October 10, 2003

New Netkey article

Nice article on changes at Netkey.

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Meet the new Netkey
by Christine Zimmerman, editor 10 Oct, 2003
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Netkey has been changing. Its evolution reflects what is happening in the self-service industry itself. Leaders are emerging and new paths are being forged. Its time to take things to the next level. Netkey is a bellwether of the industry because it has lasted through the years.

"What Netkey does is significant because its the oldest kiosk company standing. It has been around since the early 90s," said Francie Mendelsohn, president of Summit Research Strategies. And what Netkey does is guided by V. Miller Newton, chief executive officer since July. See related story, "Who's who: V. Miller Newton."

"We are transitioning from being entrepreneurial to putting in a sales team that will take us to high-growth mode," said Newton. "We will seek the large deployments of the world versus the ones or twos of the world."

Newton said Netkey will focus on the verticals of retail and human resources in the kiosk and digital-display markets. "We are very interested in owning the unattended self-service space."

He explained that self-service has transformed from being a market of early adopters to one of high growth. "We see huge deployments on projects that were in the test stage only a year ago."

And he casts aside rumors that the company is in financial trouble. "I can tell you, we have a clean balance sheet with darn-near zero debt. We have money in the bank. Put two and two together: no CEO would take the helm of a company if it didnt have at least a years cash in the bank."

In fact, Miller said he expects the fourth quarter to be cash-flow positive, way ahead of his own expectations. He declined to share actual numbers.

"No CEO would take the helm of a company if it didnt have at least a years cash in the bank."

--V. Miller Newton, Netkey CEO

Real business

Newton said Netkey is wrapping up the first phase of a project with the U.S. Postal Service, and hopes to announce the second phase in 30 days. The postal service is using Netkey software in Kiosk Information System (KIS) kiosks to reach 500,000 employees who do not have access to PCs. KIS will produce and support 310 kiosks under the $4.1-million contract, and USPS has an option for another 300.

Netkey is also on its fourth self-service project with BMW. And the company last month announced a deal with Starbucks Coffee Company and Kraft Foods, Starbucks grocery sales and distribution partner, to engineer and power the Starbucks Interactive Unit, a touchscreen marketing tool designed to give grocery consumers insight on the best way to enjoy Starbucks coffee at home. The unit will be featured in about 4,000 grocery stores per year.

Mendelsohn said, "Netkey has had some key wins already, particularly in the area of HR with business partner, KIS. Miller Newton has an incredible track record. Well just have to watch, wait and see." KIS would not comment on changes at Netkey.

Netkey Manager Bob Esposito said last month during The Kiosk Show in Long Beach, Calif., "We may have had a quarterback change, but were still Netkey. Were just not going to get bogged down in onesies that take resources. We grew 32 percent last year. We needed an executive to get us out of the boutique mindset."

Target markets

Retail is one area in which Newton sees potential. "Target wont put any devices in their stores without my platform," he said. "Retail has been an early adopter of self-service. Theyve realized that, in the search to offer a better customer experience and reduce costs, self-service plays a role."

As for the HR market, Newton cited analyst firm, The Aberdeen Groups study of CIOs that shows HR self-service among the top technology priorities.

"The good news is that weve had the best year ever. The tough news is that, when you grow, you have to make changes."

--Alex Richardson, Netkey founder and executive vice president of business development

Tough decisions

Of course the changes at Netkey havent come without some pain -- in the form of lost jobs. Newton said his restructuring actually has yielded the net increase of two new positions at the company. He will not talk about how many people have left Netkey in the last month.

"The first restructuring was about realigning resources and beefing up on the professional services side. We are getting ready to announce a 2,000-device digital-signage deployment. When you shift to large deployments, senior project management experience is a key," Newton said.

"Candidly, weve put the next level of talent in existing spots. Its about addressing gaps in the management infrastructure."

Said Alex Richardson, Netkey founder and now executive vice president of business development, "The good news is that weve had the best year ever. The tough news is that, when you grow, you have to make changes. Its no different from any other company."

Added Mendelsohn, "[Newton] is bringing in his own team. That happens all the time."

This month Newton named Pete Steiner vice president of sales. Steiner is responsible for direct and indirect sales and expansion of Netkey solutions and services within existing and new markets, according to a news release.

Newton said, Steiner "is a superstar at creating and managing a sales organization." Steiner did not respond to requests for an interview.

Steiner brings more than 20 years of sales, marketing and business development experience to Netkey. He was previously vice president of sales at mGen Inc., a provider of training and learning software solutions. Prior to joining mGen, Steiner was senior vice president of sales at Monster.com, a provider of online recruiting services and Newtons previous company.

Steiner built and led Monster's sales organization and strategy, where, over a three-year period, revenue grew from $300,000 to $40 million annually and the sales force expanded from two to 73 professionals.

Newton said growth wont stop at sales. "Our next growth wave will be in product development. Were injecting the department with steroids."

And what about the role of Richardson, who is still a board member? Newton said, "We have not announced any formal changes regarding Alex. He is still extremely active, obviously, at the board level and at the Miller level."

And its business as usual for Newton, who has met with Netkey customers about his plans.

"We have met with all of our marquee clients and the response has been extremely favorable that we are taking the company to a new level. There has been no negative feedback in the marketplace. Customers see this as strengthening of an already strong company."

Posted by Craig at October 10, 2003 07:13 PM