Charlie Kroll, the CEO of Andera Inc., began his entrepreneurial career working out of his college dorm room when he was a student at Brown University, starting a boutique Web-development firm in 1999.
In 2000, he rolled that company into a new startup, Andera. Since then, Kroll has led its successful transition from Web development to marketing a software business model – perfecting a streamlined way to open new banking accounts online, an outcome Kroll accomplished without having to raise significant investor capital.
That transition was not without some bumps. “It was a four-year transition that seemed like 40,” Kroll told the Brown Hazeltine Entrepreneurial Network. “We needed that much time since we didn’t raise a lot of outside capital to finance the transition. Almost all of our initial product development, sales and marketing were funded out of Web-development revenue during that four-year period.”
The USA Patriot Act, which for the first time legitimized electronic identity verification as an alternative to traditional paper methods, proved to be a catalyst for Kroll, who created a vendor solution to capitalize on the huge market need – and opportunity – in the financial industry.
Today, Kroll’s Providence-based company, which markets software technology that enables banking customers to open new accounts online, recently signed up its 314th customer. Andera’s customer base is twice that of its nearest competitor, and includes household names such as PNC Bank and H&R Block.
Andera currently has 65 employees, and has doubled revenue for two consecutive years while maintaining positive cash flow. With research analysts such as Javelin Strategy & Research predicting that more than 50 percent of all new bank accounts will be opened online by 2015, the future looks very bright for Andera – and Kroll.
Kroll’s successful marketing strategy, he says, comes directly from “Crossing the Chasm,” Geoffrey A. Moore’s 1991 seminal work on marketing and selling high-tech products to mainstream customers.
“A lot of what we’ve done is taken right out of the book,” Kroll says from Pal Alto, Calif., where he says he travels to regularly to meet with partners and clients.
“One of the key points in the book,” he continues, “is when you are in an early phase, focus is a requirement. If you cast your focus too broadly, nothing sticks. By focusing on a small segment of customers, you have some chance of making it resonate.”
For Kroll, that was a decision to pare down the firm’s focus to a particular data processing system – Summit – which shrank his potential customer base from 16,000 to about 200. Then, after achieving initial traction, Kroll was able to replicate the formula, focusing on data processing systems that run the back end. Today, Kroll said, Andera provides online account-opening coverage for 14 of the 20 data processing systems in the financial industry.
As Kroll explains in a recent posting on Charlie’s Blog (charliekroll.blogspot.com; he posts about 3-4 times a month): “Andera’s early adopters and initial customers were primarily credit unions, while traction with banks took longer to develop. Over the past 18 months or so, despite market turmoil, we saw momentum among banks overtake credit unions. We now have more bank than credit union customers for the first time.”
Kroll, who says his blog helps “humanize” the company, believes in transparency. “It reinforces our company philosophy of transparency,” he says.
Andera, Kroll says, has been “somewhat insulated from the chaos” created by the recent turmoil in the financial markets. “The industry is moving from a technology platform to a solution platform to help banks acquire customers in the future,” he says. “The turmoil doesn’t change the bank’s need to acquire customers. It’s made our value higher.”
Kroll is no stranger to awards recognizing his entrepreneurial smarts. He has been named one of the 40 Under Forty by Providence Business News on three occasions. In 2005, he was named the Young Entrepreneur of the Year by the U.S. Small Business Administration for the New England region.
“It’s such a small place, there are not that many of us under 35,” he says, with a laugh. But, in terms of the “Rising Star Innovator” award, he continues, his voice turning more serious, “I’m accepting this on behalf of the company.”
“This is not just about me anymore,” he explained. “The company is only successful because we have such an incredible team. I’m here as a kind of proxy for my 65 employees. Our biggest asset is really people,” he said. “We don’t have inventory, we don’t make widgets. We have tremendous intellectual capital on our team. It’s the people who make the company successful.”
The 31-year-old Kroll sees his perspective evolving as the company matures. He certainly has been mentored – “You never grow out of the need for mentors” – but he is looking at it from the other side, too.
This summer, he served as a mentor in a 12-week summer program that helps to incubate very early-stage companies, taking them from concept to prototype, and then connects them to capital.
Kroll, who lives in Providence with his family, says he enjoys the creative process. “I’m always looking for new opportunities or better ways of doing things.”
“Company building is so creative, people don’t realize that. It’s really about taking ideas and making them work. It combines the pure conceptual – having a good idea – with the tactical skills to implement it. It’s both right-brain, left-brain, which keeps it very interesting.” •
