How We Got Started
From concept to company and beyond
1. Early History
The challenges of running a small software business and losing contracts to someone’s nephew
The parent company of the Knowland Group was a small software engineering firm now named Knowland Holding. Founded in 1998 by Mike McKean, this company had its ups and downs. The dot-com bust, September 11, the economic downturn in 2002 and 2003, the advent of the global outsourcing boom, all had adverse affects on a small IT company trying to get itself off the ground. But of all of these challenges, the biggest obstacle seemed to be that it was constantly competing for business on an uneven playing field.
The firm would generate proposals for companies seeking IT services, spend numerous man-hours getting everything right, even ensuring their price was lowest, and still not win the business. It’s a story very familiar to many small business owners. You respond to numerous RFPs and feel you should win, but come to find out later, the fix was in. The contract gets awarded to a company owned by someone’s nephew. Or the company really just wanted to see the proposal so they could do the work themselves – kind of a free research service. Sometimes it was all for show. People had to give the appearance of competition before they awarded the business to a family member, relative or friend.
2. Introduction to the Reader Board Business
The work that laid the foundation for our current products
In this challenging environment, Knowland was approached by a consulting company to help them find back office processing (BPO) vendors offshore. The initial task involved the world’s largest hotel reader board service. A hotel reader board service is a competitive field research service for the hospitality industry (see What is a Hotel Reader Board Service?).
In addition to data entry, Knowland was to find vendors who could carry out fairly complex market research. The main task involved determining the name and phone numbers of meeting planners who had booked specific events in a hotel. This reader board company, with hundreds of clients and dozens of employees, was far larger than Knowland. This was an exciting prospect.
Over the following three months Knowland did extensive work to develop a better way to run a hotel reader board service. A detailed statement of work (SOW) was developed to be shopped to dozens of vendors. The SOW included details on completely new concepts, heavily reliant on web technology, to ensure the reader board business would operate faster and smarter than it had ever dreamed possible and could scale up to thousands of records per day.
Dozens of BPO vendors were researched. Exhaustive reference checks were carried out. Test cases were conducted. Quality assurance processes were given trial runs. Pricing was negotiated. Terms were fought over. All was done in the hopes of being awarded the contract to assist this reader board business become a truly great company.
At the end of the three month period Knowland submitted a highly detailed, extremely extensive proposal to the large reader board company.
3. It Happens Again…
Saying ‘enough is enough’ and putting your money where your mouth is
For lack of a better technical business term, the reader board company blew Knowland off. Emails were not returned, phone calls went unanswered, voicemail was not responded to. After a massive amount of work, far greater than Knowland had ever exerted on any proposal or RFP process before, the reader board company was non-responsive to all overtures.
It seemed at the time that the only logical explanation was that the firm never intended to work with Knowland in the first place. Regardless of the overwhelming merit behind the proposal the firm was uninterested.
At this point Knowland decided enough was enough. They had developed truly original and unique methodologies to create the world’s greatest, fastest, most accurate reader board service and they didn’t want to see the work go to waste. So in the summer of 2004 Knowland conducted a number of test cases in the Washington metro area. Directors of sales were visited, reader board data were recorded and sample reports generated. And on September 1 the business was launched with two clients.
4. Launch
The excitement of having a product that creates ‘buzz’….
The going was somewhat slow at first. By the end of 2004 the firm had five clients. But slowly something began to happen. Forward thinking hoteliers became excited. In April of 2005, a great hotel management company flew Knowland to their annual sales and marketing meeting to give a presentation on their new service. Every one of the company’s hotels committed to signing up. Then another management company did the same thing. A major brand was interested in signing up all of the properties for their new select service offering.
And slowly, word was spreading amongst hoteliers in the Washington and Baltimore markets. The feeling was palpable. People were excited. Hoteliers were calling and saying they had heard about Knowland’s new offering and wanted to see this new product for themselves. By the end of April 2005, nine months in, Knowland had 12 clients, but verbal commitments for many, many more.
5. Potential Disaster
Nasty letters and potentially crippling legal fees
Then a very scary thing happened. On May 2, 2005, just as the small software firm that had morphed into a small reader board company was taking off, a threatening letter came via registered mail. The original reader board firm who had refused to return Knowland’s phone calls had hired a lawyer.
“This letter is to inform you that you must stop your sales and marketing efforts in the reader board industry immediately….If I do not hear from you by May 10 I am prepared to file with the court the appropriate legal proceedings to prevent you from going forward” it said.
To say the founders of the company were scared would be an understatement. Regardless of the merits, the intellectual property attorneys Knowland first consulted requested a $100,000 retainer fee. The amount might as well have been a billion dollars. Things didn’t look good.
6. Knowland Decides to Fight
Our very own version of Erin Brockovich
But Knowland’s founders dug in. Mike McKean stayed up late into the night researching the legal issues at hand. His wife, a paralegal, offered him the login to her employer’s Lexus Nexus database after hours. Trade secrets, intellectual property rights, non-compete agreements, no matter how you looked at the facts, he was sure there was no case. The real problem was the cost.
Finally McKean found Knowland’s savior. A firm named Hankin Patent Law in Los Angeles which specialized in these types of cases. The small firm was run by a man named Mark Hankin, a big time corporate litigator from New York who spoke fast and swore casually. Hankin had moved west and opened his own practice in the mid 90’s. McKean loved him. Hankin heard the facts of the case and was incredulous. Of course there was no case. And he wouldn’t require a $100,000 retainer. Quickly he devised a plan and sprang into action.
Hankin prepared and filed a law suit on Knowland’s behalf within two days. The suit asked for no money. It simply asked the court to grant a ‘preliminary injunction’ against the largest reader board company in the world. Knowland asked a judge to declare they had done nothing wrong.
Over the course of the early summer of 2005 the lawyers went back and forth. Posturing went on. Arguments were made. Finally the owner of the reader board company agreed to sign a covenant not to sue. An agreement saying Knowland had done nothing wrong. It was time to compete in the marketplace.
7. Knowland Gets Big
Rows and rows of cubicles, Knowland becomes the de facto choice for reader board service
When the legal agreement was signed in July Knowland had a total of 22 clients. By the end of the year they had 100. By the end of the next year they had 400. Soon other reader board companies were claiming they were working on tools that would be ‘just as good as the Knowland Group’s.’
In 2007 the firm moved out of its 4 room office in downtown Washington to a 7,000 square foot location on the eastern shore of Maryland (the Knowland Event Booking Center). The company went from having 7 desks to over 70 cubicles, offices and work stations, a break room, parking spaces, vending machines, even, (the founders’ pride and joy) a fairly large training room. All of a sudden the small software company had now morphed into the largest reader board business in the world. With hundreds of clients and thousands of users in over 100 different markets, Knowland had become the de facto choice for reader board service for many hoteliers.
8. The Next Stage in the Company’s Evolution
The real fun - a belief in the power of data and how it can transform business development
Once the reader board business was in place, the company rapidly built up a database of virtually all the group meeting activity occurring in hotels. Tens of thousands of events per month, millions of events overall. The firm could see and track the activity of hundreds of thousands of organizations as they spent billions of dollars in hotels.
This database became the foundation on which the firm began to develop additional products and services. Based on the empirical knowledge it could deduce from this information, these offerings are poised to revolutionize the hotel sales industry.
For more information on these and all of Knowland’s innovative products and services, please visit the Products section.
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