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Berbee’s success is based on company’s history and culture

MADISON, Wis. – Berbee Information Networks Corp. President Paul Shain spoke on his company’s history and culture March 31 as part of Accelerate Madison’s monthly meeting. According to Shain, Berbee’s unique principles and culture allowed it to flourish during the aftermath of the dot-com era as other information technology-focused companies failed.

Started in 1993 by Jim Berbee, the company was founded on the dogma of creating an environment for success, embracing customer goals and trusting individuals’ judgment.
This formula, according to Shain, is the reason its employees stay with the company and customers remain satisfied.

‘We need to be in the advice business’

Technology is only one component to solving business problems, Shain said, support and advice are just as important. “When I get to work in the morning I want to see the parking lot absolutely empty because that means all of our engineers are out at customer sites billing,” Shain said. “That means that we need to take extra measures to make sure that our people understand how we want them to conduct themselves at customer locations, how we want them to make decisions, how we want them to ultimately support those customers.”

Training is important to help employees make good decisions and understand Berbee’s principles, he added. The company’s training program, Tradition, is designed to teach recent hires how to make good decisions and work through ethical and moral dilemmas in a safe environment. “[New employees are] indoctrinated into what we believe is important to our culture and how we want it to continue,” Shain said.
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In the data center business, a sector Berbee is involved in, there is a dire need for process methodology and great management control, Shain stated. Extensive training is necessary to ensure Berbee’s customers are comfortable with its protocol and have the same experience with every transaction.

Berbee history

Berbee has been partners with IBM, Cisco and Microsoft since the early ’90s, according to Shain. The reputation earned from the company’s association with these corporate providers has allowed the Berbee to build healthy relationships with those and other companies.

In 1996 the company crossed the $2 million revenue mark, an important milestone for Jim Berbee. The company was confronted with significant decisions in terms of how and where to grow, Shain said.
In 1998, Berbee decided to explore the data center business, a risky decision, according to Shain, as millions of dollars had already been invested – and lost – in the industry at the time. Shain pointed out that Berbee’s business plan, projected that the company would regain profitability two years after the launch of its data center operation.

“We were going to take a profitable company and take it into the red for a period of two years,” he said. “We were going to grow up as a company … we were going to need outside investors.”

Growing up as a company, Shain said, meant restructuring the entrepreneurial management team, creating a board of directors, hiring legal assistance and getting investors into Madison.

Shain described companies as one of four stages: start up, early stage, late stage and mature. In 2000, Shain came on as president and Berbee positioned itself as a late-stage growth company to “[attract] a different type of investor, we wanted to get beyond the world of angel investors and we wanted to bring in private equity folks that would be more conducive to be able to fund our requirements long-term.” Berbee financing was lead by Baird Capital Partners.

Shain described the lessons he learned during Berbee’s financing stage, such as making sure a prospective investment group has industry knowledge is well-networked.

During the past two years Berbee has grown by 25 percent per year in terms of head-count, mostly outside Madison.

“Our core culture hasn’t changed, our core products haven’t dramatically changed,” Shain said. “We’ve added data centers to our capabilities and most importantly most of our customers are still with us and would answer ‘yes’ to the question ‘Do we provide good advice?’”

In terms of geographic expansion, Berbee now has eight offices around the Midwest. The company has grown strategically and concentrically, keeping employees frequent travel requirements in mind, Shain said. Because of this growth, Berbee views itself as less Madison-centric but more Midwestern-centric.

Berbee today

The company focuses on three areas, supporting software from corporate partners IBM, Cisco and Microsoft, data centers and hardware. The consulting and hardware-related business are less predictable for revenue than data centers which smooth out Berbee’s revenue stream, according to Shain.

“I can tell you absolutely what will have next month in revenue,” Shain said of the data centers.

As the president of a company that grew during the dot-com bust and the recession, Shain described a few reasons why businesses fail, emphasizing lack of business strategy, ignoring business plans, setting unrealistic goals and forgetting to make customers happy.

On the other hand, those who do not fear failure, have a passion for the business, harbor the ability to endure hardship and are proud of their employees will be successful business leaders, Shain said.

According to Dave Pelisek, a Partner in Baird Capital Partners and Berbee board member, BCP’s March 2000 investment in Berbee was based on the company’s commitment to customer service and its strategic business plan.

“In the four years that Baird Capital Partners has been an investor, Berbee has matured from a young company with promise and potential to a more solidified, unified business, due in large part to strong execution on the part of management,” Pelisek said.

“Berbee is a service company ... it is their people who are out helping customers on a daily basis. The culture of a service company is incredibly important, you need qualified employees that are excited about what they are doing and you need to have leadership that establishes goals and objectives and I believe that Jim Berbee and Paul Shain do a great job of leading the company, motivating the employee base and making Berbee a special place to work,” he added.

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Kristin V. Johnson is a Madison-based writer. She can be reached at kristin@wistechnology.com.

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