No Regrets, Now

No Regrets, Now

By Francis X. Gilpin

Associate Editor

There are always dark days for entrepreneurs.

For James R. Barge, the darkest came during the 2001 technology slump. Those days were all the gloomier because he and his partner had spurned an earlier cash offer for their fledgling Clearwater IT consulting and staffing company.

"We thought: 'Boy, if they want us now, wait till three or four years from now,'" Barge recalls. "What we didn't know was, a year-and-a-half later, there was going to be a gigantic recession. I'll tell you, I drove to work every day for a year-and-a-half, every day coming over the Bayside Bridge in Clearwater, thinking: 'Why didn't I sell the company?'"

Barge and T. Scott Ferrante toughed it out. Last year, their resilience was recognized by Inc. magazine, which named Intellect Technical Solutions Inc. one of the 500 fastest-growing private companies in America.

Intellect, which does work for Baxter International Inc., Publix Super Markets Inc., Tech Data Corp., and other equally well-known clients, increased revenue by a whopping 486% during a recent three-year spurt.

Barge basked a bit in Intellect's glory Jan. 20 as the University of Tampa kicked off a monthly series of talks by executives from four companies based around Tampa Bay that made the Inc. 500 list last year.

No longer regretful about turning down the 2000 buyout offer, Barge says he wouldn't trade the last five years of his professional life for anything. "I mean, what we've learned," he says.

A people business

One thing that Barge learned was that Tampa serial tech entrepreneur Tom Wallace was right. Now chief executive of professional education portal RedVector.com Inc., Wallace once declared: "I would never start another business that required people to scale."

That is just where Barge finds himself, in a world where there is precious little to separate one shop of geeks from another. "One of the big challenges in the services business is," he says, "to scale, you have to find more people with certain expertise.

"It's fairly difficult with new customers because there are a ton of companies that do the exact same thing that we do," he adds. "We certainly don't want to compete on price necessarily. In our business, there's not necessarily a technical advantage. It's a fairly commoditized business, from the customer's perspective."

Barge describes Intellect's competitive advantage as "customer intimacy."

When Publix executives need help with an overhaul of the electronic point-of-sale systems in their nearly 900 supermarkets, including installation of self-checkouts, Barge says his employees already know what to do. "Somebody else comes in the door and it takes them a year or two to even learn the ins and outs of working with that particular client," he says.

Not that Intellect's client familiarity has come easy. Barge spent two weeks in December living out of an extended-stay motel in Lakeland working on a Publix project that required him to pull three all-nighters. "Your life isn't always going to be like that," Barge says. "But there are times when you're going to have to do that."

Self-finance

As a student, Barge knew he would run his own business someday. "I had the entrepreneurial bug from an early age," says the 1991 graduate of St. Joseph's University in Philadelphia, where he majored in business management.

Before the age of 30, Barge started Intellect with Ferrante after they soured on the acquirer of their previous employer, which had transferred them to Tampa. The seed capital was $40,000 of Barge's savings.

Intellect has grown to about 130 employees with no family money, no angel investors, no venture capital and no bank financing. Most of those employees work in the field away from the Clearwater headquarters and a satellite office in Lakeland. Intellect will soon open a third office in Kentucky.

Barge looks back in amazement at the nine years of 60- to 70-hour workweeks. "This doesn't happen overnight and there's a huge price to be paid," says the 36-year-old Clearwater Beach resident. "I do feel lucky at this point. Now that I'm in my mid-30s, I don't know if I could do it over again. The sheer effort I put in, I'd like to think I could. But I'm not sure on that."

The founders are looking to pull back from the business a bit this year, when Barge hopes to increase revenue by another 66% to $20 million. Barge says he and Ferrante must work on strategies to deal with threats, such as corporate America's moving tech services to contractors in India and elsewhere.

Although labor shortages in low-wage countries already are beginning to push up pay and reduce the cost advantage of going overseas, Barge says he understands why one of his clients sent IT work abroad. It saved 25%.

Staying stateside

Other clients have experimented with foreign outsourcing and returned to domestic consultants. "From the software development perspective, you're getting a lot of code that comes back that is just sloppy and error- and bug-riddled," says Barge. "A smart executive is going to look at the total cost of all that."

An executive at Intuit Inc., the financial software developer for small businesses and another Intellect client, told Barge that troubleshooting the work product of foreign coders adds $12 to their $32 hourly wage. Still, that's better than the $80 an hour that an American software engineer might get.

An audience member at Barge's UT talk asked, why doesn't Intellect also contract outside the United States?

Barge doesn't want to cannibalize Intellect's existing business. Moreover, he truly does have qualms with foreign contractors.

Take their integrity, for example. "Half of what you see on a resume is completely fabricated," he says. "They'll give their roommate or their best friend or their brother-in-law as a reference."

Maybe a more prosperous Intellect will relent someday. "I, frankly, wouldn't trust what's going on 12 hours away while I'm here in Clearwater unless we were a lot bigger and had a lot deeper pockets," Barge says.

Finding the Right People

Jim Barge spoke extensively to University of Tampa entrepreneurship majors about hiring and motivating employees. Here are three of his observations:

?Workaholic business owners must learn to work with employees who aren't.

"You want the feeling that everybody in the organization cares as much as you do," Barge says of entrepreneurs. "They always feel that there is no one else in the office that is going to work as hard as they do. To some degree, that bothers them."

It shouldn't, according to Barge. "It's your business," he says. "You have more at stake."

Startup owners should settle for a reasonable commitment. "You want to find people that are passionate about what they do," he says. "They'll give more because of it."

Barge sounded happy for one employee who recently left Intellect to teach at a private school in St. Petersburg. Although she makes less money now, she is more excited about educating than tech consulting.

?Hire superior performers, but don't make snap judgments.

"We're in the business of finding good people," he says. "The bell curve applies." Eighty percent of job applicants are average. "You don't want to fill your company with average performers," he says. "You want to find the 10% on the right side of the bell curve."

At Intellect, Barge seeks techies with a personality that puts clients at ease. "That's at least half the hire, right there," he says.

But Barge is careful. He recalls interviewing a Wharton MBA who had worked for Proctor & Gamble Co. both domestically and abroad. "Had as much polish as you're ever going to find," says Barge. "Looked at the resume, the pedigree was perfect."

Then the reference checks came back. "Wouldn't hire him on our worst day," Barge sums up the consensus. "No people skills."

Barge says: "You have to go beyond the initial impression sometimes."

?Luring tech workers here isn't getting any easier.

Intellect has to relocate about half of its hires. "That's a big number," Barge says.

Florida still appeals to the snowbound. "People like the idea of Florida and the weather," he says. "That's a huge draw, as simple as it sounds."

Yet the absence of lateral opportunities in the Tampa Bay tech industry remains a big drawback, Barge says. And one of the region's perennial strengths – the cost of housing, including property insurance – has turned into something of a weakness, even to relatively well-paid tech workers, according to Barge.