[nukkad] `Discipline, patience and humility' help software firm's founder turn the corner

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 "All great deeds and all great thoughts have a ridiculous 
beginning." - Albert Camus 
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Boston Business Journal

>From the May 12, 2000 print edition 

No longer behind the 8 ball
`Discipline, patience and humility' help software
firm's founder turn the corner



Gary McNamee can recite the lines to his favorite
movie by heart. He learned the script to "It's a
Wonderful Life" during the many sleepless nights he
sat watching as the movie's protagonist,
down-on-his-luck George Bailey, brought McNamee's own
real anxieties to life on the small screen. 

The late-night TV viewings came after the Internal
Revenue Service showed up on McNamee's doorstep, and
before his electronic payment company inked a deal
with payroll industry giant Automatic Data Processing
Inc. (ADP) of New Jersey. 



Today, McNamee truly has a wonderful life, in which he
oversees 12 employees and a client roster that
includes General Electric Co. and Motorola. But only
three years ago, such an ending would probably have
seemed too far-fetched to even the most creative
Hollywood director. 



McNamee, 36, is founder of IPS of Boston, a software
company that makes paper-based and electronic
applications for corporations. Last year, the
privately held Braintree company brought in $691,000,
and this year is on track to make $2.2 million,
McNamee said. Four years earlier, its founder
defaulted on the 23 credit cards he used to finance
the business. 



His story is one of determination and faith. Unaware
he suffered from attention deficit disorder, McNamee
slugged it out through four years of low grades at
Westfield State College, studying accounting, computer
science and philosophy. He graduated in 1986.

His unflagging belief in himself showed through even
then, epitomized when he ran the 1986 Boston Marathon
on a dare following a week of training. 



After working as a bartender, bookkeeper and printer
salesman, McNamee seized on opportunities in the
fast-growing laser printer industry and in 1988
started a company called Laser-Fax to produce custom
font work. McNamee even dressed his only employee, his
father, in a rented uniform to create the perception
that his was a company to reckon with. The
gimmick--and the hard work--paid off, and McNamee
bootstrapped the company up to $100,000 and 23
employees before selling it in 1994 for an undisclosed
amount. 



McNamee used some of the profits to splurge on a
six-pack of beer and a pizza to celebrate with his new
bride, Gladys. At the time, he figured it was only
fair. The year before he cajoled her into spending
their honeymoon at a trade show in New Orleans, where
he went to research a foray into the electronic
payment market. McNamee eventually sunk the remaining
profits from the sale of his Laser-Fax into IPS, a
company that existed in name only since 1992. 



The idea for IPS came from his work in the laser
printer industry, when McNamee noticed customers were
using special printers to create checks from blank
paper. Such printers were very expensive, so McNamee
decided to create an application that would allow
corporations to print checks on any type of printer.
He took the idea to software designers who developed a
product that produces checks from blank paper and also
creates electronic payments. 



But McNamee quickly burned through his start-up money
and, after raising $100,000 from credit cards, made
what he called the "toughest decision" of his life. He
asked his retired father to take out a home equity
loan. 



"That was extremely hard, but I had a tremendous faith
in what we were doing. I knew this market was huge." 



In fact, the market for electronic payment software is
a very fast-growing one, according to Albert Pang,
e-commerce analyst International Data Corp. of
Framingham. 



"All these customers are growing by leaps and bounds,"
said Pang. "There is a lot of demand for these
products." 



At the time, however, McNamee's was a little-shared
vision, and in April 1997 he hit his low point when a
trench coat-clad IRS agent appeared at his door
seeking back taxes. By that point, he could no longer
meet payroll for his seven employees. 



But then, true to Hollywood fantasy, "everything just
started to click," McNamee said. 



"I was working really hard for every deal, but I got
realistic in terms of what we were capable of doing. I
went for the $8,000 and $10,000 deals rather than
$100,000, and the sales cycle got faster." 



IPS soon acquired a roster of high-profile customers
including Suffolk University, which uses IPS software
to print its own accounts payable and student refund
checks. 



"The checks look 1,000 percent better," said Susan
Scott, senior programmer analyst for the university.
"We had pin-fed, multilayer checks where we would have
to rip off the edges and needed a check signing
machine. Now, you get a sheet of 8-inch-by-11-inch
paper already perforated so when you mail it to a
company, you fold it and it rips right out." 



McNamee's big break came in 1998, when he was
contacted by payroll bureau ADP to devise a way for
its clients to print their own checks. During
negotiations that lasted for more than a year, McNamee
once more dipped into his faith reserves. Since the
timeline was tight, IPS had to do the development work
while the deal was being negotiated. 



"There was no option B, no contingency plan. I bet the
farm," he said. 



The gamble paid off, and IPS this past week announced
a multilayer contract to incorporate its software into
ADP's products. The first release is due this month,
along with an IPS product called DoubleCheck that
helps companies reduce their exposure to check fraud. 



To celebrate, McNamee took his wife on a legitimate
honeymoon in St. Martin and paid off all 23 credit
cards. But even in his finest hour, the lessons of the
entrepreneur's struggle continue to resonate. When
McNamee recently went to buy his wife a new luxury
car, dad had to co-sign. 



"I've learned discipline, patience and humility," he
said. 




© 2000 American City Business Journals Inc.







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