Good Feedback

Turning chatter into cash

Adam Edmunds is a young man in a big hurry. The Salt Lake City native took two years off after high school to serve as a Mormon missionary in Brazil and then earned both undergraduate and master's degrees in accounting from Brigham Young University in three years. In 2003 the then-24-year-old borrowed $50,000 from a buddy's father to start SilentWhistle, a Web service through which employees can send anonymous tips about wrongdoing to top managers or directors.

Two years later, Edmunds met Gary Rhoads, who was almost three decades older and on the lookout for a whiz kid. Rhoads, a professor of marketing at BYU's Marriott School of Management and director of the school's Center for Entrepreneurship, had started Allegiance Technologies in 2000. The South Jordan (Utah) company made software that helps companies collect and analyze surveys and other communications with customers and employees. The two men combined their companies in September, 2005. "Most PhDs [like Rhoads] have great ideas but aren't big on marketing and selling," says Edmunds. "That's what we do very well." Revenues for 60-person Allegiance (Technologies was dropped from the name) have soared from $500,000 in 2005 to $2 million.

Edmunds heard about Rhoads while raising angel capital and set up a meeting. Rhoads says he was impressed by the buzz Edmunds had built around his company. "We had world-class technology people," Rhoads says. "But I knew we needed some marketing mojo." Edmunds became president and CEO, and Rhoads a consultant for product development. Edmunds had been named BYU's Entrepreneur of the Year in 2004, and his local reputation helped him get in the door with a few clients such as He put together a sales team that began making cold calls and attending trade shows. Edmunds also made it easier for customers to draw detailed results from the feedback software. "Adam's coming on board really took the company to the next level," says longtime customer Scott Anderson, CEO of Zions First National Bank, a subsidiary of Salt Lake City's Zions Bancorporation (ZION ).

Still, Allegiance is up against much larger rivals in both the whistle-blowing business, which accounts for about two-thirds of its revenue, and in the fast-growing customer feedback market, where players include Vovici and Confirmit. Esteban Kolsky, research director at Gartner Group (IT ), says Allegiance has to prove it can manage the massive systems big customers want. "When an enterprise looks for a solution, they want everything," says Kolsky. "Allegiance needs to mature a bit to be able to offer that."

Edmunds isn't worried. He says Allegiance will focus on markets including retail banking and telecommunications, where competitors have a smaller presence. Later this year it plans to unveil Engage Platform, a souped-up version of its feedback software that suggests ways a company can increase profitability. It might, for example, tell a bank whose customers are closing their accounts what it can do to reduce defections and raise profits. And Edmunds and Rhoads are planning a series of seminars in 25 cities and online in which they will talk about customer loyalty and, perhaps, the effectiveness of their particular blend of the academic and the pragmatic.

By Amy Barrett

    Before it's here, it's on the Bloomberg Terminal.