Published July 1, 1991 | July 1991 issue
"We made every mistake in the book. We call ourselves 'The company that does it right the third time.'"
On the surface, this doesn't sound like a very strong endorsement from a company that generates $1.2 million in revenue annually and pumps $1 million into salaries each year. But that's exactly what Jeff Arcel, founder of Applied Information Services (AIS), says about the creation and early development of the company.
In 1985 Arcel created AIS in Whitefish, Mont., to develop databases for specialized products. He predicted that interactive information services would be needed for the next generation of computer users and that businesses and consumers would need central access to vast amounts of varied information. Basically, Arcel's goal was to put catalogs of almost any sort into a central database and allow users to customize services according to their unique needs.
The initial product that fit into this database framework was the Official Recreation Guide, a comprehensive digital catalog of tours, destinations and related recreational services. A serendipitous moment (Arcel literally sat up in bed one night and said, "Aha!") led to the focus on the recreation market. And that's when the enterprise ceased being the small local company with a few employees and became a nationwide center for recreational travel information.
A trip to a New Orleans trade fair with the program prototype in 1986 netted Arcel a tie-in with American Airlines that linked his database with 70,000 travel agency terminals throughout the country. And since then, that network has grown to 170,000 terminals. Arcel now has over 120,000 files representing 12,000 travel recreation suppliers in his database. By the end of this year, AIS' product will be linked to 95 percent of the travel agent terminals in the United States.
So where did he go wrong? What were the mistakes he made?
The first problem arose when the contract with American Airlines proved to be almost larger than AIS could handle. "We got big fastalmost too fast. The project was much too big for our capabilities and costwise, almost got out of control," Arcel says. The instantaneous growth caught AIS by surprise, but proved to be only the first roadblock Arcel would overcome.
Arcel admits that beyond the creation of the product, "we didn't have a clue. When it came to pricing, marketing and articulating the product, we were quite naive." The lack of experience helped create new marketing networks for the company, but Arcel's most pressing concern was trying to let potential customers know exactly what this new product really was. "Letting the customer know what they were getting for their money was a real problem. Letting them know that this was not a booking system but rather a Yellow Pages on computer for travel agentsgetting to that point was a problem."
And finally the concern that threatens most new enterprises, lack of funds for the growth that will sustain and nurture the company, had to be addressed. The initial cost of the system and the reluctance of larger companies to back a venture in such a remote location as Whitefish, left AIS precariously undercapitalized. Even today, the start-up costs for the firm have not been recouped, but recent moves by Arcel convince him that the company will flourish in the future.
In a licensing agreement with a sales and marketing firm, World Comnet of Irvine, Calif., Arcel has eliminated most of the problems that have faced AIS. World Comnet has the resources needed to fuel the expansion that Arcel envisions as well as the management, sales and marketing expertise to accurately and efficiently get the product to the right customer. With AIS providing the development and technical support of the database (AIS will remain in Whitefish) and World Comnet the marketing element, Arcel feels the company will prosper.
In the end, the venture has equipped Arcel with the experience needed to overcome the problems of creating a new company. "Working 28 hours a day and having no pay for months was not necessarily stressful, it was a challenge that has been self-feeding and very rewarding," Arcel says. He advises those who chose the path he has taken to "pay attention to your business plan, revise it when necessary, but stick to it. Articulate what you want to do; a well-thought out plan will help you avoid pitfalls."