CommTools serves up conferencing menu

BOULDER — A couple years ago, if you only had $150,000 and wanted to get into the rapidly growing high-tech corporate communications market, you’d be like the skinny kid on the beach trying to compete with the guys who could bench press four Baywatch lifeguard chicks.

Traditionally, the world of 90s corporate communications — Internet, videoconference and satellite delivery systems — has belonged to the boys with hardware, hardware and more hardware. AT&T, Sprint, MCI and national conglomerates like Frontier Videoconferencing and Kinko’s dominate the videoconferencing market, while communications giants like United Artists control the meetings-via-satellite niche.

The reason is price — it costs millions of dollars to buy satellite systems and ISDN videoconferencing systems. But since the advent of national and statewide telecommunications deregulation, the market has been opened to resellers.

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One of the pioneers in the reseller niche is Boulder-based CommTools Inc. Local entrepreneur Don Hobbs started the company last summer with $150,000 in seed money and an office in a converted horse barn adjacent to his house.

Hobbs’ hardware investment is two computers and an office stereo system. “Exactly all the business is, is organization and service,” he says.

Hobbs found hids niche in the corporate communications world after a three-year stint at United Artists selling a meeting-via-satellite concept. UA and other large theater chains market a nationwide satellite hookup broadcast in their theaters around the country.

The benefit to the theater presentation style, Hobbs says, is comfortable seating, lots of space, plenty of parking and central locations, since movie theaters dot the American landscape.

The format usually is used by large companies that want to introduce a new product or image to as many people as possible at the same time. For instance, XYZ Pharmaceuticals is launching a new drug, and it wants employees, customers and media nationwide to see an hour-long presentation with a message from the president, pictures of the new drug and demonstrations of how it works.

XYZ contracts with a large theater chain like United Artists, which not only owns the venues, but has a substantial satellite hardware investment. But there are problems inherent in that system, Hobbs discovered.

Say XYZ isn’t that big of a company or doesn’t need to reach that many viewers. Theater satellite programs are pricey, Hobbs says, with a minimum cost of about $50,000, which could skyrocket to $600,000 or so for a multi-venue program.

XYZ may want to go with videoconferencing, which is usually held in conference rooms via TV monitor. Or it may want to deliver its program via the Internet. The images won’t be as high-quality, but the price is much lower.

At United Artists, Hobbs had one option — satellite theater systems. At CommTools, he offers three options — satellite, videoconferencing and Internet.

“You can’t build a house with just one tool, and you can’t meet all of your corporate communication needs with just one delivery system,” he says.

What Hobbs offers is service. For instance, one of his clients is a large mall operator that wants to have a retailer appreciation event. As part of the CineSat arm of his business, Hobbs has agreements with about 500 theaters — including Boulder’s UA Village theaters and Louisville’s Mann theaters — to rent space for satellite presentations. Rates go for $600-$1,200 per venue per program.

He also has arrangements with satellite delivery brokers to buy time, usually at a rate of $1,500 per hour.

He can steer clients toward studios and production people in their cities, if they need help filming the program they want to present. He contracts with local caterers in each city where the presentations will be held, to make sure there are refreshments before and after the program.

And his specialty is attendee management — sending out invitations, collecting registrations, mailing advance material, collecting fees, checking people in, making sure they know where to park, and forwarding fees to the sponsoring company. It’s a big job — some of the presentations can have more than 70,000 participants.

“In many ways, I work in a virtual environment,” he says. “I’m a virtual team — an advertising specialist, a satellite specialist, a caterer.

“I realized it doesn’t become what you own, but what you can manage.”

CineSat is the “big hit” component of his business. Hobbs’ financial goal for 1998 is $500,000 gross, with CineSat presentations bringing in half of that money. Four presentations should pull in around $250,000, he thinks.

The other quarter million dollars is scheduled to come from Internet communications. Hobbs has a reseller agreement with Littleton-based Broadband Associates Inc. The company has developed M.Show, a proprietary software that allows interactive video and audio broadcast via the Internet.

M.Show, which delivers graphic content rather than face-to-face interaction, works on any computer with a modem speed of 28.8 kilobits or faster. It works well for companies that aren’t wired with T-1 or other high-speed communication lines.

It’s also cheaper than satellite or videoconferencing — $80 per connection per hour, with an average of six to 100 connections per show.

M.Show works well for training sessions — one of Hobbs’ clients is Lexicor Medical Technology, which hosted an Internet biofeedback training for instructors around the country. He’s also working with the National Investor Relations Institute, which wants a real-time, interactive way to describe its new investor vehicle.

Hobbs’ target is a minimum of one show a week by the end of the first quarter 1998, moving up to a show a day by the second quarter.

Boulder has few companies large enough to contract for Hobbs’ CineSat services, but it’s a hotbed for M.Show, Hobbs believes. While big companies will go ahead and buy Internet communications hardware like Microsoft NetWare — at $5,000 to $15,000 per viewing station — smaller companies don’t have the presentation volume that makes it fiscally sound to fork out that kind of cash.

Those companies are Hobbs’ customer pool. By year’s end, he’d like to have a client base of 50 to 100 throughout the Front Range, he says.

Also in 1998, Hobbs is planning to hire an event manager/operations director and an administrative support person. He’d also like to have a videoconference partnership with a Boulder company to get the videoconference arm of CommTools started.

One local company, Link VTC, was bought by Rochester, N.Y.-based videoconferencing giant Frontier Videoconferencing in December 1997, and changed its name to that of its new parent company.

According to Frontier Manager of Product Strategy Matt Fuller, the videoconferencing/multi-point bridging market saw 80 to 90 percent growth in the last year. Competition is growing, but is limited to big players who can buy the necessary equipment.

But for a reseller like CommTools, Fuller believes the market is wide open.

“If I were going to start a business tomorrow, it would have that kind of reseller element in it,” he says.