Intellum is an Atlanta-based company that offers low-cost solutions for e-learning projects. CEO Chip Ramsey will answer reader questions in the comments section today (6/1/11).

“You may not have heard of us, but chances are you run into people on a daily basis that have,” says Intellum CEO Chip Ramsey (right). “You know the security guard in your building? We probably train him. Walked by a Coke machine recently? There’s a good chance we trained the guy who filled it.”

The company processes millions of student enrollments annually in over 11,000 cities and 65 countries. One day they’ll be in Palo Alto working with Facebook, the next in Atlanta with The Home Depot.

The initial idea
It was a long route to get there, though. It started back in 2000 with Ramsey’s stepfather, who worked for the Occupational Safety and Health Administration (OSHA) and spoke frequently about the difficulty and expense of complying with government regulations. “The initial idea was to build a hosted web app to simplify regulatory compliance and in the process, help employees avoid injuries,” explains Ramsey. “We’ve evolved over the years, but that’s how it started.”

The original funding plan was to raise $500k from investors, but Ramsey’s team fell short of that goal. It instead wound up raising $175k from friends and family. “I would love to drop some sanctimonious rant about how we were too good to take VC funds and were wise beyond our years regarding building a lasting business. But the truth was we did try to go the more traditional fund raising route. We spent months in bars, coffee houses, and hotel lobbies writing our business plan, meeting with whomever would see us, rewriting the business plan, and so on. We tried it all; We just failed. And despite the cursing under our breath that went on after each VC ‘didn’t get it,’ the truth is they were right to turn us down. Three twenty-five year old friends, barely out of college with little work experience and no product to sell probably aren’t the most qualified people to spend the millions of dollars our business plan called for.”

So what happened with that $175k? “We spent it all in three months and, at the end of the day, had nothing to show for it,” admits Ramsey. “The money was spent on salaries and professional services fees — fees for lawyers to draft our PPM and contracts, fees for financial experts to come up with our valuation, fees for programmers to develop software that never worked, and, my personal favorite, fees for consultants to coach us on how to raise money.”

Intellum’s home page today.

Course correction
The evaporating funds meant a change of course was needed. “For months, we had been writing a plan and basing decisions on what investors told us they wanted to see,” explains Ramsey. ”’You need more grey hair.’ Okay, we’ll hire a more experienced CEO, whose salary will burn through all our capital. ‘The mobile web is heating up. You should really have a mobile offering.’ Sure, we’ll waste a month of consulting hours on a prototype even though no one’s phone can actually display it yet. ‘If you were smart, you’d be looking for a big name insurance partner.’ Great idea, we’ll pull some strings and fly all over the place to meet with people, who don’t necessarily understand technology and already have more on their plate than they can handle.”

“We had been writing a plan and basing decisions on what investors told us they wanted to see.”

All that chasing left them living off credit card debt and peanut butter and jelly sandwiches. So the team made a decision: Stop chasing a funding event and figure out how to make money.

In order to conserve money, Ramsey began learning how to code. “Learning how to program wasn’t too terribly hard,” he says. “This is somewhat embarrassing, but I used to play around with BASIC on the Commodore 64, when I was in middle school, writing a few games similar to The Hitchhiker’s Guide to the Galaxy text game. I loved those books. Certainly nothing to brag about, but the experience minimized the intimidation I felt approaching code later in life.”

Early on, the team built quick prototypes with the open source ArsDigita Community System (ACS). ACS offered functionality coded into modules that the team could customize while also learning best practices. “The ACS prototype served as both our computer science classroom and entree into potential customers,” says Ramsey.

The hustle
Armed with a working prototype, the team kept hustling. But now they were hustling for customers instead of investors. Ramsey: “We networked, made cold calls, went to trade shows, and whatever else we had to do to get in front of people. We would pitch the idea, show the prototype, and update the software based on feedback. Ironically, it was a similar process to meeting with VCs and iterating over the business plan, but instead of being left with a worthless stack of paper, we crafted a product people were willing to pay for.

“We also learned, the hard way, that not every request should be taken seriously. For example, we once built the ability for students to call an 800 number, review a presentation, and take a test using voice recognition. The potential customer that requested the functionality said it would make our service a ‘no-brainer’ for them. When the feature was completed and they stopped taking our calls, we realized it should have been a no-brainer for us to require a signed contract with financial obligations before we started development.”

By 2002, the company was profitable. But, in response to customer feedback, the vision of the company kept shifting. Early investors responded favorably to the company’s niche focus on the safety and health industry since it made it easy to identify the right person to call in an organization. In reality though, those same people were extremely hard to sell to; They didn’t trust computers and had a hard time procuring budgets, according to Ramsey.

Meanwhile, Intellum was seeing an emerging trend: Customers wanted them to address learning and development needs beyond the confines of the safety and health department. Ramsey explains, “We already had software that was managing training records across entire organizations and were authoring custom courseware on topics that had nothing to do with compliance. As a result, we started seriously considering becoming an e-learning company.”

That meant battling bigger competitors, though. Ramsey says, “People didn’t understand why we would give up being one of only a few companies competing in a niche market that we were helping to define to go to a more mature market with a number of large established players. We went with our gut.”

Intellum Learning Management System Student home page lets students see and launch courses.

The sea change
Trusting that gut feeling has paid off. Over the last five years, Intellum has grown an average of 23% a year by focusing on e-learning. The company’s current headcount: 22.

Ramsey says, “We treat our employees like adults and manage them as little as possible. Some people work from home. Others work from our main office. Many are spread across the US. The lead developer on our newest product leaves D.C. each winter, because he would rather be in South America than deal with the cold weather. He can do his work from anywhere with an Internet connection and kicks ass at what he does, so that’s fine by us. We also try to keep our management style as egalitarian as possible. We hire intelligent, responsible people and encourage them to be passionate about what they do.”

Ramsey’s advice to other starters
Do what YOU think is smart. There’s a lot of advice out there — a lot of experts and business philosophies — you simply can’t take at face value. If you’re anything like us, you’re going to make some bad decisions and plenty of mistakes, but don’t fall into the trap of looking for the silver bullet or people outside your organization to give you all the answers. Pick something you can be passionate about, work hard because you love it, and refuse to fail.

Ramsey feels his background in coding has helped him be a better CEO: “My first instinct is to say I don’t understand how anyone could possibly be the CEO of a software company and not know how to program. Of course, that’s ridiculous. I know there are plenty of software industry CEOs that have been far more successful than I have without ever writing a single line of code. Regardless, I think the skill has helped me with everything from hiring and managing programmers to identifying new technologies and approaches that give us a competitive advantage. Also, I can’t imagine having a moment of inspiration and not being able to quickly bang out a prototype on my own. That benefit alone is worth the price of admission for me.”

Is there an exit strategy? “The truth is we don’t have one,” answers Ramsey. “We never really talk about it. I guess if there were some undeniably compelling reason to raise a bunch of capital and we were in the position to do so, an IPO may be a good way to go. But overall, we’re focused on growing the business and building the best company we can.”

But Intellum does have goals unrelated to the exit discussion. “One of those goals involves the sea change we, and many others, believe is coming in both corporate training departments and educational institutions. The Internet has provided an opportunity, possibly even more significant than the printing press, to impact learning around the globe. When a student in Botswana can get on a computer and take the same class as an MIT freshman in Boston, things are changing. When over 1 million students go through videos online from the Khan Academy each month, something meaningful is happening. These changes bring with them questions. How do you give structure and context to resources that are scattered across the Internet? What’s the best way to facilitate connecting people with experts that can mentor or tutor them? How should we handle accreditation in this new world? If we can make even a small contribution in this arena over the coming years, I think we will have accomplished something incredibly worthwhile.

“I don’t think we’re unique in this way either. Most entrepreneurs I meet seem to be more enthusiastic about the act of creation and the possibility of making a mark than they are about maximizing profits.”

“Most entrepreneurs I meet seem to be more enthusiastic about the act of creation and the possibility of making a mark than they are about maximizing profits.”

Update: This post was originally listed as part of our “Bootstrapped, Profitable, & Proud” series but commenters pointed out the company didn’t meet the criteria since it did in fact raise $175k from friends and family before going the self-funded route. To eliminate any confusion, we’ve removed it from the the series.