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Twelve Horses balances invest and spend

John Seelmeyer

“We are,” says Twelve Horses North America President Dave LaPlante, “living comfortably beyond our means.”

LaPlante, who’s also the company’s chief executive, puts the emphasis on “comfortably.” He figures Twelve Horses quickly could scale back some of its research-and-development initiatives if it needed to book a profit.

Revenue growth that exceeds 300 percent a year further boosts his confidence that company isn’t living foolishly.

Even so, LaPlante and his team at Reno-based Twelve Horses North America increasingly look to build profitable business rather than merely adding more revenue.

The company, one of the highest profile technology outfits in the region, develops e-mail marketing programs no, not spam for customers ranging from Boeing to ESPN to PriceWaterhouseCoopers.

In the last year, LaPlante said the other day,Twelve Horses sought to answer three questions:

* Could the company sell its product? The answer from the marketplace was affirmative.

* Could the company service what it sells? Again, the answer was positive.

* Could the company book revenue from its sales? Once again, the answer was affirmative.

That leaves the fourth question: Can Twelve Horses operate profitably? And that question, in turn, will be answered only as the company balances the need for profitability against its need to invest heavily in development to carve out its position in a highly competitive marketplace.

Here’s what Twelve Horses does: Its core product, dubbed “MessageMaker,” allows companies to quickly develop and send customized and personalized e-mails within a matter of minutes.

More critically, the Twelve Horses system allows businesses to track what happened to the e-mail once it arrived.

Did the customer open it? Forward it? File it? Immediately delete it? It’s a niche market, but Twelve Horses executives say the niche is plenty big.

Forrester Research estimates that companies spent $1.1 billion on e-mail marketing in 2001, and Jupiter Research predicts that e-mail marketing messages will grow at a compounded annual rate of 111 percent through 2005.

The reason? AMR Research says finely- tuned e-mail campaigns can achieve seven to 12 times the response rates of traditional direct-mail campaigns.

Twelve Horses doesn’t limit its efforts to e-mail marketing.

Its system is used, for instance, by accounts receivable departments to contact overdue accounts, track customers’ response and automatically send follow-ups.

“We lead with e-mail,” said LaPlante.

“But it is only the tip of the iceberg.”

The iceberg increasingly includes larger amounts of technical service from Twelve Horses not because the pro-duct is unduly complicated but because the company’s clients have reduced their internal technical staffs.

And in that, LaPlante said, lies a growing opportunity for Twelve Horses.

“There’s still a real strong demand for talented professionals,” he said.

That demand increases, he said, as many of Twelve Horses’ customers deal with evermore- stringent regulations on protection of privacy and require higher levels of reliability in their systems.

Eighteen employees more than a third of the company’s worldwide staff of 52 are devoted to professional services, and the number is growing.

The attraction of the technical services business isn’t hard to see it provides a second steady stream of income to augment often-modest licensing fees that the company receives for its MessageMaker platforms.

(Some users pay as little as $149 for the most basic of the company’s software packages.) While Twelve Horses is a technology company, its financing is far removed from the dot-com wonders of the late 1990s.

Some of its debt, for instance, is secured by mortgages on its founders’ homes the sort of financing that keeps companies from giddy foolishness.

LaPlante, however, said he’s happy the company missed the excesses of the technology bubble.

“We skipped the party, but we skipped the hangover,” he said.

While Twelve Horses continues to invest heavily in further development of its core product, the company also is pushing hard to deepen its sales effort.

A major accomplishment in the past year, LaPlante said, was creation of a distribution network that targets value-added resellers of software along with end users.

The company these days operates sales offices in Las Vegas, San Jose, San Francisco and New York.

At the same time that it’s ramping up its sales effort, however,Twelve Horses keeps a close eye on the rising complaints about unwanted e-mail marketing spam, in short.

LaPlante said the differences between legitimate e-mail marketing and spam often is nebulous, and that means Twelve Horses puts effort into making sure it’s customers use the technology wisely.

“Without a doubt, we have no aspiration to be a spam company,” LaPlante said.

Twelve Horses North America the “North America” is important services North America, South America, the Pacific and Asia.

The rest of the world is served by a Twelve Horses office at Dublin, Ireland.

The Reno-based company and the Irish operation essentially work as sister corporations sharing the same holding company.

As a practical matter, La Plante said, the two companies sometime work following the sun European employees will work on a project early in a day, handing it off to American staffers as they arrive for work.

LaPlante and other key employees of the North American operation previously launched Aztech Cyberspace Inc., a Renobased company founded in 1994 to provide Internet services.

Aztech worked closely with Twelve Horses, and the two companies merged in mid-2002.

As part of that merger,Twelve Horses North America moved from Salt Lake City to the company’s current headquarters in the Reno Tahoe Tech Center in South Meadows.

Part of the company’s decision to locate in south Reno arose from the location of Redundant Networks and its highly secure data site just upstairs.

“We have to meet our customers’ expectations without failure,” LaPlante said.