WebFilings relieves the 'pain' of SEC filings
Saturday, May 08, 2010 7:00 AM
Matt Rizai, front right, CEO of WebFilings LLC, has assembled a leadership team that includes Randy Califf, front left, senior product manager, and in the back, from left, Dan Murray and Mike Sellberg, managing directors. Photo by Joe Gardyasz
Matt Rizai is among the tens of thousands of entrepreneurs who know how incredibly difficult it is to launch a successful start-up software company. But he and his partners are also part of a much more exclusive club: those who know what it's like to take a technology company through an initial public offering and build it to about $110 million in annual revenues.
Now, some 20 years after they started Engineering Animation Inc. (EAI) at the Iowa State University Research Park in Ames, Rizai and other former EAI principals have spearheaded WebFilings LLC, a software company with a product that just might hit another one out of the park.
WebFilings, which has its headquarters in Los Altos, Calif., but the bulk of its employees in Ames, has developed a software program that automates and streamlines the production of reports that publicly traded companies must file with the U.S. Securities and Exchange Commission (SEC). After testing its cloud-based filing program with a half-dozen publicly traded companies last year, among them FBL Financial Group Inc. and Meredith Corp., WebFilings announced a nationwide launch of its software product on March 23.
"If you can put together a product that takes care of a customer's pain, then you've really got something," said Rizai, WebFilings' CEO.
For publicly traded companies, that pain comes quarterly when text documents and spreadsheet-based financial reports must be merged, laboriously cross-checked and converted into standard formats required by the SEC. Mix in the new SEC requirement to data-tag the entire filing using eXtensible Business Reporting Language (XBRL), and you've got the kind of chaos that customers will pay handsomely to resolve, Rizai said.
"We interviewed dozens of companies, discovered many common reporting issues and developed a unique, cloud-based solution that streamlines the entire reporting process," Rizai said. "Our product is like nothing else on the market today."
FBL Financial, which helped test the software by using it to file its third-quarter SEC reports last fall, last week released its first-quarter SEC filings using the subscription service, its third reporting period in which it has used WebFilings.
"I think (FBL executives) were hesitant about showing it to us and starting something new," said Carrie Dostal, life accounting manager for the West Des Moines-based financial services company. "But we took a look at it and saw that it was something that was really going to give us some benefits. So we were willing to take that little bit of a scary leap to be a beta customer of theirs."
Dostal said she and her colleagues are "very happy with the efficiencies we have gained."
"A couple of things that specifically helped us is that we can have multiple people editing the document at once," she said. "Before, we had to share one Word document. Also, there is a workbook where you put all your numbers, so you can enter a number just once and it goes to all the places. That also means that if you update the number, which happens frequently, you're sure that it gets updated everywhere."
The headaches customers faced related to SEC reporting are very similar to the communication and collaboration needs that EAI's software addressed for automotive engineers, Rizai said. With EAI's three-dimensional visualization software, engineers and designers were able to work on a nearly real-time basis in different locations, sometimes different countries.
"When you think about the SEC filing process, isn't that the same thing?" he said. "You've got a diverse group of people who need collaboration and communication as they're working on one product. We thought, 'This is just like what we used to do.'"
WebFilings, however, enjoys an advantage that took years for EAI to develop: a ready market in which its technology will have immediate traction. EAI began by developing special-effects software for Hollywood studios and later got into courtroom accident re-creation for the legal profession before it found its niche in engineering software for the automotive, aerospace and manufacturing industries.
Though WebFilings is getting many suggestions from its customers to enhance the product that could send the company off in 10 different directions, the founders' EAI experience cautions them to be patient.
"At this point, we're saying, 'If we try to do all that, we'll go out of business'" Rizai said. "We have other markets that we want to go into, but we don't want to go in too many different directions at once." However, it would be "a very natural reaction when the market tells you how good you are."
By using cloud-computing technology, WebFilings has saved between $2 million and $3 million in hardware costs it otherwise would have incurred to purchase servers to host its online system, Rizai said. And its customers also benefit from the technology, because the software-as-a-service model does not require any capital expenditure on their part, just a quarterly subscription fee.
In January, WebFilings received a $500,000 award from the Grow Iowa Values Fund to provide funds for product marketing, direct-sales support and customer support. In return, WebFilings pledged to create 61 new jobs and retain six existing positions. The company currently has 40 employees in its leased space at the ISU Research Park, within sight of the 100,000-square-foot building that once housed EAI.
EAI had about 1,200 employees in 21 offices worldwide when the partners sold the company in 1999 to Unigraphics Solutions Inc., which later became a subsidiary of Electronic Data Systems Inc. Through a series of subsequent acquisitions, much of the former EAI is now a part of Siemens USA.
Rizai, who with his partners has a significant amount of his own money, not to mention reputation, staked in WebFilings, won't discuss their marketing strategies, other than to say it's using a direct-sales approach. "If I tell you too much, I might as well cut my own throat," he said with a smile.
"It's a very sticky product; once you use it, you'll stick with it," he said. "Right now, we're pushing the market. In two years, we'll be pulling the market - they'll be coming to us."