Tom McLeod founded McLeod Software in 1985. Rusty Watkins joined the company in 1986 and continues to serve as Executive Vice President and Chief Information Officer.
What do you remember about the early days of McLeod Software?
Tom: When the company first started, it was just me. At one point I had a programming contract that would require all of my attention for four months. I knew that I could sit down and do it, but after that was done, I would essentially be out of business, because I wouldn’t have any time to go out and generate business. The other option was to hire someone to help with the programming, which would allow me to go out and try to sell the next deal. That’s what I did, and the rest is history. I focused on bringing in people and looking ahead to the next month.
Rusty: At the start there were only a few of us and everybody did everything. Each of us needed to know how to support the product, how to train on the product, how to sell the product, and how to develop and design the product. It was definitely not a boring time.
So many new businesses fail in the first few years. What allowed McLeod Software to survive?
Tom: We had the good fortune of starting the company at the right time. The use of computers in business was increasing rapidly, especially with small and mid-sized businesses, which was our target at that time. If we had started five years earlier or five years later, I don’t know if we would have been successful. Timing is essential. Part of it depends on you, and part of it depends on things you have no control over.
Do you have a business philosophy that has guided you over the years?
Tom: I came up with three basic rules for business success. The first is “Spend less than you take in.” You must be fiscally responsible. As long as you make more money than you spend, you get to keep playing the game. The second is “Do what you say you’ll do.” Your customer has an expectation, and if you can deliver on that better than your competitor, then you will win in the marketplace. The third is “Know what you’re doing.” You’ve got to be good at what you’re doing. There were 50 or 60 regional players developing software for the trucking industry in the late 80s and early 90s, and many of these didn’t succeed because they failed to follow one or more of these rules.
I later added a fourth rule, which is “Treat everyone—customers, employees, and vendors—with respect and dignity.” Following this rule alone won’t guarantee business success, but it does help. Your people stay longer, you keep your customers longer, and your vendors work with you better, if you treat them right.
Rusty: Tom’s rules may seem overly simplistic, but they proved to be essential to our success. I think there’s one more rule that has helped us succeed, and that is, “Don’t be afraid of innovation.” Tom has always encouraged people to try out new things. He wants people not to be afraid of taking reasonable risks.
In the late 90s, you decided to make the rewrite all of the software code from the ground up in a new language, Java. Why did you make this move? Was it a nerve-wracking transition?
Tom: We were having success with our product in those early years, but it was a character-based, green-screen application. It was obvious by the early-to-mid 90s that everyone was moving to graphical user interfaces—Windows look and feel. We started evaluating technologies, and our first move was to get our dispatch system ready to go in 1998 in a language called Delphi. Our plan was to rewrite one module at a time, and build it on top of our old database, but something new developed in the computer programming world around that time. The entire market was moving to support a platform based on the Java programming language. We decided to stop the Delphi-based project and start over, which was a bold move, but we wanted the platform that would enjoy the most support from the industry, including all of the vendors. It helped that business was fabulous in the late 90s. Extra sales were being driven by Y2K. We were so busy with meeting demand for our products that we didn’t get started in earnest with rewriting everything until the spring of 2000.
It was nerve-wracking, but mainly because it was taking much longer to do the rewrite than we had predicted. We underestimated the amount of time it would take. If I had been told how long it was going to take, I would have said, “Just shoot me now. We’re never going to make it.” But we hung in there. We had great staff managing the development. We revamped our entire development process, including some wonderful improvements in the way we do design work, testing, and quality assurance. That put us on a sound footing for the years leading up to today, as we’ve continued to build out a very robust product.
Rusty: We were confident that we were making the right decision technically, because we had spent so much time doing the research, but we were in the midst of a down market in the early 2000s. The challenge was surviving on the current product in a down market while you’re putting so much company time and energy into developing the new product. It can be nail-biting. The anxiety was less in the product itself and more in the market. Are we going to be around to see this new version? We did manage to squeak by and come out in a positive way on the other side.
What are the company’s biggest achievements over these thirty years?
Tom: I’ve proud of the fact that we’ve been able to create a good working environment that has attracted such a wonderful group of people to work here. A significant number of the people on our staff have worked here for many years. I’m also honored by the customers who have stayed with us for so many years. We have a very high retention rate.
Rusty: The company has grown substantially, and our growth has been almost entirely organic, as opposed to growing through the acquisition of other companies. I think that underscores the quality of the products we’ve made all these years and the way we’ve conducted business.
What do you see ahead for McLeod Software?
Tom: I have the lofty goal of wanting to structure things so that the company is able to carry on the tradition of high standards, high service, and the highest quality products for years to come.
Rusty: The main thing as we move forward is to keep to our principles. As we grow larger, we don’t want to lose that sense of family, that personal touch that we have always had at McLeod.