New Business Model: Primix

After targeting the software market, Primix has pegged its Internet-services hopes on a vertical-market strategy.

Services Turnabout While many integrators frolicked in the easy money of the Web craze, Primix was enduring what euphemistically could be called a character-building experience.

The company, which went public as OneWare in 1996, hoped to make its money in Web-enabled application-development software but soon found the product business wasnt all it was cracked up to be. After Avix Ventures LP bought a majority stake in OneWare in 1997, the new management determined that the companys product was overly complicated and too early for the market.

What to do? "We had a heroic systems-integration team, and we decided to build a company around that," recalls Michael Troiano, president of Primix. OneWare shed its products, renamed itself, and plunged into integration services.

"Its been hard for us," he says. "We were never one of those media darlings."

But when the New Economys bubble burst, Primix found itself in better shape than some of its formerly high-flying rivals. The company, Troiano says, had a "business-development model that didnt depend on the phone ringing. We had a cost structure that didnt require bill rates in the $300 [range]. We find ourselves hitting our stride as others are struggling."

Vertical Strategy The companys services transition has generated top-line momentum, Troiano notes. Primixs revenue increased 149 percent from 1998 to 1999 and roughly doubled in 2000. Now the companys goal is to achieve profitability. To that end, the company has embarked on a niche strategy.

"The path to profits is to focus on verticals," says Troiano, who adds that the 264-employee, $21 million company isnt large enough to be a generalist.

Although many Internet integrators are running toward vertical markets, Primixs strategy is to pursue a more granular path. The companys differentiation plan is to offer "a specific solution defined around a specific problem around a specific vertical for a specific region," Troiano explains.

Primix, for example, has developed knowledge-management solutions for media and market-research companies. Other verticals include manufacturing/ distribution, financial services, retail/ consumer and pharmaceuticals.

In terms of profit progress, Primix last month announced a Q1 pro-forma net loss of $638,000 compared with a pro- forma net loss of $1.9 million in Q1 2000. The company predicts a pro-forma net loss of between $400,000 and $0 for Q2.

Primix aims to reach profitability "as soon as possible," but acknowledges that the economy is cause for concern. Primix, however, has some experience with difficult transitions.