improving quality of service’; we will offer them the software either on a hosted basis or for on premise deployment. It is the customer’s choice, but interestingly, we charge the same price for both, whether we run it on our hardware and manage the whole thing for you or if you run it on site. We can do that because it costs us less to host the application than it does to provide Tech Support, to a company that chooses to run it on their own hardware. Therefore, even though we don’t charge for hosting, our profit margin is higher if we host it for you. It is all counter intuitive, but that’s what makes this new software as service or OnDemand model, so compelling for customers; giving benefit 5 times faster and eliminating 80% of the ownership costs. This is where the industry is going.”

CEOCFO: Why is RightNow a better choice for CRM software than the competition?
Mr. Gianforte: “We had a customer recently that ripped out a 1,600 seat Siebel deployment and at the launch, they said to us, ‘RightNow Technologies has done more for us in 45 days than Siebel did in two and a half years. Hence, speed of deployment is one thing, and the second thing is that traditional CRM has been sort of a boil the ocean exercise, where you are trying to solve a big problem all at once. Figuratively speaking, the reality is that when a business has a headache, you don’t really want brain surgery; you want an aspirin. What we’ve done is that we’ve modularized CRM, essentially into aspirins and pain killers, so that you only have to take what you need. We have over a 90% annual customer retention rate, because we tend to start small, deliver success and then earn the right to come back and do the next piece of business. This is a totally different approach than the boil the ocean, burn the bridges, take the money and run approach that we’ve seen in the software industry historically.”

CEOCFO: How do you reach your customers?
Mr. Gianforte: “We finished the year with 110 people worldwide that sell for us, so we are primarily a direct selling organization; although about 10% of our business goes through partners.”

CEOCFO: Do you have the customer support worldwide for customers to feel comfortable in choosing RightNow?
Mr. Gianforte: “We have a customer success methodology that includes having people out on site. Unlike traditional software companies where they tend to show up in a Greyhound bus and set up tents in the parking lot, we tend to fly in and spend a couple of weeks, get some early success and come back when the customer needs us. So there is a lot of hand holding involved.”

CEOCFO: Could you tell us about your revenue model?
Mr. Gianforte: “We know about 80% of our revenue on day one of each Quarter, because it is predominately a recurring, annuity based revenue stream, although we provide our customers some flexibility in how they order from us. Our most common license is a 2 year term agreement, where they pay upfront for the 2 year period and then they have to renew it; so that is an annuity based stream. Some customers choose to purchase perpetual licenses and then pay a recurring maintenance, but those are the primary types of licenses. It is really about what the customer wants to do.”

CEOCFO: Are you still spending a lot of money on R&D?
Mr. Gianforte: “The software industry is one where you are continually innovating and investing, so we will spend more this year than we ever have spent before. We are also continuing to hire the best and the brightest that we can find, because ultimately, the value that we can create for our customers is based on the depth and breath of the solutions that we can deliver.”

CEOCFO: What do you feel that you need to do to grow your business over the next year?
Mr. Gianforte: “Our revenue brakes into 3 primary categories; about one third of our revenue is renewals of existing contracts, so we stay really close to our existing customers to make sure that they are happy and getting the value that they expect out of a license. We’ve got 19 product in our offering and unfortunately, not all of our customers are using all of our products yet. Therefore about one third of our business is what we call additional penetration, which is additional product sold to existing customers and then the final third of our sales comes from business that we do with brand new customers. We are happy to bring them into the fold, but that is a big effort. Therefore, we have to maintain the high standards of customer satisfaction that we’ve been able to deliver, as well as go out and pursue those opportunities that exist in the marketplace.”

CEOCFO: Could you tell us about the financial position of the company?
Mr. Gianforte: “We’ve had 32 consecutive quarters of revenue growth and we’ve just announced last week our 2005 financial results. Our revenue and bookings both grew more than 40% and that is year over year. We acquired about 300 new customers, we have no debt on the balance sheet, we are cash flow positive, we are profitable, and so it is a solid business that is growing very rapidly.”

CEOCFO: In closing, please address investors and tell us why they should be interested in RightNow Technologies?
Mr. Gianforte: “I think that the reason to be interested is that there is very few places to find growth in technology today. We have grown the business 40% year-over-year last year and during our earnings call we said that we were going to grow between 40 and 50% again in 2006. The overarching theme is that there is a changing of the guard going on in enterprise software, from these obsolete, out dated, expensive and failed on premise Client Server deployments, to this new, less expensive and much easier to deploy OnDemand delivery model. Further, we are leading the charge in that regard, so to the extent that people want to be a part of the future of the software industry, there aren’t a lot of places to look.”


Any reproduction or further distribution of this article without the express written consent of CEOCFOinterviews.com is prohibited.

“The reason that we exist as a business is to help our clients better serve their customers, however they serve them, whether that is in a post sales environment, if it is in a marketing context with customer communications or in a presales environment where we are actually identifying opportunities and fulfilling them.” - Greg Gianforte


To view Releases highlight & left click on the company name!


ceocfointerviews.com does not purchase or make
recommendation on stocks based on the interviews published.