Michael Zammuto is a former CIO who left the corporate world to launch the microISV, Sapago Inc. Sapago’s first product, Art-FID, allows art galleries to leverage RFID and handheld technologies to boost sales by reducing the dreaded words “just looking” from customers.
Why did you decide to give up your role as a corporate executive to launch your own software company?
I have always wanted to start and run my own business. I became a CTO at 29 and also served as a corporate CIO. Now, at 35 I know I want to do new things and to expand my skills and I think that I have enough maturity and business experience to be able to do it. Most importantly, executive positions can become a trap for entrepreneurs. Big offices, fat bonus checks and fully paid benefits can be very cushy and make it harder on you and your family to walk away and try to build something on your own or to join some bare-bones startup. I did not want that to happen to me.
How did you come up with the idea for your product, Art-FID?
Ecometry, where I was CTO, is a leading retail-industry ISV, with 350 enterprise clients including Nordstrom, Miles Kimball, J. Peterman and Coldwater Creek. I spent a lot of time developing retail Point of Sale systems. But, I have a secret. I hate retail stores. I almost never go to them any more. Have you every printed out product information and gone to Best Buy to make a purchase? Invariably they don’t have what you researched or there is a new one you did not know about. I got frustrated that all of the good information, the comparison shopping, reviews, user suggestions, content samples, cross-sell is all online. I thought I could bring those things to the retail shopper.
How long did it take to develop Art-FID?
The first version took a few months but development is ongoing. I have another version coming out in early June that adds new multimedia features, email capabilities and more to the product and am planning an enterprise version for large chain-stores. I have the next three years development all mapped out in my head.
What is the most important thing you’ve been able to apply to you current company that you learned during your time as an executive at larger companies?
Managing 55 people plus an off-shore group as large as 25 working on a product with over 3 million lines of code was a great experience. My experience which has proven most useful in my business came several years ago when I was an VP and then a CTO for couple of technology startups. That is much more roll-up your sleeves and get involved with everything. I participated in sales, recruiting, setting up partnerships, learned about working with the press and learned to focus on cash flow.
Your software is filling a very niche market. Do you feel that small niches are the future for most successful software companies?
I think niche markets are the only way to go for all small businesses. It is very difficult for a small business to fund and successfully develop a product or services with a huge market that cannot be replicated, almost instantaneously by bigger competitors. Software is tough because even big companies are often still be nimble and innovative. Wal-Mart snuck past K-Mart and Dell surprised IBM because they nibbled at the edges.
Do small software companies have the ability to compete with the big companies in today’s marketplace?
It is very, very difficult. The only way to do it is to create something that cannot be replicated like unique content or a sense of community that is hard to replicate.
You and your product have been featured in several articles recently. Do you get a significant boost in interest in your product after each of these articles is published?
PR is a fun and essential part of any marketing and I am grateful for all of the coverage. The kind of boost you get depends on who reads it. There are 25,000 art galleries in the U.S. so for the sake of argument, lets say I have 25,000 potential decision makers to reach. The first articles have been in technology publications like RFID Journal and retail-industry publications like Internet Retailer and The Retail Bulletin. So the lesson is to not rely on PR because you cannot control the message or who sees it.
How do you plan to market Art-FID going forward?
I am starting promotional mailings shortly and am going to sell direct via telemarketing and web-based promotions to gallery owners and museum curators. Eventually I will partner with PoS companies to jointly market the products.
What is the most successful marketing strategy you’ve used up to this point?
So far it has been contacting business and personal contacts directly, I am trying to get as many people I know to feel involved in this. I have called in a lot of favors this year.
How do you plan on pricing your product? Will it be a price per handheld or will it based on other factors such as the number of RFID tags?
I have priced my product per user-system. Each system includes two software applications, a PDA an RFID reader and 10 tags. That way a gallery can try out a single system and scale up later. The tags are Texas Instruments TAG-IT tags based on an ISO standard. They are nominally priced and additional ones can be purchased through me or any number of vendors. There is a nominal maintenance fee for support and software upgrades.
What are your short term and long term goals for your company, Sapago?
My short term goal is to sell enough Art-FID systems to become cash-flow neutral. I expect that to happen in the next 4 months. Long-term I will expand into other retail and entertainment verticals. At the enterprise level the system will be highly personalized, tied into loyalty programs and a company’s CRM system and provide all of the functionality that we enjoy on ecommerce sites today plus many things you can only do inside the stores. At that point I may entertain outside investors so I can build a larger sales and service organization.
What piece of advice do you have for other microISVs out there?
The most important thing to any company is sales. No matter what your background, make sure you budget time and resources for selling first.
————- About Michael Zammuto ———————-
Michael Zammuto is the founder and president of Sapago. Michael is a leader in producing innovative technology solutions for the retail industry. Prior for founding Sapago, Michael served as chief technology officer of Ecometry Corporation where he provided technology vision and product development leadership to the leading multi channel retail ISV.