Opinion: ‘Fenix’-like rise into open source profits

New venture expects to make money ‘paying’ clients to use product

Jennifer MacKinnon started Fenix Solutions in 2001 after the Montreal-based tech company she was working for decided to pull out of the Ottawa market. She asked herself: “Why not do it on my own?” So she did.

It was a tough time to start a tech biz, but she got her first client almost right away – a $20,000 web development contract for a Colorado-based group.

There was only one problem: the U.S. company filed for Chapter 11 bankruptcy protection after she did the work, so Fenix never saw a dime.

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She thought: “Pack it in!” Her husband said: “Keep at it.” So she did. In December of that year, she got another call from the same Colorado guy she dealt with earlier. He promised it would go better this time, and it did – she landed a US$350,000 contract and was off to the races.

Fenix has six employees today and competes against some tough local competitors such as RealDecoy and non-linear creations in a heavily male-dominated industry.

Four years ago, Fenix pivoted its business model when Ms. MacKinnon decided to make a risky change and become an open source developer. Clients were becoming more concerned, she thought, with being locked into proprietary systems. What if your vendor tanks? Who will support your applications then?

Fenix now has an annual run rate of about $1 million, and Ms. MacKinnon says she has a lot of fun running her shop. She’s also wisely realized that there’s no going back.

“I’m unemployable,” she says with a laugh, adding she’s forever “stuck” as an entrepreneur.

Like many women, she juggles the enormous demands of entrepreneurship with a family life that includes two boys, aged four and five.

One of the keys to success that Ms. MacKinnon identifies is simply showing up to work each day. For her, business development is more about answering her phone calls and e-mails than cold calling, looking for contracts.

It also helps that Fenix has become known as an Ottawa-based open source shop. That’s its differentiated value. Ms. MacKinnon even gets calls asking Fenix to audit work done by other developers in this space.

In less than four weeks, Fenix will be launching “Agent App,” a separate company with its own board and its own marketing for a new software-as-a-service business.

She noticed many of the more than 1.2 million North American realtors have websites filled with information about themselves, but containing few details about their actual product – property listings.

For a monthly fee, Agent App displays listings “above the fold,” and makes them accessible to read on desktop and mobile devices.

She has come up with an irresistible value proposition, basically saying: “We’ll pay you to hire us!”

She’ll wholesale the app to them and they will resell it to their agents so the brokerages’ cost to use Agent App will actually be negative.

We call that negative-cost selling, but you can call it smart marketing if you want.

Professor Bruce M. Firestone is entrepreneur-in-residence at the University of Ottawa’s Telfer School of Management; founder of the Ottawa Senators; executive director of Exploriem.org; and a broker at Century 21 Explorer Realty Inc.

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