Phone kings

Executive Summary
Company. Star2Star Industry. Technology, Communications Key. Firm hopes to hit $100 million in annual revenues by 2018.

Norm Worthington, CEO of one the Sarasota-Bradenton region's fastest growing business, ran into an executive hiring obstacle four years ago.

Worthington sought a chief marketing officer for Star2Star, a Manatee County-based firm he co-founded in 2006 that sells and operates unified communications systems for businesses and organizations. Using patented technology and products, and a patent-pending network, Star2Star handles all ends of an entity's communication needs, from old-school landline phone calls to new-wave video conferencing. The system blends cloud software with on-premises software, and clients can either pay a monthly fee or lease/purchase the hardware and phones outright.

“Star2Star looks like a telephone company,” Worthington says. “But we are really a software company.”

Yet getting a top-tier marketing executive was a big pain point for Worthington. He looked at resumes and candidates for 18 months, he says, and was indifferent, at best, to the options.
Most were what he calls “arts and crafts” marketing people — style, not substance. “I was looking and looking and looking,” he says. “I had my headhunter focus only on this.”

Worthington was about to hire someone he says was “good enough,” when his recruiter connected him to Michelle Accardi, a vice president of digital marketing at Computer Associates in New York. Accardi had worked for Worthington at another tech company he founded in the Sarasota area, Infresco, in 1996. Computer Associates bought Infresco in 1997, and Accardi stayed with CA.

“She just blew us away,” Worthington says of Accardi, nearly two decades later. “She was clearly what we were looking for.”

Accardi has since been promoted to chief operating officer at Star2Star. In that role she oversees two distinct sides: One is managing the rapid growth in new clients and services for existing clients. The other is managing the rapid pace of changes and advancements, from new products and technology to expanding globally to utilizing big data analytics. Ventures on the horizon range from more business overseas to a mobile fax product.

On revenues, the company is the rare Sarasota-Bradenton gazelle: Sales are up 86.7% since 2013, from $33.2 million to around $62 million last year. The company has made the Deloitte Technology Fast 500 list four times and has been on the Inc. 500|5000 list every year since 2011. Worthington projects the firm, now with about 335 employees, will hit $100 million in sales by 2018. It plans to hire at least another 100 people this year.

“It's a great time to be at Star2Star,” says Accardi. “I'm excited about what the future will bring, and I think the best is yet to come.”

Gobble up
Star2Star is seemingly in a good spot in the unified voice communication industry, sometimes referred to as Voice over Internet Protocol, or VoIP. For starters, Accardi and Worthington point out, the firm has its own technology and network — a clear competitive advantage. “That lets us adapt to big opportunities,” Worthington says.

That technology is also Star2Star's leverage for a current wave of industry consolidation. The unified communications as a service industry, according to research firm MarketsandMarkets, is projected to grow from $15.12 billion in 2015 to $24.88 billion by 2020. That's a compound growth rate of 10.5%.

Some of the big players in the industry, according to another report, from Synergy Research Group, include Cisco, Citrix Systems and Microsoft. Cisco made two acquisitions in the industry last year, according to Synergy, and Microsoft bought a unified communications firm, Event Zero, in a deal announced in January. Says Worthington: “The weaker ones will be gobbled up.”

In one of several moves to get stronger, Star2Star secured $30 million in venture capital funding, mostly for research and development, in December 2014. Suburban Philadelphia-based NewSpring Capital, a series of private equity funds that backs firms mostly in health care and technology, invested in Star2Star. Worthington says he was offered at least 20 term sheets for the funding — more validation of his vision, he says — and briefly considered an acquisition.

Worthington and Joe Rhem, old tech industry colleagues, co-founded Star2Star. A New Jersey native and New College of Florida graduate, Worthington has founded at least a dozen software and technology businesses over the last 30 years. Toy company Mattel bought one firm he launched, consumer software business Software Toolworks, in 1999. He also started a company while a student at Northwestern University School of Law.

Star2Star was far from an overnight success. The entrepreneurs started in Rehm's garage, with the belief that if they built the technology right, clients would follow. But the beta test was a disaster. Calls were dropped, and the service, says Worthington, was a failure.

Worthington remained steadfast in the vision. He put another $500,000 into research and development, which brought his personal investment in Star2Star to $2 million. The persistence paid off: The firm hit $1 million in sales by 2007, and turned a profit by the 2009 third quarter.

Shoot for more
Star2Star sells its products through third-party distributers. Executives say that lets the firm find more clients, faster, without having to hire and train a big sales staff. It also allows the firm to push more spending toward research and development. “That will continue to be the strategy for us going forward,” Accardi says.

A large portion of the firm's revenues comes from clients in North America, in hospitality, real estate and retail. The client list includes Dollar General, Pizza Hut and Enterprise Rent-A-Car. In the Sarasota area, companies that use Star2Star include Center for Sight and the Observer Media Group, publisher of the Business Observer.

Worthington says Star2Star's customer churn rate is 2% — a loss percentage that would be stellar for any industry, but is particularly impressive in highly price sensitive unified communications. “There's no other company that has a rate like that,” Worthington says.

But Star2Star shoots for more.

One way it targets more is in new locations. It's opening a sales office in England later this year, for example, to go after work in Europe. It already does some work overseas, but that comes from North American firms with locations there. Star2Star also covets Australia for business.

Another aspect of the growth strategy will come in new markets, such as education and municipal governments. High schools, colleges, cities and counties all have lots of people and lots phones. “Now we have the credibility to get in there,” Worthington says.

A big focus for the company in 2016, wherever it does business, is to utilize data analytics more frequently for current clients and to land new ones. Star2Star is part of a program at New College, where data science students help study how to use a variety of algorithms. Star2Star also runs an internship program out of its Atlanta office, next door to Georgia Tech.

Worthington says capturing data, and using it properly, is the future of unified communications. Says Worthington: “Understanding how people communicate, what about and for how long, is the lifeblood of an organization.”

Star2Star also seeks growth through new products. A mobile fax option, where a Star2Star user can take a picture of a document on a cell phone and send it to a fax number, is coming soon. Other new products are in the pipeline. “We have a lot of stuff no one else has,” Worthington says.

While mobile is important to Star2Star, Worthington says the core being of the company is in a safe space. “The king of communication will remain voice,” he says. “Desktop phones aren't going anywhere.”

See you in Space
The space that makes up the offices of Manatee County-based communications software company Star2Star is all about space.

Outer space, that is.

Walls, training rooms and hallways are filled with artifacts and commemorative pieces from the history of NASA and the space program. The museum-in-an-office, in Star2Star's 62,000-square-foot facility near the Sarasota Bradenton International Airport, a converted hangar, covers exhibits from the early stages of the space program through the International Space Station. There's even the Galileo conference room.

The bulk of the pieces are from Star2Star CEO Norm Worthington, a longtime space buff. Displays include:

An original shuttle-era NASA lab coat, with a zip-up front and 7.5-inch NASA patch sewn into the left shoulder;

A card signed by the crew of Expedition 19/20 with the International Space Station, where astronauts came from the United States, Russia, Canada, Germany and Japan; and

The original operations checklist from Apollo 13, signed by mission commander Jim Lovell and lunar module pilot Fred Hasie. The checklist was used to restart the guidance control systems of the lunar module.

At a glance: star2star
Year Revenues %Growth
2013 $33.2 million
2014 $43.5 million 31%
2015 $62 million 42.5 (Represents total contract value)

Source: Star2Star

The chart with this story was updated to reflect total contract value, not revenues, for 2015.