Internet firm keeps marketing in mind
Philadelphia Business Journal - by Peggy Salvatore Special To The Business Journal
With about 90 small internet service providers in the Delaware Valley, SNIP's founders had to tailor their services just right to break out of the pack.
When one of SNIP's founders, Pete Cava, looked around him in 1995 at what other ISP's were doing, he found that most were mom-and-pop shops run out of their homes.
No marketing. Limited equipment. Minimal service.
"There were a lot of UNIX hackers in their basements," Cava said.
To become top dog, SNIP needed to apply some basic business techniques.
Cava read some marketing books, and the founders invested in people, equipment, and wrote what they hoped was a solid business plan.
Today, Cava and his two founding partners, Anthony and Phil Abate, are expecting to bring in $3 million in revenue this year, a figure based on monthly income to date. Within a year or two, Cava expects SNIP to top out at $5 million.
That growth earned SNIP the No. 2 spot on this year's list of the 25 fastest-growing privately held companies in South Jersey.
That growth also attracted an investor recently, who bought 16 percent of the company for $1 million. The investor's analysis of SNIP put its current value at $5 million, factoring in some multipliers, including the Federal Communication Commission's recent approval to become a local phone service provider.
Electrical engineers by training, the three founders took their vision for SNIP several step farther than the mom and pop-ers.
Cava said most of the small ISPs can handle no more than 1,000 customers because they are doing it by themselves with limited space and limited office support to do the administrative work and billing necessary to function.
For many, it is a part-time job, bringing in an extra few thousand dollars a month.
SNIP's founders wanted to become South Jersey's largest internet service provider; it was a vision they have now achieved. The company plans to move to a 12,000-square-foot facility in Pennsauken Sept. 1 to accommodate its growth.
Cava points out that while SNIP is the largest ISP in South Jersey, locally it still trails behind Voicenet of Ivyland, Pa., and regionally, Erols, which services the East Coast from Maine to Virginia.
Online service providers like AOL are, of course, even farther ahead.
Like other ISPs, SNIP still fights the stigma of being a direct access line to the Internet, which spells "user unfriendly" to the uninitiated.
Cava said the big online service providers force users to dial into their system, which only then connects them to the Internet. But that indirect connection to the Internet is much slower, and a user is paying a premium for the bells and whistles supplied by the intermediary, Cava said.
In any case, the FCC's approval to become the first Competitive Local Exchange Carrier based in South Jersey provides SNIP with a huge competitive and economic edge over other ISPs.
With 8,000 customers a month using nearly 1,400 phone lines, SNIP's phone bills were a huge expense, at $60,000 to $70,000 a month. No more. As its own phone company, SNIP expects the ledger to look much more favorable because it will be supplying its own phone lines.
As for customer service, Cava says SNIP's customers should rarely, if ever, find themselves unable to access the Internet.
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