Company Profile: Eleven Wireless creates broad success with a narrow focus

by Carri Bugbee, Big Deal PR

Eleven Wireless has become a Portland start-up success because the company found a niche with customers who truly need what the company has to offer and have the resources to pay for it. That niche is the hospitality industry. The founders recognized the value in becoming the perfect solution for a tightly focused category over the lure of becoming a good solution for a wider group of customers. This has helped the company grow dramatically over the past year and expand its product offerings with strong results.

Carri Bugbee interviewed co-founder Josh Friedman about Eleven’s products and the process that has fueled the company’s growth.

Carri Bugbee: Josh, can you give us a brief description of what Eleven does?

Josh Friedman: Eleven helps the hospitality industry provide guests with broadband access and related technology services in a way that allows hotel chains or specific properties to generate more revenue, promote their brands, enhance the guest experience, track the effectiveness of their offerings and make changes on the fly.

CB: That sounds like an appealing option for hotels. Can you explain how Eleven does that?

JF: We’ve created two products that help hotels meet the growing demand for broadband services. Our flagship product is ElevenOS, an on-demand software platform that allows for unparalleled flexibility to manage and control a hotel’s Wi-Fi or wired public-access Internet network. This enables hotels to track usage and revenue, create reports, add their brand messages to guests’ browser start pages, build a variety of pricing plans, integrate pricing plans with existing property management software, create promotions for discounted or free broadband for specific groups or hotel guests, and a lot more. ElevenOS allows for management of all these services at the corporate level, at individual properties, or some combination of the two. For example, you could allow the front desk staff to input promo codes for free or discounted broadband, but only allow the sales and catering department to create group accounts. Then the usage reports might be generated by a corporate system administrator. In a smaller hotel, maybe a manager would do all these things.

Our newest product is called ElevenBC. It is a desk-top computer set up for guest access in a hotel’s business center. What makes it different from the business center computers most hotels already have is that it runs both Windows and Mac operating systems and it is tied into ElevenOS to offer the same monitoring capabilities and services that are offered through the hotel’s broadband network when guests use their own computers.

CB: So, where would we find your products being used? Who are your customers?

JF: ElevenOS is already being used by most of the major hotel brands. We’re in many of Kimpton’s boutique hotels, the Hilton and Starwood family of hotels, Holiday Inns, InterContinental, Marriott, Radisson, Best Western, and many other brands and individual properties. Here in Portland, you’ll find our products in use at the Mallory (now called Hotel Deluxe), the new Hilton, 5th Avenue Suites, Vintage Plaza, the Mark Spencer and Hotel Lucia, which was our first hotel customer. The Oregon Convention Center uses ElevenOS and we count a number of prominent broadband service providers as customers or partners. Companies such as HotSpot International, StayOnline, RoomLinX, Datanamics and VerLAN use ElevenOS to manage their networks. In many cases, they automatically include our software as part of the package when they provide broadband to hotels, making them resellers of ElevenOS. In other cases, hotel groups have grown to love our software so much, they require it to be deployed at their properties regardless of who the service provider is.

CB: That sounds like an enviable position to be in. Are there competitors offering the same types of products as Eleven?

JF: There are three other companies that create similar software, but they are focused on different industries. They have a few customers in the hospitality industry but they’re not developing solutions specifically for this category. For a while we were competing against them, but that actually doesn’t happen much anymore. More often, we come up against network service providers who have built their own internal software solutions. While those certainly work for the service providers, we feel that our software is better geared to serve the needs of hotel guests and managers because we focus on nothing else. This is classic specialization. Our growth is definitely based upon the merits of what our software does. For example, Hilton has dictated in many cases that their properties must use our software.

CB: Can you tell us how the business got started and how you ended up focusing on the hospitality industry?

JF: It was the height of the recession in Portland – no better time to start a new technology business! I was most recently working at Tripwire and wanted to build a software company utilizing the knowledge I had acquired there. I was doing a lot of networking and I ran into an old friend, Josh Blank, who had co-owned a company that developed Web-based software. We started bouncing ideas around. We were both business travelers, so we thought about the hospitality space. I knew that Wi-Fi had legs since it was a true industry standard and had industry-leading companies behind it. I also knew I wanted to do something scalable. After doing a little industry research, we decided to deploy Wi-Fi networks to better understand the software dynamics in the industry and help bootstrap the company. Around the time we got our first client, my former colleague and close friend, Andrew Yorra, left Tripwire and joined us as a co-founder.

After deploying and managing a few networks, we came up with the concept of creating centralized software to manage Wi-Fi networks. As soon as we came up with the idea, we brought in a software architect to start working on it in November 2002.

From the beginning, we wanted to build a software platform that would allow us to add new products and features down the road and leverage the work we put into the platform. We talked to a lot of potential customers about our software before we built it and we were able to stay alive long enough to actually build it to meet their deadlines.

Our first customers started using ElevenOS in 2003, but we really took off in 2004. That fall, the folks at Hilton said they really liked what we were doing and wanted to do a pilot program with five of their hotels. We built in a few more features they requested, they liked it and started rolling it out to a lot more locations. That alone has turned into a huge opportunity because we’re now Hilton’s preferred vendor, and the only one at that.

CB: When did Eleven hire a new CEO and what made you want to do that?

JF: I was the founding CEO and we were having great success. However, I had never run a technology business before, so it was an easy decision to build our management team by bringing on a CEO with the experience to take our business to the next level. We spent a good deal of time looking for the right person and Kevin Macgillivray joined us as CEO in early 2005. Kevin has done just about everything you can do in a software business. He’s raised venture capital, taken a company public, acquired businesses, and gone through a secondary public offering. He’s great with operations and has brought a lot of order and focus to the company. That’s primarily what we were looking for.

In fact, he helped guide the company to develop a narrow and deep business strategy instead of a broad and shallow approach. In other words, we decided to become the technology provider for the hospitality broadband industry and began thinking about what other products we could offer that fit within this business model. That spawned the idea for ElevenBC, our business center computer. From concept to deployment, ElevenBC only took us about six months to develop and these business center computers have already turned into cash machines for us.

CB: What industry trends affect the products and strategies of your business?

JF: Boutique hotels are a big trend. In fact, larger hotel chains are starting to launch sub-brands in the boutique category. Kimpton Hotels are already on a pedestal in that arena and they were among our first customers. In fact, Kimpton was ranked as the top hotel brand with broadband. As Kimpton’s technology partner, Eleven was specifically cited as one of the reasons they were ranked number one. In building ElevenBC, we really listened to their needs. Kimpton caters to a young, hip, creative clientele, so they wanted a versatile, aesthetically pleasing solution for their business centers.

Of course, the biggest trend we are riding is the rising rate of broadband adoption in hotels. There were 15,000 hotels with broadband in 2005 and 20,000 are expected to have it in 2006. Once hotels make that investment, they want to leverage it for more revenue and we provide the perfect way to make that happen and manage the process.

CB: What are your plans for growth?

JF: We expect to double revenue this year over last year. We also plan to build stronger corporate relationships so that we have good penetration in the top 20 hotel groups. By working with hotel companies directly, that changes our sales strategy slightly. We’ll still be working with network service providers for channel-oriented sales, but we’re aiming for more enterprise sales at the corporate level with hotel chains.

CB: How many employees does Eleven have?

JF: We currently have 15, which doubles our numbers from last year.

CB: How has the business been funded?

JF: We raised a Series A round in 2004 of about $1 million. We’re planning to raise a Series B round of $2 to $3 million this year, though there are a few customer deals we’re working on that might negate the need for additional funding.

CB: Tell us what you like about working in Oregon.

JF: Portland – and Oregon in general – is a spectacular place to start a business. The culture is down to earth and real. You aren’t surrounded by a bunch of fake people like you might find in L.A. or people who are so addicted to work that they don’t have a life, like a lot of folks in the Bay area. Of course, there are a lot of outdoor amenities here as well, so people who want to have a life outside of work have stuff to do. And the longest commute of anyone working here is 15 minutes. There is just a lot to attract people to living here.

From a business standpoint, there is a lot of technical talent because of Intel and all the other business in the Silicon Forest. However, I don’t think we have as much management talent here as we need. We saw that first-hand when we were searching for a CEO. In the Bay area, the depth of management talent is almost unbelievable, but I think Portland will be able to build that depth. People like Kevin, our CEO, are moving here because of the quality of life and I believe that will continue to lure great talent. Talented people rarely have trouble find jobs.

When we first started this business, I encountered a lot of people who complained that Portland is not a good place to start a business. Even though the economy has picked up a bit, I still run into a lot of people who bad-mouth Portland. Personally, I think it’s a self-fulfilling prophecy, so I feel strongly that people should be more positive about Portland being a great place for business. We couldn’t have started Eleven in the Bay area the way we were able to do it here. To start a company like ours and completely bootstrap it would be very difficult in Silicon Valley. We’d pay ten times as much for rent, and as a start-up we couldn’t afford to pay people what they would need to live down there.

Since we started Eleven at the height of a recession, it was definitely a challenge to get funding, but I think it’s all cyclical. If you look at it holistically and consider all the factors, this is a great place to start a business.

Carri Bugbee is the proprietor of Big Deal PR, a small firm that serves as a virtual marketing team for innovative businesses and organizations. With over 15 years experience in advertising and public relations, Carri has quite a knack for developing astute strategies and compelling messages that help clients get noticed. She launched her own business in 1993 after working for powerhouse agencies Wieden & Kennedy and Hill & Knowlton. Solving marketing conundrums is still Carri’s favorite part of the job. If you have one, you can reach her at 503-297-4043 or carri@bigdealpr.com.