As part of our Gritty Entrepreneurs series, we interviewed Frank Zamani, Founder/CEO of Caspio. Their pitch is “no more programming for custom web applications”. That is a tough market, which we will explore in this post. But Caspio is bootstrapped, profitable and can point to some real case studies. So they must be doing something right. Let’s tell you this entrepreneur’s tale and assess their future prospects.
Frank “Been There” Zamani
14 years ago, in 1994, Frank and his brother Payam founded Autoweb (“no haggle pricing for cars”). They did the whole deal of that era: lots of VC, then an IPO in 1999 and then the crash. Frank came away from that experience a bit bruised and wiser. For his next venture, like many other similar entrepreneurs, he decided to use his own money and customers money (aka revenue). After some false starts, Caspio started properly in 2005.
Today, Caspio is a profitable product (not services) company with 30 employees. That is not easy to do. Here is one big gritty cheer!
Why No VC? Risk Difference
I asked Frank, “why no VC?” His response was interesting and is a common refrain from some entrepreneurs. He said that VCs look at your company as just one in a diversified portfolio, a ‘shoot for the moon while risking everything’ approach. That does not work so well for an entrepreneur who sees his or her company as their one good shot at success. Failure is not an option.
This is interesting because it is contrary to the usual entrepreneur complaint about VCs, that they are too risk averse. Frank (and other entrepreneurs we’ve spoken to) have observed the opposite!
The Non Programmer Tools Market
I came to this interview with an inbuilt prejudice against the market for tools that can be used by non-programmers to create meaningful applications. I believed that these tools fell between two stools – neither easy enough for laymen, nor powerful enough for programmers.
History is littered with failed attempts at this market. There are plenty of people pitching this right now. Some of them are big companies and some have plenty of VC cash.
So Caspio, with no external financing, doesn’t stand a chance? Well, not so fast. They are profitable with 30 employees and have real clients. So what are they doing right?
Where Is Caspio Getting Traction?
Their biggest base of customers today are newspapers and other media companies such as ABC News, LA Times and Boston Globe. The editors/journalists use Caspio to build simple online databases such as restaurant guides. That makes sense. Those apps are way too small to get into the IT Dept queue. It is really all about understanding the content.
Disaster relief is another use case, people who need to quickly compile and distribute lists and want to go beyond email lists.
Caspio is built on a Microsoft stack – SQL Server and .Net. I can hear all those Java techies groaning, but this is not targeted at you! The technology is totally abstracted from the user.
This kind of thin horizontal layer on top of a Microsoft stack (or any other stack) would never have worked pre-SaaS. The IT buyers would have killed it. And end users would have fallen at the “install this on .Net” hurdle. That is why this has always failed in the past.
Using a SaaS approach, those barriers go away.
Who Are Caspio’s Competitors?
Interestingly, Frank mentioned Offshore Outsourcing as the primary competitor in real projects. That makes sense. Small custom jobs tend to be a bad deal for both buyer and seller. So a DIY approach makes sense.
The BigCo competitors that Caspio see are:
b) Salesforce.com; but this still requires somebody to write code and usually revolves around sales
c) Quickbase from Intuit: Caspio say this is good for internal apps, less for public facing apps.
The SmallCo competitors: Coghead, LongJump, Formsite. This is a long, long list.
Who Will Be Last Man Standing?
This market is bound to consolidate. VC funded ventures that don’t get to profitability are unlikely to raise more money. Caspio is serving underserved small niches that BigCos are less interested in. So they have a shot at being the “last man standing“.
What questions would you ask this Gritty Entrepreneur?