Firm Now Eyeing Mezzanine Round, Expansion and IPO
It’s 3 a.m. , do you know who’s watching over your web site?
Jeff Pierick, not to mention investors that have poured $3.7 million of venture capital into the company, hopes that for many businesses the answer is SiteLite Inc.
Just days after closing its most recent round of financing, the Newport Beach spin-off is searching for a $10 million to $15 million mezzanine round as its fills out its executive team, launches it first out-of-state presence and prepares to go public.
The 8-month-old company, which started as a division of Agoura-based OSI Consulting Inc., provides web site and application monitoring, keeping all parts of a customer’s e-commerce system up and running. The so-called system availability management segment (or SAM), is expected to grow as more companies outsource their web management tasks and make e-commerce a bigger part of their business plans.
And the recent “denial of service” attacks that overwhelmed popular web sites such as Yahoo!, eBay and Amazon.com has heightened interest in system-reliability issues. With no one monitoring a site’s activity, it’s easy for hackers or simple technology glitches to shut a site down.
“It’s like having a babysitter,” says Pierick, an OSI senior partner who is now SiteLite’s president and chief executive. “A lot of other companies claim they are, but their philosophy is not to touch the baby and call you when there’s trouble. Well that’s not a very good babysitter.”
Analogies notwithstanding, the business is adding up to a lot more than babysitting money. Pierick says the company generates about $250,000 per month now and is doubling that every quarter.
Fueling that is the explosive growth of the commercial side of the Internet as more companies scramble to generate online sales or create a web-based information infrastructure.
Pierick says he got the idea for the OSI division when pondering just how large a task managing a web site is for most businesses.
Many predictions about an impending worker shortage assume that companies will host their own web servers and hire their own information technology staffs, much like early phone company predictions that one in every 15 workers would have to become telephone operators to keep up with demand for connections.
And like the phone companies’ eventual discovery of new ways of handling caller volume, it dawned on Pierick that he should approach the problem differently.
SiteLite creates teams, or “pods,” of four people who handle multiple customers. In addition to making better use of workers’ time by eliminating the idle hours that characterize most of a typical IT technician’s workday, the pod method creates better-trained workers who have experienced a greater variety of issues, Pierick says.
“The growth in the number of web servers is so phenomenal, there’s just not enough people to support it the old way,” Pierick says.
SiteLite probably will have worker shortages of its own as it attempts to jump from about 40 employees now to 120 within the next six months.
With revenue growth approaching 1,000%-per year in Orange County, Piernick says his company is ready to take the model nationwide. SiteLite is opening offices over the next few months in Texas, Illinois, Silicon Valley, New York, Boston and Chicago, some of the hottest areas for Internet business.
And closer to home, the company recently purchased a 2,000-square-foot building in Rancho Santa Margarita it plans to occupy by May. The company also has wooed several big-name Orange County investors, though officials won’t publicly name them.
In addition to selling directly to customers, SiteLite sells through partnerships with web-hosting firms and system integrators. Customers include Unocal Corp., Canon Inc., Minolta Co., Amgen and BMW.
The company has plenty of competitors, including firms such as SiteSmith and Netscape founder Marc Andreessen’s LoudCloud. But Pierick insists that those companies’ restrictive approach, which require customers to adopt a complete turnkey solution, gives him an advantage.
SiteLite, by contrast, allows customers to take on its services at any point of their growth. And unlike many web-site monitoring services, SiteLite constantly checks related applications such as the database servers used to keep track of inventory.
And even with the competition, Pierick says, there will be plenty of room for lots of players.
“We’re doing OK,” he says.n
