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Software company comes to a welcome crossroads

After a successful start, Pilgrim Software must choose the right venture partner to help it grow.

Ami Utji is on the fence.

She and three partners built a software company in Tampa by going without pay, working from home and running up hundreds of thousands of dollars in credit card debt.

Today, Pilgrim Software Inc. has 95 employees. It made more than $6-million last year selling software to Fortune 100 customers that tracks quality in the supply chain and production process.

But Utji, Pilgrim's president and chief executive, has a nagging feeling that bigger things beckon and outside help is needed.

"This is a $6-billion market and there is no market leader," she said of manufacturers' demand for quality management software. "Whoever gets there faster will win. But we need outside money to grow."

Profitable and debt-free, Pilgrim is an anomaly in today's tsunami of money-losing tech start-ups. It's exactly the kind of company that venture capital firms, tired of posting losses on dot-com flings, want to back.

But as Utji and her partners consider term sheets from outside investors, she's troubled by the trade-off that many businesses face sooner or later: grow faster _ but risk losing control or eroding a successful corporate culture.

"The bottom line is we need to take more risk," said Utji, 37. "But there's a lot of risk aversion in this industry. Most of our competitors are like us, small companies that have grown their business from scratch."

With about 10 companies like Pilgrim splintering the market, Utji fears the time is nearing when one company will get major financial backing and dominate the market. And she wants Pilgrim to be that company.

Slow and steady has been Pilgrim's motto since its beginnings in the early 1990s. Utji, who has undergraduate and masters degrees in industrial engineering from the University of South Florida, was working for a Jacksonville sheet metal company that made electronic chassis for customers such as AT&T Paradyne. The Paradyne contract was in jeopardy because of quality problems until Utji developed a system that tracked production so defects could be detected and corrected.

"Quality engineering is all about documenting what you do, then following the documentation," she said. "The goal is to reduce the amount of non-conformance on the production floor."

Higher-quality chassis began rolling off the line, and the Paradyne contract was salvaged. But since Utji's solution was paper-based, it was an administrative nightmare.

Utji recruited a former colleague at USF, Prashanth Rajendran. The two of them worked nights and weekends to develop software that would automate the quality management system. Their employer, Exact Inc., agreed to be the test site, and by the end of 1993 the system was implemented.

"The place was a real sweat shop, with no air conditioning, and we had to train the machine operators from ground zero; we had to teach them to type," Utji recalled. "But it worked."

In 1994, Utji and Rajendran came back to Tampa and convinced Utji's sister, Maya Leeflang, and another former USF student, Atulya Risal, to join their effort. The quartet launched Pilgrim Software on the back porch of the Tampa home that Utji, Risal and Rajendran shared.

The company took advantage of a state job training program to underwrite the cost of hiring programmers. Cash advances from the partners' credit cards supplemented a meager $25,000 in first year's sales.

In early 1995, Pilgrim had its first big sale: a $150,000 order from a lighting manufacturer in Seattle. Utji still marvels that the buyer didn't visit the company before placing the order.

"If they had come down and seen we had no office, no nothing, we never would have gotten the deal," she said. "As it was, that was the oxygen we needed to survive."

The next big buyer did insist on a site visit, so Pilgrim, with seven employees, moved into hastily rented office space. Six years and three moves later, Pilgrim occupies two buildings in an office complex near Dale Mabry and Busch boulevards. The company is on track to more than double its revenues this year to $14-million and grow to 120 employees by year end, according to Utji. Among Pilgrim's customers are medical device manufacturer Cordis, Air Liquide, Siemens Automotive and Gencorp Aerojet.

Utji said the diversity of Pilgrim's client base protects her company from being hit too hard by an economic slowdown.

"Automotive and generic manufacturers may take a step back this year," she said. "But quality assurance is not an option for medical device manufacturers who deal with the FDA."

Pilgrim also is expanding its products beyond quality management software, which starts at $5,000 for a small manufacturer and rises into multimillion dollars for large conglomerates. Consulting is a growing part of the business, as manufacturers work more closely with their suppliers to cut costs and ensure the quality of their raw materials.

Utji is proud of what Pilgrim's founders have created: a management team that shares in ownership of the company and a work force notable for its diversity. "We probably have 16 languages spoken in our company, everything from Russian to Chinese," said Utji, a native of Indonesia whose partners include natives of Nepal and India. "And we've got every religion you can imagine."

Despite her reluctance to tamper with Pilgrim's successful formula by bringing in outside investors, Utji thinks it's the logical next step.

"The most important thing is to find the right partner and the right terms," she said. "And it's not just the money, it's the connections and market expertise they'll bring to our company."

Nor is she worried that she might be replaced by a more experienced executive.

"We're not creating a company to leave a legacy," she said. "We're in this business to make money. And no matter what we've been through so far, we're still relatively green."

_ Kris Hundley can be reached at hundleysptimes.com or (727) 892-2996.

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