In the early 1990s, the keys to business success seemed clear to a generation of young entrepreneurs. Tim Pearl, owner of Lansing-based
Agate Software, remembers these years fondly.
“Everyone was starting their own internet companies at that time. Anybody with a PC could hang their shingle out and be self-employed.”
Like other entrepreneurs, Pearl says, “we created our company first, and then we had to figure out what we were going to do with it.”
Agate has since developed web-based accounting and grant management systems for 250 programs in 15 states and the District of Columbia—tools that shepherd more than $2.5 billion to hundreds of traffic safety, workforce development, and housing and community development programs.
In 2000, Agate’s annual sales were at $700,000, with five employees. After seven years of developing web-based database applications and 15 to 35 percent annual growth, they have 31 employees and $4.5 million in annual sales.
That’s a long way from where they started, which seems almost like a different century. Case in point: When asked why he named the company “Agate,” Pearl is matter-of-fact: “Back before
Google, you needed to be near the front of the phone book.”
Off the groundPearl moved to Lansing to take a job following the completion of his computer science degree at
Michigan Tech in 1985, and stayed because of the ready access to talented graduates of
Michigan State University. It was during this time that he created Agate Software.
During Agate’s early years, Pearl provided database consulting services to a range of corporate clients. Agate’s breakthrough came in the late 1990s, when high-speed internet access became available through TCI, the cable TV company at that time.
“What’s probably kind of unknown at this point,” recalls Pearl, “was that East Lansing was the first place in the country where a small business could get high-speed internet at a reasonable price through the local cable company.”
Pearl began looking for synergies that might result from applying web technology to database management. To accomplish that, he would need to convince customers that they needed a web application.
“That wasn’t just everybody back then,” Pearl says, as if it were a lifetime ago.
“Unless you were a big player, you couldn’t make millions of dollars off of creating web sites; we realized that. We created a lot of web sites, but at $3,000 to $5,000 each, they weren’t getting us where we wanted to be. There were only two big local players back then that had anything to do with the internet—that was MSU and the State of Michigan, and they both became our customers.”
One of Pearl’s other customers was Bob Vandenhaute, a manager at a local company supplying polypropylene components to the auto industry.
“I hired Tim to develop a system to manage our entire business,” says Vandenhaute. “It brought together all facets of our business—technical development, suppliers, sales, inventory. It brought all our systems together.”
Pearl agrees: “At that time, we didn’t want to reach a million people; we just wanted to link the plants together.”
Pearl and Vandenhaute developed a system that linked their factories through internet access to a central website, rather than through a database installed on desktops throughout the corporation.
It was a breakthrough concept.
Finding the ProductVandenhaute left his company to join Agate, where he is now chief operating officer. “We realized that we weren’t just doing consulting work,” says Vandenhaute, “We had an opportunity to become a product company, versus a consulting company.”
“I think everybody who does that—or at least a good portion of them—is looking for the answer to the question, ‘How can I find something here that I can make a product out of, and transition to a product company?’" says Pearl. "It’s hard to come up with the dollars as an individual to be an R&D shop for some period of time—with no income—to develop a product.”
“And that’s exactly what we had to do,” concurs Vandenhaute. “I don’t think we’d be here if we hadn’t transitioned into a product company.”
Armed with their internet database platform, they marketed this approach to various local companies and the State of Michigan. They found an interested audience at the
Michigan Department of Education (MDE).
But MDE wasn’t interested in linking various offices so much as linking their grant programs to eligible applicants and the public throughout the state. So Pearl and Vandenhaute developed a new platform to meet the need.
The result, in 2001, was the
Michigan Electronic Grants System (MEGS), an innovative online application and grant management system. Eligible local organizations could apply for and be awarded funding, request and receive payments, and report progress online.
The team refined their platform into a product called “
IntelliGrants,” successfully marketing their technology to other offices of state government in Michigan.
Since many state government grant programs use federal funding for their grant programs, many states have similar grant management requirements, creating a potential nationwide market.
Growing StrongThe results have been profitable for Agate; Pearl and Vandenhaute are forecasting continued growth, hoping to double their annual sales over the next 5 years.
The state of New Jersey has recently contracted with Agate to develop the first comprehensive, state-level E-Grants system in the nation.
But a major challenge both men cite remains finding and retaining young talent. “Enrollment in computer science has been declining for the past few years,” laments Vandenhaute. “When the tech bubble burst, people said, ‘I don’t want to go into that field, because everybody’s getting laid off.’ So you’ve got fewer people coming out.”
Pearl and Vandenhaute credit organizations like the
Capital Area Information Technology Council, a Mid-Michigan association of IT companies, for efforts to retain talent in the Lansing area.
Agate has taken its own steps to create the kind of casual atmosphere that young workers appreciate. They have added a workout room to their new headquarters in Okemos. The office has a gong that’s rung to mark big sales, and many employees keep a trusty Nerf gun at the ready, always prepared for the occasional outbreak of “office hostilities.”
Pearl and Vandenhaute are doing their best to keep the gong ringing, and they expect to have plenty of work for the talent they have rounded up.
“There’s lots of room for growth in grants management,” says Vandenhaute, eyeing the 35 states that don’t use Agate’s systems yet. “Plus, in nearly every state we’re in, it’s not just grant management. Once they start down this road they realize—what would it take to add other elements?
"We’ve never had a state government yet that just said, “Thanks, I guess we’re done.”
Lawyer-friendly disclaimer: Although local writer Rick Ballard uses an Agate system in his work for the State of Michigan, this article reflects his own work as a freelance writer.
Dave Trumpie is the managing photographer for Capital Gains. He is a freelance photographer and owner of Trumpie Photography.
Photos:
Tim Pearl, owner of Lansing-based Agate Software
Joshua Tkaczyle works at Agate
Joel Post shoots his Nerf gun at co-worker Ryan Yoakam during a work break
Tim Pearl
The gong that is rung to mark big sales at Agate
All Photographs © Dave Trumpie