WebFilings: An Idea Whose Time Has Come

webfilingsLast night I attended the New Hampshire High Tech Council Entrepreneur Forum and discovered through Bobby Touran of ApplyKit that I was again lagging.  Email is dead among teens, and texting rules.  But wait!  There’s something new:  an app called Kik, which all the teens are using.    I haven’t used it yet, but it purports to be a smartphone messenger with a built-in browser.  As in, surf the web without ever leaving your messenger.  For those who are curious, ApplyKit is a poor kid’s Naviance.  Naviance is purchased by schools to guide their students through the college applications process.  ApplyKit is accessible by individual students, no matter their affiliation or school.

Now on to the main subject:

Every once in a while, I come across a company that grabs my attention.  As in “This is neat!  Where did this come from?”  and “Why don’t I know about it?”

This weekend, as I was researching the Rearview Mirror, the biotech company I was researching was profiled for having used WebFilings LLC to prepare and file their S-1 (IPO) with the SEC.  The article talked about how said company had saved a significant amount of money by avoiding the financial printer.  Think of lots and lots of edits in a document and $30 per change when you’re at the financial printers.  The article, which I can’t find, talked about a $500,000 financial printing bill, which is OK if the deal gets done.  And sinks the company if the deal doesn’t get done.

Doing a bit of research, I discovered that WebFilings is based in Ames, Iowa.  Ames, Iowa?  You’re kidding.  I thought these types of companies were the exclusive domain of California, New York City and Boston.  Maybe add in Dallas or Houston, Denver, and if you really stretch it, Chicago and Minneapolis.  Not Ames.

But there’s always a story.  Turns out, the management team had founded Electronic Animations Inc. (“EAI” )in the 1990’s, also in Ames, Iowa.  According to Wikipedia, “EAI got its start in 1990 by providing consulting for lawyers and expert witnesses and producing animations to help illustrate technical testimony in the courtroom.”  Later on, EAI developed and released 3D interactive visualization software packages.  Eventually, the company became the largest independent game developer for publishers such as Sierra On-Line, Electronic Arts and Hasbro.  EAI also burrowed into the medical and scientific illustration market, with a variety of 3D interactive educational products, including the The Dynamic Human for McGraw-Hill.  The Company was sold in 1999 to Unigraphics Solutions, an EDS spin-off.

Full speed ahead to 2008 when the band got back together and WebFilings was founded by the EAI  team, also in Ames Iowa.  My guess is that the founders had a three year non-compete, and then went on vacation for five years.

What’s so special about Ames Iowa?  If you look a little closer you’ll see under three percent unemployment, and a lot of activity:  Iowa State University, 3M, Danfoss and WebFilings.

OK, now I understand the genesis.  If you can create complex 3-D systems, you know a lot about matrixes, databases and different codes, formats and structures.  And if you’ve been preparing documents for court cases, you know a lot about what that market requires.

WdeskThe WebFilings’ target customer has a job to get done:  compliance reporting, risk reporting, management reporting, and sustainability reporting.  As a filer of compliance documents, I can attest that none of that stuff amounts to a lot of happiness.

Another confluence of factors is that all of these filings are going or have gone digital.  BLP Advisors is now going through it’s FINRA audit, which is on a three year cycle.  For the prior audits, I received a call from our FINRA auditor, received a document request list and three weeks later physically handed him a file box full of those requested documents.  This time, I downloaded my document request list from the FNRA Gateway on  an Excel spreadsheet and then proceeded to upload all the documents to the FINRA Gateway.  No physical meeting, no hand off.  My interview is scheduled for two to three weeks from today.  It may have taken a while, but the digital/cloud/internet world is here, and everywhere and embedded in the process.

Hence WebFilings’ opportunity, and why their statistics are so impressive:

  • 1,900 customers;
  • includes 60 percent of the Fortune 500;
  • Released on mobile devices; and an
  • Enterprise solution

These guys (WebFilngs) are attempting to dis-intermediate the financial printing industry, which is a huge, incredibly profitable industry.  For those of you who haven’t had the pleasure of spending the night proofing and waiting, proofing and waiting, and proofing and waiting at the financial printers, you aren’t missing anything except the food:  M&M’s and lots of takeout.

There comes a point at the printers, where everyone is cranky and the CEO stands up and gives an angry impassioned lecture about how much all those change/corrections are totaling.  That’s the point when you know that you’re close to the end—or better be.

Say goodbye to RR Donnelly and Merrill and hello to WebFilings.  As with all of these incredibly high margin businesses, we knew it was too good to last.

Margaret Johns

Sources:  Forbes, Wikipedia, Company websites