A business mindset and a unique product helped Tom Margarido, Chief Executive Officer of East Point Systems, Inc., grow his company from a basement startup to a thriving $2.5 million business. Margarido shared stories about his beginnings; emphasized the importance of people, process and product; and described his company’s plans for the future.
IDH: Did you always have an entrepreneurial drive?
MARGARIDO: I always felt that I wanted to do something on my own, even though I worked for multiple companies. I spent a decade at Royal Business Machines, which is better known as Royal Typewriter. I was their national service manager for electronic products. Later on I spent a decade at Wang Laboratories, which was a key computer company during the mini-computer era. That gave me the background for building my software company. I also spent three years in the military, where I was trained for computers and electronic equipment, so that was kind of the catalyst.
IDH: You had the computer background, how did you develop the business owner mindset?
MARGARIDO: At Wang I started off as a developer, then became an analyst, a branch manager, a manager of several branches and then the district consulting services manager. So that managerial experience, along with my business education at Central Connecticut State University, helped spark the entrepreneurial spirit to start a business. I felt I had the tools both on the technology side and on the business side and that allowed me to move forward.
IDH: Once the entrepreneurial spirit was sparked, how did you create the business concept?
MARGARIDO: The positions I had held cumulatively prepared me to found a company. In 1996 I met Paul Taff, who is now our Treasurer/General Manager, while working in a real estate office where I had written a substantial amount of software to automate the business.
After leaving real estate sales, Paul went on to find work as a contractor in the little-known niche market of mortgage field services. As the contracting business where he was working grew, the need for automation became critical and Paul provided my name to the owner. I made a deal with the owner to create a fundamental software system for his business at a very low price if he would teach me everything he knew about the mortgage field service industry.
The deal also included the stipulation that in return for the low development price I was charging, I would own all the rights to the software I developed. After creating the initial software package and learning about the industry, I realized I could enhance the system I had developed and sell it to thousands of contractors across the U.S.
That is when East Point Systems came to be. We were pioneers and our software was the only field service software in existence for the mortgage field service industry for almost a decade.
IDH: How did the business develop and grow?
MARGARIDO: It started off with just me. I spent the first five years of this business in my basement developing software with my wonderful wife supporting me. She had faith in me and stuck with me. As a result, I was able to develop a product that was saleable.
I had the business experience of managing people. I had the experience of managing budgets and materials. What I didn’t have was the experience to know that I needed to start developing layers of management underneath me.
Of course, when you start a company, there’s a tendency in the back of your mind that says: It’s not going to be done right unless I do it. Finally one day you wake up and say: If I don’t get another layer of management beneath me I’m going to die. There are only 24 hours in a day and I’m working 25!
I do remember in the first five years working all day and developing software all night, seeing the sun come up and knowing that customers were going to start calling for support. So I’d go take a shower and I would go back down to the office and I would work the whole day again. Sometimes I’d work two or three days without sleep.
That’s the kind of dedication you have to have if you want to get your business off the ground. It takes dedication from you, and the people that you hire, especially in the beginning. If the people who are working for you don’t have the same level of desire and attitude toward the company as you do, you should get rid of them because they’re going to do nothing but drag you and the company’s bottom line down.
IDH: So how do you bring in the right people?
MARGARIDO: That’s a good question because people are probably the biggest variants of any business.
The three most crucial parts of a business are its people, its process and its product. If anything is broken in those three areas, your company is not going to be successful.
You start with the people. They not only have to have the skills and desire to be where they are and be engaged in what they’re doing, but they also have to be able to collaborate with the rest of the team effectively. If they don’t, things are not going to happen properly. They’re not going to happen as a team, they’re going to happen as a bunch of individuals all running around in a fire drill.
IDH: Tell us about the business process.
MARGARIDO: The process is so important to any business. When I refer to the process I mean every procedure in the entire company—sales, accounting, development, quality assurance (QA), support, delivery, accounts receivable (A/R), accounts payable (A/P), purchasing, and so forth. It’s the structure that business is built upon.
If you’re not disciplined and you don’t look at your business as a process, then you’re definitely going to fail in the long run. Your process is not only the glue that holds your operations together, it’s the key to increasing margins, controlling cost, controlling cash, increasing revenues, increasing the overall performance of the business, increasing job security, increasing job satisfaction and maintaining or increasing your product’s quality.
If you have a broken process, you have a broken company and a broken product coming off the end of the line, whether it’s a service you provide or a product you’re manufacturing. The end product is the result of the people collaborating and the process that’s used to get to the end product.
IDH: And how does the product factor into the equation?
MARGARIDO: First and foremost, your product has to solve a problem in the marketplace. There is no market at the North Pole for snow balls. Another important thing is that your product line has to be focused and not scattered in multiple directions, otherwise you’ll confuse your customers.
The product part of the equation is the bottom line of the whole thing. If you’re delivering an inferior product or you’re delivering a product the market doesn’t want, you’re going to be in trouble.
When it comes to the product, you really have to stay in tune with what’s going on in the market and be able to adapt quickly. Things move so fast. It’s really a conveyor belt. Especially with technology, if you don’t have cutting-edge technology that solves customer problems, you’re not in business. You have to keep moving. When your new product is being released, you better have an idea of where you’re going next, because if you don’t, your competition does.
We’ve really learned that the people, process and product components of a business are very important, no matter what business you’re in. We have vetted our people and are currently re-tuning our process, which is something that needs to be done on a regular basis. Business environments change and rules change within the business. The process is what really guides the business through the steps that need to be taken to come out with a good product or service. Now that we are in the process of releasing our new Field ForwardTM product, we are already forming ideas for our next product.
IDH: Let’s go back to the people. How many employees do you currently have?
MARGARIDO: In the dark days of the great recession, we employed 37 employees, (mostly software engineers and support people). Today, due to the recovering economy and the lower number of foreclosures that are occurring, we employ 15 people. We expect that that number to grow quickly as we release our new multi-industry Field Forward product.
IDH: Regarding the product piece, tell us about the products and services your company provides.
MARGARIDO: The mortgage field service industry, which services foreclosed properties that are owned by the bank, is very busy when the economy is down because home foreclosures increase and those properties must be maintained when they are abandoned.
Our current Field-CommTM software product helps property preservation contractors and inspectors within in the mortgage field service industry dispatch, track and report work performed on foreclosed homes owned by the banks.
We also developed and maintain a large communications platform that functions something like a central telephone switch where any subscriber can stream data to any other scriber’s system through a single highly secure, application program interface connection. Typically our communications platform processes and routes around 7 million documents and images each month.
We recently expanded our scope beyond the mortgage service field industry with our Field Forward cloud-based process management system that adapts to any industry for any business. Field Forward is designed specifically to strengthen the people, process, and product components of a business. It provides a platform where everyone involved in the process, including internal staff, fieldworkers, vendors and clients, can participate and instantly collaborate throughout the process.
Field Forward incorporates features including business rules, process tracking and a forms template builder to enhance the process and product quality, and it runs on any device that has an internet browser, including mobile phones. That’s why we call it a process management system, because it actually enhances the whole process. It makes the people part better, the process part better and as a result the product is better.
IDH: Let’s talk about the grant you received to fund your new product. Did you receive the grant through a specific program?
MARGARIDO: In September 2014 we received a $100,000 grant from the Department of Economic and Community Development (DECD) Small Business Express Program. It’s a very good program. It gave us monies in different areas, such as communication, software tools, marketing and office equipment.
Up to 50% of the grant could be used toward salaries. We had to have matching funds, meaning we had to spend an equal amount of our own money on the project as well. Some of our matching funds were used for business travel, payroll taxes, fringe benefits and so forth. The grant also specifies that we had to employ a certain amount of additional people in Connecticut for a minimum of one year.
The grant, along with monies we contributed, helped us develop our new Field Forward product and will make East Point Systems less vulnerable to fluctuations in the economy and seasonal work volumes, while bringing new jobs to the Hartford area and our company.
IDH: Will the jobs be tech-based?
MARGARIDO: Most of the jobs will be tech-based (software engineers, QA engineers and technical support people) but there are other jobs—sales, customer training and internal processes—that need to be manned. You can’t grow a company on just technology; you have to have a structure as well.
IDH: There are 20,000 offices using your products. In your first five years you had 200. How are you developing your customer base?
MARGARIDO: The mortgage field service industry is a very niche industry, so word of mouth is very important. Most people never even heard of this industry until it got into the newspapers during the depths of the great recession.
One trade organization, the National Association of Mortgage Field Services (NAMFS), has an annual conference, a leadership conference every six months and training for the industry. They also have an associate program, which we’re part of as a vendor that provides services to the industry. East Point Systems attends the NAMFS conference every year.
A lot of our marketing is word of mouth through the industry. If you have a good product and one potential customer hears about it, then they tell the next potential customer. If someone sees the product at the national association tradeshow floor and they like it, they’re going to talk it up while they’re there, bring the information back to their company and discuss it with other people. They spread the word and the phone starts ringing.
We also have several multi-billion dollar clients (banks, insurance companies and national field service companies) that use our products to dispatch fieldwork, receive field reporting and process work within their headquarters. To have a common field processing network, our large clients require all of their fieldworkers and subcontractors to use our products for receiving work and field reporting. This is another large source of new business.
That dynamic might change as we expand out to some much larger industries with our new process management system.
That’s another aspect of this whole thing. Why create a process management system? Well, we didn’t realize it until recently, but our Field-Comm product was always a process management system, we just called it a service management system. It monitors the process, provides collaboration for the people component and incorporates business rules and rule-based data collection; however it was a one-trick pony focused on one industry.
Now we have built something that’s flexible and generic that will work with any industry. It’s a process management system that is deliberately designed to enhance the people, process and product elements of a business. It’s not a just service management system, It’s much more than that.
IDH: How do you feel about working in the Greater Hartford community?
MARGARIDO: We enjoy being part of the Hartford area and the Hartford district. It’s easier to hire employees here because there are a high number of people in the area that have the skills that we look for.
As you know, there are a number of large insurance companies in the Hartford area. Insurance company information technology (IT) departments have the same needs as we do for software developers, which helps to build the momentum of the high-tech/IT community in the Greater Hartford area.
As the demand for software developers increases, more developers are drawn to the area, making the talent pool even larger. If an insurance company experiences a layoff because they’re closing an office or a department and the laid-off workers apply for a job at East Point Systems, it’s likely that they have the skills we’re looking for, because the insurance companies require the same levels of skill as we do. The synergy is here.