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TECHNOLOGY: At your service

The Software as a Service industry. A wedding. Crookston. While this list may seem completely unrelated, all three items have played an instrumental role in the growth of one Fargo company. In 1999, Brian Gramer founded Vtrenz with the idea of cr...

The Software as a Service industry. A wedding. Crookston.

While this list may seem completely unrelated, all three items have played an instrumental role in the growth of one Fargo company. In 1999, Brian Gramer founded Vtrenz with the idea of creating marketing automation and marketing solutions for clients. He was interested in the budding Software as a Service (SaaS) industry, which involves an on-demand product delivered through the Internet.

The idea started in the Fargo-Moorhead area, but one could make the argument that the business came to fruition on Gramer's wedding day.

Vtrenz has a very strong connection to Crookston. Gramer was born in Crookston, but moved to Moorhead at a young age with his family. William Schnabel, the company's president and CEO, graduated from Crookston High School in 1985.

Despite this similarity, the most important connection between the two business partners is that their wives are sisters from Crookston. Gramer said he had met Schnabel only once before the day he married his wife. The second meeting, which took place at Gramer's wedding, put the wheels in motion for the future of Vtrenz.

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"Women have driven the relationships for this company together," Schnabel said.

Schnabel joined Vtrenz as an investor after the wedding, but later decided he liked the idea enough to get more involved with the business. "Our idea was to build a product, but we needed someone to manage that product," Gramer said. "Will came on and he revamped the business plan."

Schnabel's background is in systems and systems development. Before starting at Vtrenz, he had spent about six years working in Asia for Accenture, a global management consulting company. He decided to look for something new after the company went through some changes.

With the help of Schnabel, Vtrenz was able to put ideas into something more concrete. The company launched its iMarketing Automation product in 2003.

A growing company

Vtrenz now offers marketing automation software to companies worldwide. The company has recorded nine consecutive quarters of revenue growth and Gramer says Vtrenz is growing at an average rate of 200 percent annually.

The company is emerging as a player in a new industry, employs more than 30 people and caters to 260 clients. It's also shaping up to be a regional success story, which is important to Gramer, who graduated from Minnesota State University-Moorhead.

"I grew up in Moorhead, so my goal as an entrepreneur has always been to create jobs in this area. When I got out of college, there weren't a lot of great jobs around here," he said.

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Schnabel said Fargo's strong economic environment offered Vtrenz the opportunity to compete on an international scale without putting the company on one of the coasts. Gramer estimated that 99 percent of the company's clients come from outside the Red River Valley.

With Fargo as a springboard, Gramer and Schnabel have big plans for the company. "Our goal here is to employ thousands of people," Gramer said.

Despite the opportunities, there are also challenges as Vtrenz moves into the future. Since Vtrenz is located in Fargo instead of an area more known for technology companies, such as the Bay area in California, Gramer said there has been a perception issue. "You're always fighting that challenge. The perception is what it is," he said. "Eventually that perception will go away."

Another challenge is possibly more pressing for the growing company - attracting investors. It has been tough for Vtrenz to attract local investors because some of them don't understand the SaaS industry, Gramer said.

"The investment community does not quite understand our business model and what we do," he said.

SaaS companies such as Vtrenz allow software costs to be paid with a pay-as-you-go approach rather than all at once. This approach can make it difficult for some would-be investors to understand the value of the company, Schnabel said.According to Gramer, a large amount of investments in Vtrenz have come from the West Coast, which could have negative effects on a company based out of Fargo. "The risk with that is that as you get more and more investment from that area, they have more and more influence," he said.

However, help is out there. Schnabel said a handful of local people have been very supportive of Vtrenz. "We have a couple of very strong angel investors locally that have made a difference," he said.

In addition, the company has received funding from the Bank of North Dakota and the North Dakota Development Fund.

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Gramer said increased private investment could put the Valley at the forefront of the new SaaS industry. "Right now, there isn't an area of the country that dominates this industry," he said. "It's wide open for the taking."

Even with the pair's desire to increase the local base of investors, Vtrenz is growing.

Since 2002, Gramer said the company has grown at an average rate of 200 percent a year. In 2007, he has his eyes set on more. "We plan to grow this year at more than 200 percent. We should beat our average," he said.

In September, Vtrenz announced that it was teaming up with Microsoft to enhance its product. The iMarketing Automation product is also part of Salesforce.com 's AppExchange, which has been described by Businessweek magazine as an e-Bay for corporate software.

The product

The SaaS industry allows business to subscribe to a service instead of buying a specific type of software.

A consumer subscribes to a given software application and outsources the operations of the backend infrastructure to a vendor like Vtrenz on a pay-as-you-go basis.

Vtrenz's iMarketing Automation combines e-mail, direct mail, Web tracking, surveys, landing pages and integrates with customer relationship management systems. This process allows businesses and organizations to create repeatable, automated marketing campaigns.

The product is primarily geared toward small and mid-sized businesses, but Vtrenz also services large companies.

Gramer said the product helps businesses cut down on costs and save time because it eliminates the need for additional spending on hardware and IT. "The time savings is astronomical," he said.

About Vtrenz

  • Vtrenz is growing at an average rate of 200 percent annually.
  • Employs more than 30 people.
  • Has 260 clients.
  • Vtrenz's iMarketing Automation combines e-mail, direct mail, Web tracking, surveys, landing pages and integrates with customer relationship management systems.

What is SaaS
The SaaS industry allows business to subscribe to a service instead of buying a specific type of software.

How it works

A consumer subscribes to a given software application and outsources the operations of the backend infrastructure to a vendor like Vtrenz on a pay-as-you-go basis.

Edison reports on business. Reach him at (701) 780-1107, (800) 477-6572, ext. 107; or jedison@gfherald.com .

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