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After the Gold Rush
Tech survivor Netkey helps clients get personal with their customers
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Business New Haven
7/9/2001
By: Mimi Houston
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Years ago when I was small, my mother bought our meat at a local butcher shop. The butcher knew us by name, and he knew and what we liked to buy. He knew which cuts of meat we preferred, what specials we would be interested in hearing about, even how we liked our cold cuts sliced. It was the kind of personal service that made us feel more connected to our world.
In today's modern, busier world, few of us have that connection when we shop. We stand in long lines, take a number and order from a stranger. In the search for convenience, we've lost that comforting sense of personalized service. Well, you can't have both, can you?
Alex Richardson, founder of Lexitech, now known as Netkey Inc. in Branford, thinks you can. It was a quest for modern yet personalized service that led him to launch his company back in the early '80s while still a student at Yale University's School of Organization and Management.
The idea for more personal service through computer technology first struck him years ago when he worked in advertising at Ogilvy & Mather in New York.
"I was introduced to an interactive computer application being tested at Time magazine," remembers Richardson. "Despite my training in print, radio and TV, I strongly believed that interactive computer, with rich media, was the future of communications."
Richardson's company, the first to be housed in New Haven's Science Park, creates and maintains Web-based software programs mounted on free-standing kiosks, ATMs, managed PCs and Internet-connected telephones.
It is the company's kiosk - almost an ATM machine crossed with the Internet - that is its most visible success story. From humble beginnings of $50,000 in private investment, Netkey is now acknowledged in the industry as the leaders in market share and technology. It recently won the 2001 Frost & Sullivan Market Engineering Award, and has several other industry awards to its credit.
Netkey's current success and path was not a predictable venture. The Lexitech of the 1980s was a professional service company that developed a mainframe computer system with interfaces for telecommunication companies and the government. But that was before the Internet.
As the world gained access to the information superhighway, Lexitech's customers began leaving the mainframe model and merged into Web-based technologies. In 1997, the company saw the need to develop and patent software that allowed customers to display a controlled version of their Web site, controlling also what links customers could access.
While software was not an originally offered product, the company saw sales soar to unpredicted heights. The decision was made to implode the old company and in 1999, Lexitech was relaunched as Netkey. The sole focus now is on software.
"Our passion and vision is to be the premier software partner to those companies who want to transform the consumer experience," explains Richardson. "Netkey is building a new generation of software and services focused on understanding a consumer's fundamental needs."
Since the company's relaunch, demands have been so high the company has added branches in New York and San Francisco.
"We're working on creating a company that will be a household name in a few years, like an Oracle or a Microsoft," says Matthew Nemerson, Netkey's vice president and chief operating officer.
And they're on their way. You probably already have used a kiosk without thinking much about it, or its future possibilities. Ever go to your local supermarket for lunch meats and decide you just couldn't wait in that long line? Near the counter is a kiosk where you can order your meats by computer and stop by 20 or so minutes later to pick them up. Richardson's company takes this convenient option giant leaps forward.
At a Netkey kiosk, you log on, maybe by swiping your preferred customer card (the one we all have hanging from our key rings). The kiosk greets us by name, and has our entire buying history in its memory. Like with the butcher of old, we can say, "The usual, please," and get exactly what we want.
And, we can order a fruit platter for Aunt Lola's birthday party, download and print a recipe for broccoli casserole for dinner, check the price, location and stock of that certain shampoo that we like. The possibilities, like the Internet, are endless.
"It's a great way for a retailer to build a relationship with the customer," says Nemerson. "People today are looking for personalization."
"It's been very reliable for us," says Keith Bishop, co-owner of Guilford's Bishop's Orchards, where a Netkey kiosk is hard at work.
To the fifth-generation farmer, technology and personal service go hand in hand. Recent winners of the Mass Mutual National Family Business Award, Bishop's Orchards has found a way to keep up with the times while preserving Old World traditions.
"Our customers sign up on the kiosk for our preferred customer program," explains Bishop. "We are saving on entry time, and the accuracy is much better. People's handwriting can be very hard to read. We're saving about 50 cents a person for each customer who signs up. It doesn't cost them any more time, since they always had to fill in a form anyway."
Bishop says customers are adjusting very well to the computerized technology. "But we have plenty of people in our retail store who can help if someone unfamiliar with computers is having a problem," he assures.
Once shoppers get their preferred customer cards, the world of Bishop's Orchards opens up to them through the kiosk. As an added bonus, when customers register, they choose an area school they'd like to help. Every time they purchase items at the store, Bishop's donates a portion of the proceeds of their sale to that school's arts and enrichment programs.
Bishop says he is able to move the kiosk around to various locations in the store, and plans to add another one in the near future to meet customer demands for its use.
"We're hooked up to our Web site," Bishop explains. "Customers can find out about the history of the farm, they can order products to be delivered, and I've hooked up to a link called 'About Produce' where they can get recipes and nutritional information."
This is exactly what Netkey developers like to hear.
"What we have is an integrated suite of products that will bridge all needs of the self-service environment," explains Nemerson. "Customers can have access to your Web site, and to related sites, but the software doesn't allow access to wander into inappropriate sites."
"With Netkey Manager, you can update the content of your site, add buttons, change the look, create databases, even run diagnostics," he adds.
Bishop's Orchards joins a Netkey client list larded with some very impressive names. They include the Ford Motor Co., Disney Stores, the Smithsonian Institution, Bayer Pharmaceuticals, JC Penney Co., Hong Kong Power Phone, Princeton, Microsoft and Yahoo! Mail among countless others.
The company manages more than 150,000 Web-connected kiosks around the world. And Frost & Sullivan, a California market-research firm, predicts this will blossom into 450,000 by the year 2006. The firm also predicts Netkey's sales will soar from $200 million this year to $6.5 billion by that same year.
Amid those rosy predictions came work June 29 that Netkey would lay off about ten percent of its workforce in positions no longer deemed necessary for the direction Netkey is heading in.
"What we've done," explains Robert Ventresca, Neykey's director of marketing,"is a rearranging in the company to build on out focus - increasing sales and improving customer service. The results in the eliminating process were positions not involved with selling or servicing our customers."
Ventresca maintains that "We're in a very strong position financially because of the funding we've received. And we're facing the future with a cautious and prudent eye."
Ventresca says his company is now hiring people who can fulfill the needs of its refocused direction. "As we get more customers and more projects, we need the people to service them. We're hiring people with different skill sets for different positions."
Ventresca portrays the restructuring as a natural business evolution for Netkey. "We're reacting to what our customers are telling us. They're saying, 'We need your help on these projects."
Customers like Jiffy Lube International, a subsidiary of the Pennzoil Quaker State Co., which recently asked Netkey to add kiosks to its stores in North Carolina. Now, when you stop to get your oil changed, you don't have to read yesterday's news while you wait.
Log onto the kiosk and you can research all kinds of information about your vehicle. Your service record is available, and so is a list of accessories you can add to your car, truck or SUV. Are you debating on adding a spoiler to your car? Click on that accessory and you can view a picture of it will look like.
You can also research product information, shop for auto insurance, check the blue book value of your car, Or, check stock quotes, the weather, latest news from links with CNN, Weather.com and Bloomberg.com. You can check your e-mail, or send one to a friend through either Hotmail, Yahoo! or AOL.
Jiffy Lube kiosks are linked to a variety of retail sites as well. You can order a new coat from Patagonia, Land's End or L.L. Bean.
You get the picture - the possibilities are endless. And this is exactly what the higher ups at Netkey are banking on.
"We've just raised $15 million, and we've spent a lot of it," laughs Nemerson. "We're creating a team of the very best people from around the country. People from Oracle, Mercator, Stanley Works."
"We've more than doubled our size within the last year with almost no turnover," he adds. "We are a stable boat in a raging sea."
Nemerson is referring to the crash dives of companies like eToys and Pets.com that seamed to sail in on a fair-weather breeze, only to encounter some very ill winds.
Nemerson has had his eye on Netkey since its inception, watching its progress as an investor and as president of the Greater New Haven Chamber of Commerce, a role he served in for 13 years. When Richardson asked him to join the ship, Nemerson felt the tug.
"Well, you've got to remember it was January of 2000 - a high-water mark for the technology industry," Nemerson recalls. "AOL had just put the offer in for TimeWarner, the NASDAQ was at an all-time record high. I felt like I was going to be joining something I had already been a part of."
"I was coming in at a high level to an industry about to go through an amazing growth spurt. It was the equivalent of being in the 1800s and loading up your family and heading out to the Oregon Trail."
"We've got very bright people who are very focused. It can be exhausting - we're working 12- to 14-hour days, but it's really an exciting time for us. There's a sense of being in San Francisco during the gold rush. We're gonna pack our bags, bring our pick axes and see what we can find," he laughs.
Nemerson and the rest of the Netkey pioneers are banking on striking gold. The climate around them is favorable, because it's folks like you and me, looking for that smile of recognition when we shop for supper after a tiring day at the office.
"Today's retailer wants to build a relationship with the customer," explains Nemerson. "There is a lot of information out there available on the Web site, information we call CRM - customer relations management data. That is, what you purchase, what you like, what you might be looking for."
"And the customer wants to know - 'What's at the New Haven store? What's special about the store near me? Is this product on sale at my store?' The kiosk brings all this and more to the customer. It allows the retailer to communicate with you as an individual. It enhances your shopping experience."
That's good news for those of us who remember the good old days. With Netkey innovators hard at work, maybe now we can all enjoy just a little more familiarity in our modern, autonomous lives.
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