The Birth of a Category Known as Contact Management


CEO & Founder, VIPorbit Software Int'l, Inc.

Note: This article is the first of a three-part series by ACT! software co-founder and co-creator, Mike Muhney. In this first column, Muhney explores the history of contact management and what was happening in software in 1986. In the upcoming articles, he will address where we are today and where the industry is headed.

Sometimes it’s only possible to get a proper perspective of an event through the lens of time. In this case, we’re looking back in time some 25 years…to 1986. The phrase “good ole’ days” comes to mind. And they certainly were.

Apart from now being old(er), I am often referred to as a “pioneer,” as ACT! created the category known as contact management – and was also a catalyst in shaping the customer relationship management (CRM) software category. Even then, I saw the value of both expanding and enhancing relationships and created software designed to help people achieve greater interpersonal success.

Since its creation, ACT! has helped more than 10 million people all over the world establish more effective business relationships. To this day, I’m proud of the solution we created and the success that ordinary professionals gained from it. My business partner, Pat Sullivan, and I created it for ordinary professionals, because that’s what we were. So, let me take you on a journey that began with both desperation and need.

Technology a New Commodity in Mid-80s

The mid-1980s were a vibrant, competitive time, even compared to today’s software landscape with the technological advancements of the Internet, the cloud, smartphone apps, and software as a service (SaaS), just to name a few. At the time, the PC software world was ruled by three main companies and their respective products: Lotus with their 1-2-3 spreadsheet software, WordPerfect with their WordPerfect word processing software, and Ashton-Tate with their dBase database software.

At the time, they were thought unbeatable and irreplaceable. My memory fades regarding WordPerfect, but I can say with certainty that both Lotus and Ashton-Tate were public companies. Competing or even keeping up was an intimidating endeavor, if one allowed it to be. But any entrepreneur worth that label would probably respond, “So what?” And the venture capital community? If you couldn’t generate revenues of at least $100 million in three years, they simply weren’t interested.

It was a time of teaching old dogs new tricks. Unlike today, when technology is basically taken for granted, by those of all ages, from preschoolers to retirees. But back in the mid-80s, technology was a new commodity for the mass market.

What we take for granted today was somewhat intimidating back then. Yet it was also exhilarating. The possibilities were limited only by the availability of software to perform the desired operations. And the availability was very limited by current standards.

The Birth of ACT! Software

The personal computer (more accurately, both the IBM PC and IBM-compatible PC) was still in its “wild west” days. Then came a brand new device, known as the laptop, with no hard disk drive and a battery life of something like two hours. Most people used a PC or laptop for spreadsheets (Lotus), word processing (WordPerfect), or databases (Ashton-Tate). On the periphery were those advancing connectivity with PC’s (Novell), but the majority were stand-alone users.

Both Pat Sullivan and I, career sales guys, had no need for a PC for the most common applications, but we did see a need to use it to keep better records for every person we were working with. We had started a company to sell another software product, but we soon realized that we needed to either close the business down or come up with another idea. So, on July 4, 1986, we set aside four hours to brainstorm. By the end of that session we knew we were on to something. We concentrated on answering one simple question: What is it that we ourselves need the most? What is mission critical?

At that moment, we might have described ourselves as visionaries, but now, with the benefit of hindsight, I have to admit that we had no clue what our little idea would produce. Neither did Mark Zuckerberg when he originally designed Facebook for Harvard students, adapted it for other universities and then made it available to the mass market.

I don’t think that any “visionary” is ever able to fully comprehend the dynamics of the market and how their solution will be adopted or adapted. We were relationship-centric and could only truly justify incorporating technology if it could be applied toward that need. I code-named our idea YES!, which stood for Yes, Everybody Sells!

It wasn’t meant only to be catchy. It was a genuine, heartfelt philosophy that we sought to embrace. We used this code name until I came up with the name ACT! It was the result of thinking up a phrase that could produce an acronym, which was Activity Control Technology. The exclamation point was added for emphasis and motion of the productivity sort. Further, Pat and I created and coined a design philosophy that we called “useful use.” We measured every idea either of us had by that philosophy. If it wasn’t a “useful use,” the other one could veto it.

Salespeople want things simple, easy and effective. So, as two career sales guys with no real software design, nor architecture backgrounds, we focused on the user’s daily use, benefit and value.

ACT! was released on the market on April 1, 1987. It’s an easy date to remember. We still had not identified the category, simply because we still weren’t sure how to encapsulate it in a short phrase that could be universally understood. Basically, what we said was that what Lotus 1-2-3 did for people who dealt with numbers (not just accountants), ACT! would do for people who dealt with people (meaning everyone, not just salespeople).

PC Availability, Utilization Proved Biggest Challenges

Along the way, there were, of course, many challenges. Certainly one of the greatest challenges was the fact that most people did not have a PC. Even if they did have one, the last thing that they would think of using it for was to better manage their contacts. We weren’t daunted. We needed the product ourselves, and we knew that there were plenty of others who would feel the same. After all, professionals in all industries deal with other people; more so, in fact, than the number of professionals who needed spreadsheets or documents.

Today, ACT! is still on the market and according to Gartner is still the leader in the contact management (CM) category. Not only did we see a need before other vendors, the end-user market was barely equipped with a computer, much less imagining using that PC to manage their relationships.

At that time, professionals were tied to their Day-Timer®-like systems and had trouble seeing how and why you would combine computer technology with your contacts and associated activities. In most people’s minds, computers weren’t needed for that; computers crunched numbers and processed words.

Relationships were neither of those. Talk about starting from scratch! Who knows where we would be without the early adopters and the proselytizing that they did. They helped make today’s market of CRM/CM users what it is.

Given the reach and adoption of Day-Timer®, Pat and I thought that we might develop this idea of ours and have Day-Timer® be the exclusive distributor for it, because we also were “power” Day-Timer® users. After all, a Day-Timer® user was a natural for our software idea.

Without hesitation, I called them up, set up a meeting and flew up to Allentown, Penn. to pitch the idea. I showed them some prototypes and offered them the opportunity. I was turned down. Want to know why? Because the idea threatened their paper-based sales and reorders, and they were all about that reorder annuity. Big mistake. Many years later, long after ACT! had established itself and had won many awards, they attempted to come out with their own software product. It failed, and they went back to paper.

Software Ready, Now Let’s Sell It

After this experience, we embarked on a new journey because we knew the product was ready for prime time. But like many start-ups, we didn’t have the funds to market sufficiently nor get any meaningful editorial coverage. So I spent hour after hour with the premier journalists of the day, all of whom (except one) wrote very positively about us. (The one who didn’t was disinterested because he was an Apple user.)

We needed to figure out who could help both promote and sell ACT! without our having to pay for it. So, being agile sales guys we coined the phrase “Automate the Automators.” We had identified an emerging and vibrant market segment that actually needed ACT! to help them as much as we needed customers. We felt that ACT! was truly an enabling technology. It was a convincing enough reason to buy a device, and the device of the day was called the laptop.

So I called on the entire community of laptop manufacturers of the day: IBM, Toshiba, NEC, Zenith, Sharp, GRiD and Compaq. They had global sales forces that were selling to both the end-user market as well as the computer store retail channel through organizations such as Businessland, Computerland, Entre and MicroAge.

These companies needed ACT! (at least we thought so) to help them in their own relationship-oriented efforts. Their salespeople usually weren’t very adept at demonstrating what they sold, if they didn’t use what they sold themselves. And so every one of these laptop manufacturers equipped their entire global sales force with ACT! (with the exception of IBM, who only did Canada), and I proceeded to travel the world to conduct sales training for every one of them personally.

We created a global sales force that we didn’t have to pay or employ but were hooked on ACT!

Some of our memorable early users were the scouts for the Kansas City Royals (Major League Baseball) who were compiling stats and info on prospective players; a cattle rancher who maintained a profile for each head of cattle; Jockey Underwear who tracked each component of each line of underwear’s marketing campaign as an ad-hoc project manager; some members from our very own CIA (they wouldn’t tell us what they were using it for); and none other than Tammy Faye Baker.

ACT! users conceived unique functions and applications beyond those we originally imagined. We continuously redefined how much more of the market could benefit from our idea. Only one issue still remained unaddressed: To which category did we belong? If we didn’t fit within any existing category, we couldn’t leave it up to journalists to mindlessly categorize us. We had to come up with something…quickly.

Stay tuned for part two of this series later this month, where I’ll explore these answers and then some.

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