Q&A Wednesday :: SubtleData

Today’s Q&A Wednesday is Richard Bagdonas, founder and CTO of SubtleData, a platform for developers that want to create mobile solutions for the hospitality industry. Be their 125th follower on AngelList and win a Starbucks gift card.

Q: Explain what you do in a way that my mom can understand?

Everybody has a smart phones these days which are basically computers in the palm of your hand. The software developers who make applications for these phones want to have their apps “talk” to Point of Sale systems like the ones you find at the front of your local Walmart or at your favorite restaurants and hotels. Getting their application to talk to the Point of Sale is very tricky and requires a lot of extra software that runs locally on the Point of Sale and even more software that is in the “cloud.” SubtleData builds software that talks to many different types of Point of Sale systems and we let software developers plug their phone apps into our software. The result is that your phone can perform tasks like ordering an appetizer, paying your bill, and even getting your receipt emailed to you.

Q: What was your “lightbulb” moment when you knew you had something?

The “lightbulb moment” happened at the 2012 SXSWi conference in Austin, Texas. I was walking around with two iPads mounted to my back that displayed demos of web applications that had been built on the SubtleData platform. Someone from Facebook asked for a demo and proceeded to ask me if I wanted to sell the company. The hyper-local approach to our data and the fact that we are integrated with Point of Sale systems that had never been integrated like we had done made me realize that we were in for a very fun ride. My hunch was right. In the past 6 months we have had several more offers to acquire the company.

Q: Why wouldn’t app developers build their own integration to the Point of Sale system?

The Point of Sale industry works in mysterious ways. The Point of Sale companies are contacted daily by developers who want to integrate with the POS system. The POS companies have to say no to them. The reason is that it takes significant resources to get an app integrated into the POS and requires knowledge and experience with integrations that most app developers just don’t have. I equate it to asking a race car driver to build their own car. They are good at making a car go fast around the track, but most don’t have a clue on how to build one from scratch. The same thing happens in the POS world. App developers are discouraged from building their own by POS companies charging $15,000-$50,000 just to integrate their app. This barrier to entry is one that most app developers cannot get past. They have to integrate with many POS systems and the idea of spending that type of money before you get to write a single line of code is daunting. By contrast, SubtleData has paid the POS companies and provides them with an outsourced integration model. The POS company never has to talk to the application developer. They rely on our expertise in integration and providing an API to their POS that the app developer cannot break. The result is that the app developer gets their app integrated into many POS systems and gets to market right away because they can simply “plug in” to the SubtleData platform.

Q: How did you get to be the #8 trending startup on AngelList?

AngelList is one of those sites that takes patience, understanding and dedication. Our rise to the top of their list of thousands of companies started when Josh Baer (see Skylist, OtherInbox, Capital Factory) assisted me in cleaning up our profile so that it “popped” when you read it. I then created a system for contacting the investors who were “following” us on AngelList. My thought was that this was a task that you had to do by hand and most companies probably didn’t take the time to converse with these investors. It worked and our numbers started going up quickly. After a few days we were in the top 20, then the top 12 and as of today, the top 8.

Q: What is the “secret sauce” that will make you shine above the competitors?

Competitors in this space take several forms. Some come from the Point of Sale companies themselves offering their APIs to developers. The challenge for POS companies is that their offering is tied to one Point of Sale system. Some competitors also come from app companies that open up their internal API to other developers. The challenge for these companies is that the features they offer are directly tied to what their app does (such as mobile payments) and they are creating cookie-cut copies of themselves. Not only are these companies directly competing with their clients, they don’t have the full depth and breadth of features that allow developers to build the multitude of applications needed by the retailers. The secret sauce for SubtleData is that we are integrated into the top Point of Sale systems with a feature-rich, standardized API that works across all Point of Sale systems without having to change the code in the application.

Q: Has the BizSpark One program been positive for the company?

BizSpark One has been an incredible boost to the company. Microsoft spent over 8 months vetting SubtleData for the BizSpark One program. It was not a trivial process. The result is having access to every business unit within Microsoft as well as access to the top resources for investors, business development, marketing and public relations. An example of how much it has helped our organization is when we were introduced to the head of worldwide retail at Microsoft by Christopher Griffin, our BizSpark One advisor. Christopher was able to get us into the man that created the Walmart Point of Sale system and now runs all of Microsoft Retail. We could never have done that if we didn’t have the backing of Microsoft.

Disclaimer: I am an advisor to SubtleData.

About Bryan Menell

Bryan is the Managing Editor for AustinStartup and the CEO of Mahana. He is a co-founder of Capital Factory, an investor and advisor, and runs the popular Austin Tech Happy Hour with his wife.