Jon Schram regularly received unsolicited emails voicing interest in acquiring his Kansas City, Kansas, tech company, The Purple Guys.
But this time, several things aligned. ECS + My IT already had proven it could successfully acquire a company and it was more than twice The Purple Guys’ size. It was the right partner, and the right time in life, since Schram’s children weren’t interested in eventually taking over the company.
“It’s not just about the transaction. It’s about, what’s next? And knowing the culture of the company we were joining was huge,” he said. “They lined up with the growth I wanted to see and they had the financial backing from Kian Capital (Partners) and ParkSouth (Ventures) to be able to do more acquisitions and continue the expansion. … They have the ability to really pour gas on the growth model that I had wanted to pursue in the past.”
Schram co-founded The Purple Guys with his wife, Jill, in 2001. He described his original vision as grandiose for the managed IT services provider. He wanted to be the Paychex of the IT services world and scale to 50 cities in 20 years. When he sold the 40-person company in February, it had about 170 small and mid-size customers in the Kansas City market, plus customers in the St. Louis area and in Des Moines. Revenue had grown to $8 million, and it was averaging 20% to 25% revenue growth year over year.
A nearly fatal decision
When The Purple Guys started out, it was focused on on-site tech support. But the model limited its growth and scale. As remote software tools became available and more affordable, Schram viewed it as an opportunity to solve the scalability issue and become more efficient. In 2005, it started offering remote services, which required educating clients and easing their concerns. It caught on, but there was a huge flaw: pricing. The new unlimited subscription model for remote services was too cheap.
“I almost put the company out of business because I didn’t price it right,” he said. “When you’re the one running the business, everybody assumes you know what you’re doing and sometimes you’re making it up. It hadn’t been done before when we switched our business model.”
Both he and his wife consulted their CEO and business owner peer groups, which have been invaluable through the years.
“We had a little bit of runway, but I could see the cliff. That's part of what being in those peer groups helps you with. They'll ask questions so you can see the cliff when it's still far enough away that you can avoid going off it,” he said. “I was able to course correct fast enough to not bankrupt the company. A lot of that came from advice from the people in my peer group.”
An accidental name and a new chapter
The Purple Guys started out with a different name: Versent. It sounded techy, but the related marketing spiel didn’t resonate with customers. It bored them. They couldn’t remember the name, how to spell it or how to pronounce it correctly.
About a year in, Schram decided to roll out employee uniforms and picked the color purple, a nod to his previous company comprised of several K-State employees. As employees showed up to customer sites, they earned a new moniker. Customers regularly said, “Hey, the purple guys are here.” Now, Louisiana-based ECS + My IT has adopted the name.
“It’s an accidental brand, but we really leveraged it,” Schram said. “That’s what’s so cool about this next phase is a brand literally born in Kansas City, named by our customers in Kansas City, is now becoming a national brand. That’s just a super cool thing to me.”
Schram and his wife remain owners in the new entity, and Schram now is market president overseeing the Kansas City area.
The company could add a new city by year’s end. Its ongoing game plan is to actively look for acquisitions in markets the size of Kansas City and to grow organically in new markets. The philosophy remains the same of hiring local and providing local support, such as a local remote service desk.
With the addition of Olathe-based Network Technologies Inc., the Kansas City market has become The Purple Guys’ largest office. Schram expects to reach 70 local employees by January. Companywide, there are about 150.
“It’s got that potential to be a national brand and be in 50 cities,” he said. “It’s exciting to see my vision get executed. … It’s a dream coming true.”
