Collaborative work management—it’s not the sexiest topic, but it’s a big business. Seattle-area entrepreneur Brent Frei estimates that his newest startup, Smartsheet, is the “301st company in the space.” The basic idea is to make software that companies can use to manage team-based projects and keep track of things like workflow, file storage, discussion threads, alerts, and to-do lists. Most companies still use Excel spreadsheets, e-mail folders, and other similar programs to do task-tracking, which can be tedious and inflexible.
Today, Bellevue, WA-based Smartsheet is launching a new tool for small businesses—brokers, consultants, recruiters, and the like—to manage their own teams and services online. But the deeper story of the company goes back a ways, and it holds lessons for other companies in this economic climate in which streamlining management could be the key to survival. “Nobody has created the Google for team-task management,” Frei says. “Someone will figure this out, and when they do…that will really pull a lot of the power away from big corporations and put it in the hands of the productive people in the world.”
In 2005, Frei co-founded Smartsheet with exactly this aim. And he knew a little something about business software and team management. The former Dartmouth College defensive lineman was the founder of Onyx Software, a customer relationship management firm that was bought by M2M Holdings for $92 million in 2006. He did a two-year stint in policy and licensing at Bellevue-based Intellectual Ventures before turning his full attention to Smartsheet last year. The startup has raised more than $4 million from Madrona Venture Group and other investors.
Frei sees the landscape of team management shifting—and that’s where the opportunity lies. “In the work environment, we’ve had outsourcing. The big typical things like research, call centers, or legal language,” he says. “But it’ll happen more and more when two things come to fruition. One, the ability to market your services, like Amazon’s Mechanical Turk. And two, the management once it’s done.” Managing outsourced projects with far-flung teams, he explains, is the “holy grail…People haven’t been able to do it.”
That would include Smartsheet. In 2006, the company launched its first product, but it didn’t catch on. “We collected a ton of data, did lots of user testing,” Frei says. “We learned a bunch of our core concepts were absolutely right, but our product was too hard to use. So we threw it all out the door and spent last year rebuilding the product entirely. Now it’s available with one-third as many features.”
Smartsheet relaunched its software last month, and it targets everyone from marketing managers in Fortune 500 companies to product managers and recruiting managers, to CEOs of 10-person startups. Frei says his company paid particular attention to the structure of people’s work, the order in which teams perform their tasks, and who communicates with whom. Also crucial is that customers who use Smartsheet’s software can work with clients and partners who haven’t adopted it. “We turn what used to be a spreadsheet into a super-collaborative tool,” says Frei.
Frei says Smartsheet has several patents pending around its technology. The company, which has 11 employees, is not profitable yet. Frei’s official title is executive chairman, “which means I work for free here every day,” he says. Looking ahead, word of mouth among small business consultants and gurus in particular areas like virtual assistants and trade-show management will go a long way towards making Smartsheet profitable, he says.
Lastly, I asked Frei about the broader advantages of outsourcing in the current climate—and how that could help Smartsheet. “For businesses, it turns out to be better because they get a better product faster, with no overhead of management,” he says, adding that that’s where Smartsheet’s software comes in. “It’s a good opportunity for small businesses to start out. Companies that are downsizing are going to need specialty services, and will end up outsourcing. There’s high probability that capital investment will contract, so a lot of businesses will look to lessen their fixed costs over the next 12 months. That means primarily people. The potential silver lining is that a lot of those companies will still need specialty services, so super-productive people will have an opportunity to start a business and make more money as a specialty service.”
