For Allen Carpenter and Ken Workun, the sale of NetFore Systems to a U.S. company marks not so much the end of an era as the beginning of the next chapter in their entrepreneurial careers.
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For Allen Carpenter and Ken Workun, the sale of their fast-growing Ottawa software firm to a U.S. company marks not so much the end of an era as the beginning of the next chapter in their entrepreneurial careers.
NetFore Systems, the company the longtime tech industry colleagues co-founded in 2010, was officially acquired by Denver-based InflowCX last week. Terms of the deal were not disclosed.
While Carpenter and Workun will no longer own the venture that specializes in AI-powered customer service software, they’ll still be an integral part of its operations.
Workun told OBJ this week the 35-person company will remain a separate entity under Inflow’s umbrella and won’t be pulling up stakes any time soon. Meanwhile, life will unfold pretty much as usual for him and his longtime business partner, with Workun staying on as CEO and Carpenter retaining his role as president.
In a sense, Workun observed, the deal is a classic example of what so often happens to tech firms in this country when they hit a ceiling and end up having to look south of the border to find the necessary resources to keep growing.
“As is the way with Canadian companies, we tend to be really good at building and not so good at selling and marketing,” he astutely explained.
For more than a decade, Workun and Carpenter have essentially been a two-man sales band for NetFore, whose revenues have more than doubled since the start of the pandemic as demand for its flagship products – AI-powered virtual customer service agents that “converse” intelligently with users – soared.
“We recognized that if we really wanted to build that (sales) team, we needed someone who could help us really accelerate and grow the business,” Workun said. “We really feel that by working with (Inflow) and their sales team, we can take our skillset and cookie-cutter it into multiple different environments.”
And so, one of the capital’s more under-the-radar software firms seems on course for the type of global expansion that likely wouldn’t have been possible just a couple of years ago.
“We’re really excited about what the future holds,” Workun said. “This is not a fire sale. This was really an opportunity to take our peanut butter and tie it to their chocolate and make something better. Both sides of the team really feel optimistic about this space and our ability to collectively go after it. They have the customer base and the relationships, and we have the technological skills.”
Profitable from the get-go, NetFore is a bit of an outlier in the Ottawa tech scene in that, up until its sale, it had never taken a nickel of outside capital.
The founders bootstrapped their venture the old-fashioned way, tapping into their connections in the telecom and public sectors to forge steady, long-term relationships with a handful of blue-chip customers, including the federal government, British Telecom, Cisco and Inference Solutions, an Australian company that was acquired by California-based Five9 in 2020 and resells NetFore’s solutions around the world.
While not a flashy approach, it’s been extremely effective. NetFore grew like clockwork over the past 13 years, regularly posting annual sales increases in the 30- to 35 per cent range even without a fully dedicated marketing department.
“We’ve never really been big, but we’ve been profitable every year, which was one of our goals,” Workun explained. “We’ve never had to take VC money. We’ve sort of always been in control of our own destiny.
“We did not have a desire to be a $200-million, $500-million, $2-billion company. We really enjoyed the team size, where we knew everybody and their family and their spouses. It was a bit of a different culture. I think now we’re seeing the opportunity and are now going for growth under new ownership.”
But even after three decades in the tech industry, Carpenter and Workun aren’t using the sale as an excuse to slowly ride off into the sunset – they’re already busy bootstrapping another venture specializing in software that was also developed at NetFore.
Called Civicentric, the freshly incorporated entity owned and operated by Carpenter and Workun was spun out of NetFore just last week. Its software interfaces are designed to serve as “the eyes and ears” of municipalities and elected officials, steering complaints and questions to the proper authorities and tracking ongoing case files.
NetFore has been selling the products – AccessE11, which is geared toward municipalities with populations of 100,000 or less, and foreAction, which is aimed at constituency offices for members of Parliament and other elected representatives – for years. About 60 towns and cities in Canada and the U.S., including Fort Lauderdale, Fla., now use AccessE11, while foreAction can be found in roughly 120 politicians’ offices across the country.
Sales of the subscription-based platforms have been growing at more than 30 per cent a year with virtually no customer churn, prompting NetFore’s founders to make them the focal point of an independent startup.
“We made the decision that it was time for that product to live on its own,” Workun said. “Right now, it’s a little bit of a land grab. We want to make sure we get in there quick, because once the data is in and it’s part of (customers’) process, it’s a very sticky solution.”
The new venture has 10 employees, and Workun said he and Carpenter plan to nurture its growth the same way they guided NetFore – carefully.
“We want it to be sustainable,” he explained. “Both Allen and I have been in Ottawa tech for the last 30 years and have seen the ups and downs. Our approach has always been slow and steady. The last year, (VC) financing has sort of dried up, and we’ve been indifferent to that. The fact that we’ve never really needed to look for money means that we’ve never had to concern ourselves with the VC market and the private equity market.”
A few universities have approached the founders about adapting the platform to their needs, but Workun sees no need to stray from the company’s core customer base – at least for now.
“Right now, we really see (municipalities and political offices) as an untapped market that we want to execute on and really stay laser-focused on that for the next 18 months to two years,” he said.
“There are other markets that need this. But there are a lot of (customer relationship management platforms) in the world, so being very vertical-focused and making sure that you solve their unique problem set is the key to being successful.”
No matter which direction Carpenter and Workun choose to take the new business, one thing is certain – they will travel a road of their own choosing.
“I wish that there was less impetus on how many people have raised financing and raised rounds and rather focus on profitability and sustainability,” Workun said. “I think in technology, we tend to focus on who raises money, not who makes money. I wish we would (promote) that alternate path that says you can do it on your own. You’re able to chart your own course, and it’s very rewarding.”
