Paycom's work pays offBy Jim Stafford
Business Writer
About a year ago, Paycom founder Chad Richison bought 130 acres along the Kilpatrick Turnpike in far northwestern Oklahoma on which he planned to build a corporate headquarters for his online payroll business.
Those plans are on hold because Paycom has grown so quickly that the corporate headquarters Richison envisioned already have been outgrown by the fast-growing company.
"I thought: ‘I'm going to build 30,000 square feet and we're going to grow into it,' ” Richison said. "But we're already at 30,000 square feet, and we need another 12,000 in the building that we are in, which we can probably get in the next three or four months.”
Paycom employs 335 people in five cities, including about 165 at its Oklahoma City headquarters in the Lake Pointe Towers on Northwest Expressway. The company also operates in Dallas and recently expanded to Chicago, Atlanta and Fort Worth, Texas. It plans to add Phoenix and Houston this year.
"We're hiring pretty close to 50 people per month right now,” Richison said.
Many of the new jobs are in sales, while others are in new client setup, he said.
Paycom serves about 3,500 companies nationwide, providing online payroll and other human relations functions through its Web-based product. It stores the payroll information on servers in Oklahoma City and Dallas, processes and prints payroll checks and delivers them to the company sites via secure couriers.
After companies are brought on board, the new client setup specialists help the companies run their first couple of payrolls, then hand them off to a payroll specialist who provides ongoing service.
Paycom targets companies — with at least 50 employees — that already are outsourcing their payroll services, said Richison, a Tuttle native who founded the company in 1998.
The firm takes almost all of its clients from competitors such as payroll services giant Automated Data Processing, a company for which Richison once worked not long after he graduated from the University of Central Oklahoma.
Paycom has benefited from the development of its payroll product as an exclusive online service, Richison said. Competitors such as ADP were created well before the Internet exploded as a business platform, meaning their services require an "installed” database and IT specialists to maintain it at the client's site.
"We developed our systems almost in the 2000s,” Richison said. "Things that take 15 steps for them for us is a one-step process because we knew the end. They are stuck in a technology.
"If we had developed our product five years earlier we would have been in Windows and we would have been stuck in Windows. We wouldn't have been Internet-based.”
Today, when Paycom's sales force introduces its Web-based payroll product to potential clients, 50 percent sign on within two weeks, he said. After about eight months of introduction to the software, Paycom wins "75 to 80” percent of the prospects.
"Even if they say ‘no' right then, their problems don't go away,” Richison said.
Paycom long ago expanded beyond Oklahoma borders, but one of its early clients was Oklahoma City-based Mathis Brothers Furniture. The company remains a customer in part because of ease of use, said Chad Raymond, the furniture retailer's director of operations.
"From an access standpoint, it's fantastic,” Raymond said of the Paycom process. "We were looking at a solution that integrates time and attendance with the payroll piece and not having a bunch of software systems. He has been able to do that.”
Richison said he operated on "credit card arbitrage” to bridge the revenue gap while the Paycom software was under development after the company was founded in 1998. But once the software became operational in 2001, the company took off.
"In January 2001, that's where the revenue outpaced our expenses and we became profitable,” he said. "By 2004, we were debt free.”
The company has enjoyed such spectacular success that Richison sold a majority stake in the company to New York-based Welsh Carson Anderson and Stowe last year for $56 million.
The deal allowed Richison to continue to operate the company and for it to remain Oklahoma-based. He said Paycom still might build a corporate headquarters within three years on the property he bought near the Kilpatrick Turnpike.
Paycom has hit the $20 million annual revenue level and is on pace to add $25 million in new revenue by the end of 2008, Richison said. It was recognized as one of the nation's fastest-growing private companies for both 2006 (No. 156) and 2007 (No. 601) by Inc. magazine. "My goal is by 2009 adding $50 million a year,” he said. "We have doubled every year.”
Paycom Headquarters
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Re: Paycom to build new offices
Originally Posted by MadMonk
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