PayPro.net is trying to shake-up a staid industry by taking to the Internet. But that may not be enough anymore.
Anaheim-based PayPro.net, formerly PayPro Resources Inc., a mild-mannered outsourcing human resources consultant, until recently sought growth through conventional means. It bought regional partners, brought on seasoned executives and expanded its offices.
Now, as PayPro.net, the company aims to meld human resources services with the Internet to offer companies and individuals,PayPro.net calls them “lives”,around-the-clock access to benefits packages, payroll and other products and services.
But since Wall Street’s souring on dot-com companies earlier this year, PayPro.net needs more than a plan.
Much of PayPro’s work remains in the works: web sites and software implementation are still in-process, hoped-for funding of $10 million from Hobbs Melville Financial Services isn’t due until July 1, and debt financing of $1 million only recently materialized.
Meanwhile, competitors such as Irvine-based Exult Inc. and Alpharetta, Ga.-based BrightLane.com are up and running. BrightLane.com’s running TV ads, while Exult recently filed to sell shares to the public in an initial public stock offering.
In comparison, PayPro.net is in a kind of dot-com limbo.
Mike Harvey, the company’s chief operating officer, said PayPro.net has an edge over its rivals. “We actually have a product,” he said, referring to the company’s offline consulting business, known as a professional employer organization, or PEO.
PayPro.net’s founding team,Harvey, Jay Dye, Marti Nett and Peter Shelman,are human resources veterans.
Dye, executive vice president of joint ventures and benefits, and the details guy to Harvey’s big-picturing, said, “We have changed our business plan from being a PEO to being a technology-based, bundled-services company.”
PayPro Resources started in 2,000 square feet of space in Yorba Linda, moved to the 10th floor of the Stadium Towers building in Anaheim next to Edison International Field, and recently was preparing to inhabit more spacious digs on the third floor of that building.
The company has more than 400 clients and 8,000 “lives,” Harvey said. Industry group, the National Association of Professional Employer Organizations, pegged PayPro as one of the fastest-growing PEOs in California.
The company recently paid $2.5 million for new software from PeopleSoft Inc., the Pleasanton, Calif.-based kingpin of human resources software. What Harvey and his colleagues envision is an online cafeteria plan for any business, anytime, anywhere.
Want to find business-to-business e-commerce tax credits you didn’t know you deserve? Yeah, we’ve got that, Harvey said. Your employees want to book vacations, buy a house, or boost their life insurance from an onsite kiosk? Yeah, we’ve got that, he said. Want volume pricing at Staples.com? Yeah, we’ve got that, too, he said.
Taking Paper Off Desks
The idea of human resources outsourcing is to get paper off the desks of busy clients, Harvey said. But there’s more to it than that: Think outsourcing services melded with the benefits of joining a club offering travel packages, Visa cards, car insurance as well as accounting, legal, banking, e-commerce and bill-paying help. All of it will be, in Harvey’s vision, available online and subscribed to monthly by companies.
PayPro.net also wants to derive transaction fees on services, and nab referral business from insurance agencies, brokers, accountants and others who would pitch services to their own clients.
As it plays catch-up with its rivals, PayPro Resources bought a local web-design company called StirStick. The unit will design web sites for PayPro.net and do work for other customers.
“It’s nice to be able to offer this,” said Jonathan Marshall, senior vice president of the interactive unit. “We are going to offer all our services 24/7 via the Internet.”
PayPro.net’s offices are a model of efficiency,the carpet’s the color of churned butter, the receptionist steely and professional, the proffered drinking water a notch below ice and smart cards control access to every office. But PayPro.net still has to deliver on its online plans. Behind those controlled access doors is a low hum of plans in motion, the glow of midnight oil being burned.
Harvey keeps his own desk spotless as an example of what he can do for clients, and because the plan is perfectly placed in his head.
“We are a one-stop shop,” he said. “This works in our favor. Most competitors offer only the human resources element.”
Then there’s PayPro Sports, a subsidiary Harvey formed by buying Affinity Sports, the sports agent business headed by Tim Shannon and ex-Rams kicker Mike Lansford. Its most high-profile client is Cleveland Indians pitcher Chuck Finley.
“He signed a $30 million contract and we got 3% of that,” Harvey said.
Like a head coach stalking the sidelines, Harvey is sticking to his game plan. Opponents can follow or get out of the way,or both,because they won’t be leading, he brashly contends.
But first, Harvey needs to engineer a John Elway comeback. Time may be running out.
PayPro’s StirStick Mixes It Up
Jonathan Marshall used to be a disc jockey at some of the most popular dance clubs in Orange County. His Haus of Design cranked out fliers touting his various nightclub gigs.
“I was the first person to play house music in Orange County,” claimed Marshall, referring to a style of English dance music.
Now Marshall has a decidedly different charge: To take the old-line human resources work of Anaheim-based PayPro.Net into the new world of electronic commerce.
Marshall founded web designer Stir-Stick in November as an outgrowth of his Haus of Design venture. In January, PayPro.net acquired the young company. And while most of the firm’s time will be spent working for button-down PayPro.net, StirStick still is free to pursue other web design jobs.
Marshall began independently assisting PayPro in its effort to move online. It wasn’t long before PayPro wanted to hire Marshall.
Marshall said he liked the comfort of PayPro’s financial backing,PayPro did $120 million in sales last year. But he also liked that PayPro is giving him room to keep his “entrepreneurial spirit.” So while PayPro owns the 14-person StirStick, Marshall gets to be the chief executive of the web-design firm. He’s also the vice president of interactive for PayPro.
As part of joining PayPro.net, StirStick is moving into a new 5,000-square-foot office and hiring eight more Internet pros, who will earn salaries between $50,000 and $120,000.
Marshall said his staff will be even beefier by September with between 40 and 50 employees.
Marshall, who has an advertising degree from California State University, Fullerton, is a designer at heart. He did design work for OC apparel companies such as Mossimo Inc. and Ocean Pacific. His advertising degree also comes in handy as the firm does work for local ad agencies.
Another stream of business for StirStick comes from a pair of venture capital groups that fund dot-coms. Marshall said he can’t name the venture capitalists. StirStick has an agreement with them to do the web sites for the startups they fund.
StirStick also is busy building sports-related web sites for PayPro’s sports division, PayPro Sports, which manages Chuck Finley, formerly of the Anaheim Angels, now with the Cleveland Indians.
It just finished deaconjones.com, a site for the former football player’s charity, and intends to launch allproathlete.com shortly. A bigger, official launch is set to take place during the Super Bowl.
Marshall’s other marketing mission is to replace as many stir sticks,the kind found in bars and nightclubs,with his own bearing the company’s logo. His specially designed stir sticks serve as his business card.
“A hot thing in the Internet community is Internet mixers,” he said. When he attends those soirees, he orders a whole bunch of stir sticks, then places his “business card” in people’s drinks. When they ask for his card, he says: “It’s in your drink.”
