When BlueTie opened in 1999, it had seven employees, and one goal—creating a less expensive, more feature-rich, more user-friendly alternative to Microsoft Exchange.For a company with only one product and a name few have heard of, BlueTie is pretty ambitious.
When BlueTie opened its doors in 1999, it had only seven employees, all committed to one goal—creating a less expensive, more feature-rich, more user-friendly alternative to Microsoft Exchange. With a little ingenuity and a large dose of tenacity, CEO David Koretz and his small team created its flagship product, a Web-based, hosted suite of collaboration tools that includes e-mail, anti-spam, anti-virus, and shared and integrated calendars, task lists, contacts and files. Launched in 2001, the offering was aimed at companies with one to 20 users.
The product garnered some attention, in large part because it's offered as a SAAS (Software as a Service), which means that companies don't have to buy a server or rely on internal support staff, Koretz said.
Buoyed by early interest, the company later that year expanded the platform to wireless PalmOS devices, allowing users to access data in real time from any device with Internet access.
By 2004, the company had released Version 4, a much-improved version with advanced customizable user-interface features such as drag and drop and right-click menus.
By 2006, Koretz was ready to expand again. Early last year, BlueTie introduced Version 5, adding more than 100 new features. By far, the most innovative new feature is something Koretz calls Featuretisements—a way to offer additional value to customers without invading privacy, damaging the user experience or increasing prices. Featuretisements went live in April.
"Classically, if you want to monetize an application, do what Yahoo and Hotmail do, which is fill the screen with banner ads, which kills the user experience and takes up a lot of prime real estate," Koretz said. "Or you do what Google does, which is scan the personal e-mails you send and receive for the benefit of displaying advertisements."
Instead, BlueTie embeds features into the user's workflow so that instead of feeling like ads, they felt like added features. The company partnered with well-known Web-based brands such as Orbitz, Mapquest, Constant Contact and Business.com.
Here's how it works: BlueTie contracts with Orbitz, an advertiser that pays BlueTie for the privilege of offering a travel feature to users. Payment is based on revenue generated per user interaction. As users plan trips, they get a prompt that asks if they are planning travel. If the answer is yes, the system opens a window within the e-mail that asks questions, such as where the user is traveling, travel dates and other preferences, with an interface that looks similar to the Orbitz interface. Once the user enters the information, the system shows flight options, overlayed on the user's calendar. Once booked, the information is entered into the user's calendar and the itinerary is turned into a PDF file and attached to e-tickets. In a future version, the system will even be able to notify contacts via e-mail if the user's flight is delayed.
The addition of Featuretisements has allowed BlueTie to offer a free version of its product to its customers. The free version provides 5GB of storage and functionality for up to 20 users. The original paid version is still available. For $4.99 per month, it includes 10GB of storage per user, live phone and e-mail customer support, unlimited users, instant messaging, encrypted file transfer and Microsoft Outlook synchronization.
Although unique, BlueTie's business model is interesting, said Sonal Gandhi, an analyst at SMB marketing at New York-based JupiterResearch.
"It's not pure advertising; because [BlueTie] is presenting only products of companies that might be useful to the business, so it's likely to get a better response," she said. "It's an interesting way to monetize the software application they are offering. And since e-mail is fairly commoditized, they had to find ways to experiment to make money, and this is an interesting experiment."
For Koretz, however, it's more than experiment—it's a passion, and it's definitely on an upward path. Today, BlueTie has more than 70 employees, with headquarters in Rochester, N.Y., and a sales office in Sydney, Australia. So far, 200,000 corporate customers use the software, as well as numerous software vendors and Web publishers.
And Koretz has plans for more. In addition to increasing the company's customer base and increasing the types of services it offers, Koretz has every intention of moving into companies with more users—as many as several thousand.
Today, 10 percent of BlueTie's customers have more than 100 employees, and Koretz says that number is rising.
"Fortune 500 CIOs today are considering the hosted software solutions model rather than doing it in-house," he said. "Our goal is to take services that companies that size need the most and integrate them as features."
