[00:00:28] Jay: Hi everyone. Welcome to The First Customer Podcast.

My name's Jay Aigner. Today I am lucky enough to be joined by Joel Reed. He's the CEO and founder of Open Arc, helping clients build software and hire great people. Joel, what's up man? How are you?

[00:00:40] Joel: I'm doing great, Jay, trying to stay warm here in this cold, December in Pittsburgh. How are you?

[00:00:45] Jay: Same thing. Same thing. over here in, in Philly, I was in, Florida and then San Diego. So coming back here is not fun, when it's, you know, 30 or 40 degrees, but whatever. You guys have a little bit colder there, I think. Right? What's it? Was it in the thirties, forties there right 

[00:00:58] Joel: there's probably three inches of snow outside. We're supposed to get six next week, so.

[00:01:02] Jay: Okay. We were, my kids were all excited to be off yesterday, and one of my favorite things as a parent is that moment of disappointment when they realize they have to go to school. It's the best, it's the absolute best. You're like, just kidding guys. It just rained. Get on the bus.

[00:01:14] Joel: my son did get to stay home yesterday, so

he was happy. 

[00:01:17] Jay: All right. All right.

Mine. I, yeah. All mine were annoyed in the morning, but that's okay. All right. where did you grow up and did that have an impact on you being an entrepreneur?

[00:01:26] Joel: Great question. I grew up in Hampton Township, which is a suburb of Pittsburgh, and my dad worked for Westinghouse and he was a, an engineer, mechanical electrical engineer. And there was really not any entrepreneurialism in my house or family or anything like that. I will say that when I was, 12 or 14, I realized that if you owned a business, that magazines would send you free copies of their magazines.

So I became the CEO of. Industries and I got lots of free magazines for myself, but, there was not any other entrepreneurialism there on New Hampton Township that I was tuned in on.

[00:02:09] Jay: Okay. Well, I've actually never heard that, theory for free magazines. I love that. That's great. Especially as a kid. I, and it's probably true. that's a great idea. I love that. all right, so, you know, I saw you kind of went through, a bunch of different stuff before you started your business.

what kind of made the, you go from, all right, I'm ready to kind of leap into my own thing here. what was kind of the moment where you said, I'm gonna go build something instead of go work for somebody else?

[00:02:33] Joel: Yeah, I was working at Development Dimensions International, from about 1995 till 2008, and that is a great company. got to know a lot of great people there. Learned a lot about. Building software products for our customers, and leadership. So very thankful for my time at DDI. I hit, somewhat of a plateau in my career there and thought that, I've been passed over for maybe a position that I was well suited for. So I decided that maybe. My time was up there and I moved to a startup company in about April of 2008. And you probably, I don't know if you're old enough for this to remember the great financial, crisis

[00:03:21] Jay: I definitely am old. I appreciate you think that I'm not, but I definitely am old.

[00:03:25] Joel: Okay. Well anyway, so that happened, not, you know, not too many months after, joining the startup. All the funding dried up and,our startup just got absorbed into, one of the investors' companies. And so I was the only, software person there in an IT consulting company and wondering what did I do to my career? I blew it up, you know, I was a leader at DDI building multimillion dollar software projects and now I am. Coding at a consulting company that doesn't even really do software. I've just destroyed my career and it's a great financial crisis, right? So not a great time to be looking for another, job. But I was looked around to me at the folks running the company and I thought, I feel like given the all the. Experience I got at DDI of leading and building software that I could probably do what they were doing. So, it kind of took me being pushed into this low point in my career to give me the, motivation to start a company and, so that was the beginning of Open Ark that, that low point. And I always tell people afterwards that, you know, that has forever given me a new perspective on those times when everything looks kind of bleak and blown up, that it might just be the start of something new that you didn't expect, and never would've guessed, you know, a year before that.

So.

[00:05:00] Jay: I love that. What did, where did the name Open Arc come from?

[00:05:05] Joel: my partner and I were very into open source software at the time. kind of the software that runs a lot of the internet nowadays. Linux, Firefox, Android,those kind of platforms we're all familiar with. open source was a big thing back then and maybe, and still is, it's become much more well accepted now.

But we were very into the idea of transparency, building trust, which is, I think a key part of kind of releasing your, the code to your software. It helps to build trust for your customers, so that, that concept seemed like a very good. Concept for a consulting company that we wanted to be very transparent with how we are doing our work, the decisions we're making, what we're building for folks, and that would build trust in our team and our process.

[00:05:59] Jay: Okay. so what, what was kind of step one you were like, all right, I'm not. Being utilized. You know, my skillset, the best at this place, I'm gonna go out and start this company. Did you find somebody to partner up with? Did you know somebody to partner up with? Like, what was step one? Once you guys were like, all right, we're gonna go do this thing.

Like how did you start accumulating clients and defining what you guys were gonna do and like what was kind of the kickoff for all that stuff?

[00:06:24] Joel: Well, that's a great question. I love this. Jay diving in deep on that, really the first step was, finding another person who wanted to go on this journey with me. Lots of conversations with him and, then I got a call out of the blue from my current business partner, Bethany, a different individual.

Bethany Simon. She runs our talent group. She called me outta the blue and said she had a position for me. She didn't know what I was doing. She didn't know I was starting a company. And I said, I will take that position if I can work four, 10 hour days instead of five eight hour days. 'cause I wanna use that extra day to start working on the company.

so. Totally out of the blue call from Bethany. she was able to work with the customer to give me that four 10 hour thing, which was, you know, a little bit, unusual at the time. And, that gave me the income to, feed my family and my business partner, family, and then use that. One day to start working on building the company out, you know, creating an operating agreement, opening up bank accounts, stuff like that, going out there, talking to customers.

So it really started with that call from Bethany and that, opportunity to work four tens

[00:07:40] Jay: and one day a week, how did you spin up? You know, something that's lasted 20 years for one day a week. That seems like a lot of shit to cram into one 

[00:07:50] Joel: It's a very small start, and obviously you're working nights and weekends and,

not, you know, all the time that one day was for meetings with people during the day that, you know, you can pull off at nighttime. but,it was a very small step and, you know, eventually I was able to, as I mentioned, my business partner was able to quit his job and we lived off of my salary for a while, tapped our savings. and you know, him working full-time on it was really got what got us his first customers.

[00:08:22] Jay: Gonna say, so who, what? What did you guys offer and who was your first customer?

[00:08:28] Joel: the Butler Area School District was our first customer

[00:08:33] Jay: Okay.

[00:08:33] Joel: and, at the time there we offered, software consulting services and hardware. We did it. consulting and sold hardware, you know,

networks, kind of solutions, routers, firewalls, those kind of things. So, my business partner had a long, relationship with, the IT director there at the school district, and, she was excited to work with us. Our new, venture and,I really think at the beginning, a couple of keys for me. One is, having a business partner. That was huge. And, secondly is having a good network of people that you can, you know, tap into right off the bat. People that know and trust you, and we'll work with you no matter where you are.

[00:09:24] Jay: Did you guys have this? How did you guys split roles eventually? Was it natural or did you guys like actually draw some lines in the sand about who was gonna be doing what?

[00:09:31] Joel: yeah, we did over the next couple years. you know, it was all hands to the pump. Everyone just did whatever it took. whether we were cleaning up after our, summer. Picnic parties, cleaning the trash or cleaning the office or building desks to, you know, deciding what our marketing strategy was gonna be or someone being, the CEO or whatever it would be.

So, that was, that involved a lot of conversation, obviously. But, I think there was a pretty good recognition of, Hey, this is something you're great at. go run with this. I'll do this. we're a team, and that mostly worked out.

[00:10:10] Jay: And who is your customer today compared to, you know, your first customer back then? Like, who are you serving the same type of people? Are you doing the same type of thing? Like what? What's changed over those 20 years?

[00:10:23] Joel: Yeah, so we don't work with school districts anymore and we don't sell hardware or do it consulting. So, you know, we started as a company that did staffing, software development, and it. services and we eventually realized that the staffing and software things were a strong fit. Lots of, synergy between them, but the IT services business very different.

A lot of it involved selling hardware. Having, you know, paying for a large amount of inventory, being a small fish in a big ocean with, you know, companies like, Cisco and stuff pushing you around, maybe on pricing and margins and stuff like that. So, yeah, totally different. in terms of who we sell to today, don't really work with school districts or, do it services. So, Yeah. You know, I think at the beginning we were, we were willing to sell and do anything, which I think a lot of startups are probably in that category. Whatever people will pay for that you can do well, you're on board for doing that. And as we've grown over the years, we've tried to refine and, you know, focus on the things where we can really differentiate ourselves and, make an impact here in Pittsburgh.

[00:11:39] Jay: It's refreshing to say no, but it's refreshing. It's refreshing to get to the point where you can say no. that's the fun part. You go, oh, we can actually, like, we're not gonna go outta business if we say. You know, we can, we can pick and choose who we wanna work with. So that's a, it's a, it's a perk of putting in the hard work, of doing everything for everybody at the start.

[00:11:55] Joel: You can eventually go, eh, that's not what we do anymore. I do think it's, Jay, I

do think it's very difficult to go from, you know, a general consulting company in a certain segment with a broad range of customers to narrow that to a smaller group of customers. It's something we've worked on for years now and, just starting to get some traction on further specializing.

But you're right, it's great to be able to say no and But it's not easy and it's continual process.

[00:12:26] Jay: It is a fantastic segue. It's almost like you had these questions, but you don't because I didn't send you any, 

[00:12:31] Joel: No. 

[00:12:33] Jay: what I was gonna ask, and I've talked to some of your, you know, your partnership guys and your biz dev guys and your sales guys, you know, being a generic or a generalized custom software development shop.

Seems to have hit a wall around the pandemic time, like maybe a little bit before that or whatever, but like, especially the last couple years where it's like you really are just saturated. And I know a lot of those agency owners that are in my, you know, my network or my clients or whoever. so I hear this all the time over and over again and I think, you know, maybe manufacturing and some other things from your team that you guys are like really good at and you're starting to hone in on, So, I mean, is that a, is that an accurate kind of feel of the timeline? Were you able to do more of that, you know, five, 10 years ago where you could just be a, you know, the shop that develops software, you know, in any vertical, in any kind of space, as long as you're selling it and you've got a good, you know, pitch and you can build some trust and like, but now it seems like that's not even enough anymore.

You just, even to get somebody's attention, you almost have to be. You know, vertical based or region based or some combination of both. You know, so you really have that power. is that kind of what you guys have felt over the past, you know, 20 years as well?

[00:13:41] Joel: Yeah, the market's definitely changed, you know, seven, eight years ago, we would get leads, through our website quite frequently. And, I would say around that timeframe you're mentioning of the pandemic, that really dried up and we do not see that as a source of new business for us. and I think, you know. We were talking before we started this podcast about the impact of the pandemic and how that changed so many things. and I really think a lot of people, you know, spend a couple years, working out of their homes on not building their, maybe their network went on pause, right? Building those networks, making new relationships. and so we've really tried. For the last three years or so to double down on getting out, people, talking to people in those verticals that we want to be in. and I think,that's been the key for our continued, success. because, you know, since the pandemic, you really just can't sit at home and wait for those leads to come in.

that's not how it works anymore.

[00:14:45] Jay: So tell me a little bit more about, and this is, I find this very interesting because I think. You know, it is the natural progression, right? You go from doing everything for everybody to starting to say no to some people, to start to identify common threads or things or people that your companies you've worked with, and you start to develop an identity of who you are and what verticals you work in.

but what has been your process? You know, getting into the weeds a little bit here of like. How are you guys starting to like, really go, okay, we're gonna pay attention to, you know, this vertical or this industry or this region or whatever. How are you guys identifying those? is it the common thread of you've worked with a bunch of 'em before?

Is it something you see in the market? Is it, you know, your, the networks you guys have, what is it and how are you guys trying to go from, you know, being a generic, software development agency to something that's more. Vertical and more defined that you can kind of target at specifically what? What is your process you guys are using to do that?

[00:15:40] Joel: Yeah, great question, Jay. first of all, I really think it's important to have someone in charge of any major initiative that you're doing like that. I do not want it to be some group effort. I need one neck to strangle and one person who's gonna own the success of that. So that to me is step one. And, Mike Carpenter. Is leading that effort here at Open. we are spending a, the next thing we really did, or the first thing after that was really get out there and talk to people in this segment. customers. That we, that could be potential buyers in the future that we had a relationship with.

And ask them about what challenges they're having. talk to them about the things we, have experience with and are, and expertise at, and find out if is that on the roadmap? do they know people who are working on those kind of solutions? So. We felt it was very strong to talk to as many people as we could in the segments that we were targeting. To learn from them about what, you know, where their pain points were. we didn't wanna come with, well, you know, we've done. These three or 10 things for customers before. So we're just gonna go start pitching that to everybody. No, that, that didn't sound like a wise approach. We wanted to go out there, ask them where their pain points were, and see how that aligned with where our expertise was. So we're, we finished that process, a month or two ago and are just starting to refine our messaging and offerings,for what we've heard out there in the marketplace.

[00:17:19] Jay: my, my normal question is what would you do if you had to. Start over tomorrow. And I wanna throw a little extra onto that, which is, you know, if you were to start the same company, same product, you know, tomorrow, kind of what would be step one, but would you recommend it be. A software development agency, because I've heard many people who sell those and go, I would start another company, but I would never start another one of those again because you're, you know, you're project based.

You, you know, your deliverable based a lot. I know you guys have the staffing thing, which probably, you know, is a nice little, you know, not a little bit nice revenue stream from that side. but the project based continual hamster wheel that we're all on in the agency space to some degree, but being project based, you know, there's a start.

There's an end. You if you don't renew, it's, I need a new customer and I need another customer, another. Would you know, number one, would you start, a software, development agency over again in 2025? And if so, what would be step one to start that agency tomorrow?

[00:18:16] Joel: great question, Jay. I, I love building software for customers, and you're right, the project world is tough. You constantly have to be out there selling new projects. I think building a consulting company is probably easier than, building a lot of different, you know, product based companies in some ways. so that's the advantage of it. Easier to maybe build and get off the ground that you don't need a lot of outside capital to do it, but you have, as you just pointed out, the challenge of continuing to need to sell. But I do love building software. It's something I do in my free time still after, you know, 30 years of doing this.

So I probably would, I think I would start another software company because of that. And you know, right now, to be honest, AI is really changing a lot how you build software and frankly, it's making it more, even more enjoyable to do that. you can build, Things more quickly for customers and put a lot more polish and features into them. And you don't need to go poking around on the internet to find out the syntax for this latest SDK and, you know, work around to bugging it or anything like that. The, a lot of that, the AI is taking care of you for you now. So I think it's making it even more enjoyable, the whole space.

[00:19:38] Jay: Okay. I like that. Well, what, all right, so if you were to start over tomorrow, what would be step one?

[00:19:43] Joel: Step one. I, I still think having a great team of people to work with is the key to success. So I would probably want to find, some like-minded people with similar values to me who, would wanna go on this venture with me.

[00:20:05] Jay: All right.

[00:20:05] Joel: all about the people you're working with and those people having a, you know, similar set of values as you do.

[00:20:11] Jay: I agree. And I've and those state men's friends that have sold those, you know, businesses, it set me my own journey of like. I, am I enjoying the money chase part of this or am I enjoying running a team of like really awesome people? And I fell very much in the latter category and it.

[00:20:32] Joel: Change the mindset and some of the goal setting and some of the stuff you do when you're sitting down, you're like, yeah, revenue, and we need to increase and we need to do all this stuff.

[00:20:39] Jay: But like, it's not, that's not the driver for me as the owner of my company. It's not like, can we just make X amount more per year? which is a business entity. That's what you're taught to do. You're, you know, you're just like, you need to have growth every year. You need to make more money. You need this stuff.

And it's like, it just becomes this like. Bar that you can never really reach. 'cause it always goes up the next year. But it's if you don't, if you're not passionate about it, if you're not, you know, driven by the people you work with, then it's just some arbitrary number you're chasing. So I can relate very much with starting with the team because that, to me, even after 10 years of me doing it, that's the same thing that I come to work for every day, is like the people that I work with.

I love it. So I love that answer. yeah. Yeah. Go ahead. Yeah.

[00:21:22] Joel: You know, probably what I love about building software is solving problems for our customers that are real challenges for them. So that what gets me outta bed in the morning when we are get the opportunity to do that for people. it's like the people you work with and there's say, shared values that's like table stakes, but then solving real problems for customers. That's like the greatest part about it.

[00:21:45] Jay: I love it. I love it. do you care about personal brand at all? Are you out there doing stuff? Are you trying to let people know that Joel is the open a guy and like the, you know, you do the smiles and the way are you doing that out there? do you take any stock in personal brand or is it more just about Open Ark the company?

[00:22:00] Joel: you know, I probably should be doing more. I probably should have a podcast

[00:22:04] Jay: you're here right now. You're here right now. That's step one. You're doing it. You're, this is gonna make you 

[00:22:09] Joel: but 

[00:22:09] Jay: to get ready.

[00:22:10] Joel: you.

[00:22:11] Jay: that's fine. That's fine. It doesn't do anything for me. Trust me. People don't know who, people don't know who I am because of this podcast, I promise you that. okay.

All right. Fair enough. all right, well, I have one question that I ask everybody on this show, non-business related.

[00:22:24] Joel: All right.

[00:22:24] Jay: Non-open arc, non, you know, industry non. This is just about you specifically. If you could do anything on Earth and you knew you wouldn't fail, what would it be?

[00:22:36] Joel: Anything on earth that I couldn't fail at? Wow. Boy. I'd say, can I say like something like play guitar?

[00:22:44] Jay: Say whatever you want. This is your part. Do whatever you want. Madison Square Garden sold out for Joel. Whatever you want, 

[00:22:49] Joel: right.

that'd be amazing. I do love music and, yeah, there's just something about getting carried away in that. That's really cool.

[00:22:58] Jay: You can't fail in this scenario. So you're a rock. You're a rock. you're a rockstar dude. you're a, you're, it, you're the new, it's not Billy Joel. It's Joel Reed. That's the new man. All right. Well, Joel, I love this conversation. I think you have some really great insight.

I want to kind of make sure we stay in touch and, you know, may have you back on again at some point. love your team. I can tell, you know, like I said, you're a people first guy, which I am too, and I love that. So, if you wanna reach out to you directly about anything they heard today, how do they do that?

[00:23:24] Joel: you can find me on LinkedIn, Joel Reed OA. There's two Joel Reeds in Pittsburgh, so make

[00:23:30] Jay: Really, are you related?

[00:23:31] Joel: me on this podcast.

[00:23:33] Jay: Are you related?

[00:23:35] Joel: yeah, two, two. And I actually work with the other Joel Reed, so we're both in the technology

space, so, 

[00:23:40] Jay: Okay. 

[00:23:41] Joel: make sure you find me the one at Open Arc

[00:23:43] Jay: we'll link you in the bio. We'll do 

[00:23:45] Joel: All right. 

[00:23:45] Jay: right. Well, Joel, you're fantastic brother. enjoy the rest of your week. Have a great holiday season, and we'll catch up at again soon. All right.

[00:23:51] Joel: Alright, great.

[00:23:52] Jay: Thanks Joel. See you buddy. Later. 

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