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(February 20, 2004) - Our initial impressions to the contrary, the industry is lucky to have a fellow like Michael Mullarkey in the game. The CEO of Workstream, Mullarkey is tirelessly building a full service, reasonably low cost provider for the bulk of the Enterprise business. Years of service at Sony have given him a view of the market that few are able to match.

Workstream is built through acquisition and integration but it is no Silicon Valley dream play. Mullarkey is brutal in his appraisals both of company assets he wants to buy and of the visionaries who created the bargains he perceives. Mullarkey delivers consistent reliable performance, dial tone as he calls it, wrestled from the ashes of venture backed firms. He is uniquely able to see the value while negotiating a hard-line set of conditions.

Over a recent dinner, Mullarkey wowed us with his vision for a business cycle-proof company that delivers a bundle of well oiled minimum level services. The company makes money on both job hunters and HR in a way that (at scale) should be the envy of Monster and HotJobs. He doesn't ever swing for the fence, preferring to get on base consistently for both investors and customers. Mullarkey is able to balance history, cost and opportunity inorder to deliver customers of dead companies the value they want at a meaningful profit.

Shrewd is the word that keeps coming to mind. Although Mullarkey has collected more detractors than we have (the Yahoo discussion board for the company is a wild collection of nastiness from the employees of acquired companies)., Workstream continues to deliver powerful incremental improvements to its performance and holdings. By balancing HR and Job Hunters as customers, the company is defining a platform for future acquisitions and consistent growth through the economic cycles. Recently, BusinessWeek described him as the "King of Rollups".

Ranked Number 146 on the 2003 Deloitte Technology 500, Workstream is rapidly outpacing the naysayers. (The Fast 500 is a ranking of the 500 fastest growing technology companies in North America. Rankings are based on average percentage revenue growth over five years.)In 2003, the company (WSTM) posted $16.6M in sales against a total indebtedness of $4M, a decidedly enviable position. Recently both Citibank and Fidelity have taken small investment positions.

We honestly didn't think he could do it. At our last dinner, we suggested that he had an inadequate perspective on the industry and its needs. At our most recent get together, we had a bowl of crow along with the entree. Mullarkey is proving our most fundamental point....This is not rocket science. For the 70% to 80% of the market that wants innovation constrained or limited to zero, Workstream offers a package that does what customers want, no more and no less.

In the market that Peoplesoft fails to serve so miserably (Class III and IV customers), Workstream offers a reasonable and sustainable product at an attractive price point. Built from the remnants of high-flying Silicon Valley companies, the core product is simple, usable and always on....dial tone. Listen closely...you'll be hearing about a lot of Workstream wins this year.

John Sumser

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