It’s the 14th year of the Neat Company’s life and things have been a little bumpy.
With its shift from hardware to software, there have been layoffs, executive leadership shakeups and scores of unhappy customers (more on that later).
But Chief Marketing Officer Jenn Choi said the Center City digital filing company is more focused than ever and has the right team in place to pursue the future. The company also just raised $1.1 million from existing investors Edison Partners, the largest shareholder of the company, and MentorTech Ventures.
The most notable leadership change was at the top: in January, former CEO Jeff Dickerson was replaced by Michael Crincoli, who’s held leadership positions with Neat since 2010. Dickerson, who spent one year at Neat, now leads a Boston machine-learning startup called Nutonian.
“As we looked at where the company was going, Mike [Crincoli] made the most sense,” said Choi, who’s been with the company since 2006, in an interview earlier this month.
Where is the company going? After more than a decade selling scanners, it’s now focused on a cloud-based subscription service and mobile apps, a move that former CTO Rick Bunker spoke of in April 2014.
As Choi explained it, “The scanner is still important, but it’s not the only way.”
Neat has retired its TV ads in favor of more print and digital advertising, trade shows and partner programs with companies like Intuit, she said. Its target customers are small businesses who use Neat for accounting and bookkeeping; it’s no longer focused on the so-called “Chief Household Officers” a former marketing VP spoke of in 2012. The company has also had to contend with mobile apps like Evernote, but Choi said that Neat’s integrations with tools like Quickbooks make Neat more attractive than Evernote.
With the move to mobile, Choi said the biggest staffing change has been on the engineering side.
“Some have been able to transition and some haven’t,” she said. “Some have left on their own.”
The engineering team is now run by Andy Schaps, who’s been with the company since 2004.
Choi confirmed that there had been layoffs but declined to comment on a specific number. In the summer of 2014, Neat employed 120, company reps told us at the time. Today Neat employs 45.
The company works out of the 35th floor of 1601 Market and has since shut down its second Center City office at 1801 Market, opened in the fall of 2012. Choi called the office a temporary space.
Might the new infusion of capital pull the company out of its slump?
It’s the second exodus of leadership in the last two years. We reported in August 2014 that a slew of Neat executives had left the company. In the 18 months since that story, at least six of the company’s top roles have left. That includes Chief Information Officer Don Nawrocki, who’s now at PeopleLinx; Chief Innovation Officer Phil Leslie, who left to run a Chicago tech company; and Chief Marketing Officer Evan Kramer, who left two months after he appeared on Donald Trump’s Celebrity Apprentice to advertise Neat.
The company’s shift to the software-as-a-service space hasn’t gone very smoothly, according to customer reviews. Since December 2014, scores of frustrated Neat customers have reported expensive customer service, faulty products and feeling like they’re being forced into a monthly subscription service if they want to access the documents they’ve stored with Neat. There are a handful of happy customers in these Amazon reviews, though.
When asked about these reviews, Choi said she monitors them very closely. She explained some of the complaints as customers’ wariness of new technology.
“People are nervous about putting stuff in the cloud,” she said. And that’s a shame, she added, since Neat is no longer adding new features to the legacy product.
As for the customer service complaints, Choi said that Neat offers free customer service for the first 60 days because that’s when most customers need help.
“Unfortunately,” she said, “there are the outliers and the grumblers out there.”
She said Neat’s customer service is better than that of companies like Expensify and Evernote where “you probably couldn’t get them on the phone.” Neat’s customer service team is split between Philadelphia and the Philippines.
Neat’s revenues are between $25 million and $100 million, according to a recent SEC filing, and have been in that range since 2009, according to SEC filings. The company has raised nearly $17 million to date. Edison Partners’ Michael Kopelman and Gary Golding sit on the board, along with MentorTech’s Michael Aronson.
The company also recently refinanced its venture debt — a funding source for companies that is less dilutive than venture capital — and now has a $6 million loan from Square 1, the lender that replaced Hercules Growth Tech Capital.
Why would a company find a new lender? For better terms or more money, since some lenders generally do smaller deals. Or it could be something more ominous: if a lender starts to have doubts about a company’s abilities to pay its debt, it could ask the company to pay it back in order to minimize the bank’s own risk. Neat declined to share further details.