Central Desktop Inc.

Founded:

May 2005


Core Business:

Communication software for companies to use while working on team projects


Employees in 2006:

2


Employees in 2007:

6


Goals:

To grow the company into a marketplace leader in the area of team collaboration and workplace software


Driving Force:

The need for companies or teams of workers to have a centralized and easily accessible system for managing projects and tasks

When Isaac Garcia and Arnulf Hsu founded Central Desktop Inc. to provide Internet-based team collaboration services for companies, the business partners were already veterans in the world of Internet startups.

That was two years ago. The pair had previously founded two companies, an enterprise data company and a business-to-business Internet site, which they sold to the tech-focused media company Cnet in 2002. As part of that acquisition, both Garcia and Hsu joined Cnet Networks Inc.,where they remained until 2005.

Central Desktop’s primary focus is on creating a forum or depository where multiple people at a company can access files and documents. The services provide employees with an Intranet-type work environment without the extensive infrastructure costs normally associated with creating such a system.

It was during their three-year tenure at Cnet that Garcia and Hsu were first struck with the need for a Web-based service that would allow teams of workers or even entire companies to organize and access tasks, documents, calendars and other applications.

As director of North America enterprise sales for Cnet, Garcia was responsible for the company’s enterprise deals with Google, Yahoo and other leading technology companies. One of the projects he oversaw involved the worldwide launch of Microsoft’s Windows Marketplace. Garcia saw that the 100 people on the project were coordinated rather inefficiently.

“All the pre-sale transactions, the timelines, proposals and documentation were handled through e-mail. No one knew the latest project environment. It was all very frustrating,” Garcia said.

When Garcia and Hsu left Cnet, and were trying to decide what to do next, they remembered the Windows Marketplace and similar experiences.

“For many of the projects we needed something that would allow members of a team a central depository to access a common calendar, tasks and other tools necessary for completing a project,” Garcia said.

In an attempt to address that need, the pair founded Pasadena-based Central Desktop.

The company provides clients, mainly medium-size business and departments within a large corporation, with Web-based team collaboration software. Multiple members of a team are able to coordinate their efforts through tools such as centralized calendars and document retrieval.

“Instead of e-mailing a spread sheet back and forth, a customer uses Central Desktop to allow all the members of a team the ability to access and edit the spreadsheet over the Internet,” Garcia said.

Out with e-mail

Rafe Furst, the chief technology officer at San Francisco-based Expert Insight LLC, which produces gaming and sports instructional videos, was sure he didn’t want a traditional approach to servicing the company’s IT needs. But he wasn’t sure what he did want.

“We needed something to get us out of using e-mail for everything,” said Furst. “We were using e-mail for things like threaded discussions, passing files around and collaborating on internal documents.”

Rafe said the 20-employee company settled on Central Desktop after considering several other options.

“Some of the others didn’t have separate desktops or enough structure,” he said. “Central Desktop had the right combination of flexibility, common structure and interface.”

Central Desktop operates in a marketplace with several competitors including WebEx WebOffice, BaseCamp and Microsoft’s SharePoint Server.

“The difference or innovation is how we deliver our product. We deliver software as a service. You open your browser and are able to access software and information,” Garcia said.

Central Desktop provides customers with several different plans, including a stripped-down version of the program for free. More comprehensive plans start at $25 a month and rise to $249 a month for the most comprehensive, with 10 gigabytes of storage space and an unlimited number of workspace members.

“You as a user determine what plan suits you best and how much you want to pay,” Garcia said.

Clay Ryder, a Union City market research and business consultant who specializes in this area, said the company fills a special niche in the marketplace.

“This service is compelling for companies that would not dream of putting a collaboration solution in-house but need more extensive service than provided by free solutions.”

But the company faces challenges, because Google, Yahoo and others offer some of the same services for free. And “at the other end of the spectrum, there are companies that have already started doing these applications in house and have made the initial investment,” Ryder said. “Those companies may be a little leery about not having all of this in-house.”

Currently there are 75,000 total users of Central Desktop, with a third connected to one of the more than 1,300 paying accounts.

While there are a few accounts set up by Fortune 500 companies with more than 1,000 users, most of the accounts consist of much smaller groups of employees at mid-sized companies.

Garcia said the startup has been profitable since the first quarter of this year and based on the current month’s figures, he expects the subscriptions could generate $2 million over a 12-month period.

Each month the revenues generated by subscription increases “roughly 15 percent,” Garcia said.

The company has just six employees including Garcia and Hsu, but Garcia doesn’t expect the workforce to grow much more.

A key part of Central Desktop’s increasing revenue and profitability is growing the subscription base while trying to avoid a buildup in staff and other expenses normally associated with growth.

Ryder said that the product isn’t facing any dominant competitors.

“Although there are several solutions out there, none of the offerings have taken the market by storm,” he said. “So there is still room for uptick.”

Garcia and Hsu have financed the company with their own money, and Garcia said all of the company’s growth has been funded with profits.

“We do not have any outsider investors and we are not beholden to any time line,” he said.

And while the business partners are comfortable keeping the company independent and growing it at a “steady rate,” Garcia did not dismiss the possibility the company might be eventually be sold.

“We are reasonable people and won’t dismiss the possibility of the company being acquired at some point in the future,” he said. “But that is not on our radar right now.”