By Clay Holtzman, Staff Writer
“Tony Cheng started his company in 1999 after watching his telecommunications clients suffer through seven years of corporate mergers and acquisitions, resulting in neglect of quality customer service.
Cheng, himself a survivor of telecom industry consolidation with seven different business cards to prove it, founded Bellevue’s Netstar Inc. in 1999 to broker the kind of telecommunications service that he believed would keep customers loyal.
“I have always known that if you build the support they will come. There is a lot of technology, but in the end people do business with people,” said Cheng, who is Netstar’s chief executive officer and lone salesman.
The shifting world of telecommunications has helped feed Netstar’s business model. Years ago companies wanted to save money on their long-distance phone bills, while nowadays options are much more complex. Companies now are trying to get the most minutes out of their plans or maximize their bandwidth capacity, according to Cheng.
Today, Netstar focuses on helping customers buy and manage their cellular and telecommunications services, and look for ways to reduce costs on those services. The company is profitable, growing and even hiring some staff.
Netstar has 12 full-time employees and typically has another 10 to 15 contract staff. In 2008, total revenue topped $1.65 million, up about 30 percent from the previous year, according to Netstar. “Last year was a fantastic year,” Cheng said. This year the company is on pace for similar growth, he said.
Driving recent growth has been Netstar’s primary service of helping clients reduce telecommunications costs by ensuring billing accuracy, maximizing existing services or getting better rates through Netstar’s strategic partners. Cheng began offering cost-reduction services around 2001 as company spending on telecommunications services began growing dramatically. However, the service has boomed during the recession as companies have slashed costs.
“We are not geniuses that know every chess move,” Cheng said. “We built this business on meeting the customer need and this recession played into our hands.” Netstar says its fee for cost-reduction services is based on savings obtained by clients.
According to Gartner Inc., and information and technology research firm, up to 20 percent of business telecom charges are incorrect, and the overwhelming majority of those errors favor the provider. In 2006, a Gartner vice president of research projected that the market for technology expense management would reach $1.5 billion by 2010.
Cheng says the trend of companies using experts to trim their telecommunications costs should feed Netstar’s growth for years to come.
Netstar primarily serves mid-sized companies that have multiple locations and spend significant amounts on telecommunications. Clients include Phil Smart Mercedes-Benz, John L. Scott Real Estate and Oak Harbor Freight Lines. The company has more than 500 clients, most in Washington state.
In addition to new customers eager to reduce costs, the recession has also given Netstar an opportunity to choose the best employees available. “The economy presented a lot of talented people that are available for us to hire. The challenge in that is finding the right people with the right customer service attitude that want to grow with us,” Cheng said.
Netstar says it has no plans to take on private investors; the company is debt free and operates on its own revenue, according to Cheng. But the company does plan to pursue additional strategic partnerships with carriers and technology providers to improve and broaden its services.”