The IdeaRoom Where It Happens
While COVID-19 affected many industries, the effect wasn’t all bad with everyone.
Particularly if you had just happened to start a business that made it easier for people stuck at home to design and order custom buildings such as sheds and carports without having to leave their houses.
“COVID was a massive stimulant to our business,” said Russ Whitney, CEO and cofounder of IdeaRoom Inc., in downtown Boise. “We operate at the cross section of home improvement and e-commerce, and both got stimulated by COVID.”
If Whitney’s name sounds familiar, it should. Right out of college (California State University at Chico, where he earned bachelor’s degrees in math and computer science), he joined Extended Systems, one of Idaho’s early startups -- which was eventually acquired by Sybase – when it had just 20 people, he said.
After a couple of years at Hewlett Packard Enterprise, Whitney then joined ProClarity, which was in turn acquired by Microsoft in 2006. He worked for Microsoft as a general manager, responsible for Microsoft Office business intelligence capabilities, for four years after that.
While he was located in Idaho when he was working for Microsoft, Whitney spent three days a week in Seattle. “After four years of that, that was getting old,” he said. So he started thinking about what he’d like to do next.
The birth of IdeaRoom
IdeaRoom has actually been around for a while. Whitney founded it in 2012. The general idea – following up from ProClarity, which helped business people make decisions without having to have a tech person involved – was to help people who wanted to buy customized products without having to go back and forth, he said.
After working in a few areas, Whitney discovered the problem was particularly acute in certain segments. “Those segments found us,” he said. “We created a product verticalized for those spaces.”
The company supplies software to vendors selling buildings, such as sheds, carports, and post frame and red iron industrial buildings. “It allows customers to see the building in 3D and configure it to match their needs,” Whitney said, such as adding doors and windows, moving them around, and changing the style, shape, size, siding, and rooftop. “Every time they make a change, it updates the visuals and price,” he said. Once the building meets the customer’s needs, they can put a deposit down on the building and the vendor can start constructing it. “It saves the customer and vendor a lot of time and money,” he said.
IdeaRoom released its first product, for sheds, six or seven years ago, and Whitney has replicated it in the other industries, he said.
Within the past few months, Whitney has actually started taking institutional investment in IdeaRoom, something he resisted for a while.
“We didn’t raise any capital, and were growing organically,” getting to about 30 employees, Whitney said. “It got to the point where the opportunities in front of us were so great that we couldn’t fund it organically. We couldn’t do it at the pace they were coming.”
So Whitney decided to start entertaining the idea of taking outside capital to accelerate the growth, and IdeaRoom’s performance in the past four years was high enough for institutional investors to take an interest. “This was the year,” Whitney said.
Whitney didn’t mention any specific experiences by name, but said his past history had made him cautious. “You have this issue, you’ve developed a great culture and a great collection of people,” he said. “When you take outside funding, you can lose all the things excellent about your company. I’ve been through that.”
Consequently, Whitney decided to work with Arthur Ventures, a small growth capital firm in Minneapolis. “It was a perfect cultural match, super down-to-earth people, focusing on businesses almost precisely like us,” he said. “It was like joining a new family of companies all similar in terms of their value system. The actual negotiation of the valuation took minutes.”
Ultimately, in June, Arthur Ventures gave IdeaRoom a total of $8 million, $3 million for growth capital and $5 million to buy out early investors, including all four of the first angel funds in Boise, Whitney said. “The earliest two were pretty close to their final liquidation,” he said. “They were looking to get out and needed to do disbursements.”
With the new funding, Whitney is looking at two areas for expansion. First is a more concentrated engineering and marketing push on the post frame and red iron industrial buildings it’s focusing on now. “That’s a huge upside opportunity,” he said, noting that the company has no dedicated sales and marketing resources on it yet. “We haven’t really hit the knee of the curve in terms of the pace we believe we could sell it. Right now, 10 to 15% of our revenue is coming from that industry.” And he has a laundry list of industries to target after that.
The second is investing more into tools to help IdeaRoom onboard its own customers more quickly. “We’ve never had a problem with sales,” Whitney said, noting that 95% of its 450 clients are inbound and can be closed with a couple of phone calls. “The issue that prevents our growth is the pace we can assimilate new customers.” So he’s planning to hire a total of 15 people to work on that side of the business, and invest in technology to make them more productive, he said.
With all the expansion, IdeaRoom may have to move from its home in the Sonna Building at 9th and Main, right above Alia’s Coffee House, Whitney acknowledged.
“We have way more people than we could fit in our office, and now we’re hiring more,” Whitney said. However, during COVID, everyone switched to working at home, and two-thirds of the employees still work out of their home most of the time, he said. The majority of the employees are from Boise, but after COVID, the company started hiring people in other places, including California, Oregon, Pennsylvania, Washington, and Brazil, he said.
As far as an exit strategy, Whitney has two. “There’s my personal exit strategy, and ultimately the company,” he said. “Personally, I’m going to hit my retirement age and will need some liquidation.” That doesn’t mean he has to sell the company, he noted. He looked at an employee stock ownership plan (ESOP) about nine months ago, and while that didn’t really work at the time because of the size of the business, it’s still a possibility, he said. Alternatively, the company could do another transaction like the one with Arthur Ventures to provide liquidation for the people who need it, he said.
And the company itself? “Ultimately, I would like it to grow at least ten times what it is now and allow all of these people to meet their financial and lifestyle ambitions,” Whitney said. “My goal is to build a great employer in the Boise Valley, a place where everyone wants to work, and do it by legitimately solving problems for customers. A company is its people and how they work together. That’s the secret sauce. You can’t do anything that will disrupt that. If you do, you’ve lost your productivity and people’s excitement to come to work. People will love to work if you pay them well and have good benefits and a great office, but what really keeps them is solving problems.”
Sharon Fisher is a digital nomad who writes about entrepreneurship.