Tag: Richard Bagdonas

By Popular Demand, Mahana Expands Outside the Restaurant Industry

Reporter with Silicon Hills News

"An Estimote Beacon is a small, wireless device, sometimes also called a 'mote'. When placed in a physical space, it broadcasts tiny radio signals around itself." Photo courtesy of Estimote.

“An Estimote Beacon is a small, wireless device, sometimes also called a ‘mote’. When placed in a physical space, it broadcasts tiny radio signals around itself.”
Photo courtesy of Estimote.

One of the rules of startups is that you can’t always follow the rules of startups. Mahana was trying. After launching its technology that helped restaurants reach out to their best customers when they were in proximity of the establishment, it kept getting calls from hotels, sports teams, airlines and others who wondered whether Mahana could help them figure out how to use beacons with their customer base as well.

“I would always answer ‘That’s not what we do,’” said CEO Bryan Menell. “You know with a startup you have to focus, focus, focus. But after awhile of doing this in restaurants it was like ‘People keep calling. Let’s go figure out what’s going on with this.’”

They took two meetings in Dallas to see if they could help two publicly traded enterprise companies and left with plans to work on two pilot programs.

“It was this ‘Aha’ moment,” Menell said. “We need to look at opening this up to more people. We can’t open it up to just everybody…we need to pick industries that can leverage it. That’s hotels, restaurants, retail, casinos. Even that seemingly small slice is very deep. There are tons of ownership groups. We started to research verticals and it was really huge.”

Menell asked co-founder and CTO Richard Bagdonas whether he thought the technology could work with these other industries and learned that Bagdonas had built it as a larger platform that could accommodate all kinds of apps and businesses. Their advisors and investors were thrilled with the bigger opportunity. So they went for it.

According to an article in The New York Times, in October, 2013, ten to 15 percent of the customers comprise 60 percent of a hotel’s revenue. So repeat business is crucial. But few high-end hotels use standard “reward” programs because they’re too commoditized. Instead, most opt for a more personal approach to winning the most lucrative customers—frequent travelers, especially business travelers.

That’s where Mahana comes in. The beacons, and Mahana’s software can be used to notify a hotel if a guest has pulled into the parking lot so the desk staff can get his key ready. They can customize messages and offerings so that when he goes to the pool, someone brings his favorite poolside drink, that he learns about the latest gluten-free offerings from the menu and that, after a certain number of visits, he gets a free spa day or something equally tempting.
The software works with a hotel’s beacons and comes with a particular set of tools, Menell said. But it can be customized for each establishment.

The software has to be able to deal with huge amounts of data, Bagdonas said, so they used Amazon’s Simple Queue Service that’s used by Twitter, Facebook and Gmail.

“It’s a firehose,” he said. “It can handle a million beacon hits per second per app. If you want to be ready for prime time you have to build it like a tank.”

Joe Canterbury, senior vice president with Appconomy and an advisor for Mahana, said that’s one area where Mahana has shown its strategic competence. Geolocating and responding to customers is a fairly new technology which is evolving rapidly. Mahana has to make sure to stay ahead of the curve.

“The technology is all changing so quickly, it’s a challenge for anyone in the space, really keeping up and really choosing best technologies. I think they’re dead on.” Canterbury was one of the advisors who encouraged Mahana to broaden its focus. Both he and advisor Jack Tan, who has worked as director of IT for several huge hotel and resort companies, talked about the possibilities for the app in large malls and retail centers where shoppers can be lured in for a great deal when they’re already in the mall.

“This kind of technology is in a very early stage of adoption, of acceptance,” Tan said. But with more people using smart phones and tablets, they’re looking for more uses for them. With social sharing, he said, use should spread quickly. “It’s really about how the experience is from start to finish.”

With any technology that recognizes customers, Canterbury said, the company has to be careful not to make customers feel intruded upon. Bagdonas said there’s a certain amount of coaching that goes with deploying the software so as not to inundate customers. Bagdonas is fairly “touchy feely” for a CTO, Canterbury acknowledged, which may help Mahana’s ability to guide its customers to maintain the “human touch” and not rely too much on the technology. But it also is part of what makes Menell and Bagdonas a good balanced team.

“The team complements each other and they work well together. They’re insanely productive for such a small company. “
But another attribute of Mahana is that both founders have a lot of experience with starting companies and know it’s important to understand the industries they work with. That’s key as Mahana expands.

“One thing that I’ve observed and also participated in is that the team does a really good job of sitting down and spending time with industry experts to really get their input or feedback…they’re very clear that the kind of input and feedback they get is going to lead to a better product.”

Mahana has begun working with a hotel chain in Asia that has about 35 properties, Menell said.

“We’re choosing a little handful of early customers to work with,” he said. “We have to pick and choose, to be very careful, work with well-known brands doing interesting things…the enterprise class is very exciting to us.”

Mahana Welcomes You from Mahana on Vimeo.

Mahana Helps Restaurants Roll Out the Red Carpet

Reporter with Silicon Hills News

Bryan Menell and Richard Bagonas, co-founders of Mahana

Bryan Menell and Richard Bagdonas, co-founders of Mahana

At a restaurant like Swift’s Attic, when someone is an especially good customer—perhaps because they come in a lot, host big parties or drink expensive Bourbon– you don’t reward them with a punch card good for a free muffin. You might send out a complimentary appetizer, said co-owner CK Chin, and you want to make sure it doesn’t show up on the bill. You might slash their wait time. You might give them the table they prefer. But with 60 percent turnover in the restaurant industry, there’s a good chance that if the owner’s not around, the hostess won’t have a clue whether the guy who walked in is a big spending regular or transient who eats nothing but salad and bread sticks. That’s part of the idea behind Mahana.

If a restaurant uses Mahana, and its customers download the app, the restaurant picks up a beacon that signals the customer is near and has a chance to invite him in for a special pairing of his favorite food and drink. If the customer walks in, Mahana lets the host know and gives information the restaurant has gleaned about the customer, meaning the host can welcome the diner by name, offer a favorite table or suggest a special based on previous purchases. Mahana also clues the customer about wait times for a table before the customer ever walks in. Mahana members can share what items they liked on the menu and especially loyal customers can expect perks, like a bump up the waiting list or an appetizer on the house.

In Praise of Market Validation

imgres-1Mahana Co-founder Richard Bagdonas previously founded SpeedMenu, an ordering and payment app for the restaurant industry…and it taught him something.

SpeedMenu and other companies, he said, “saw a problem they were experiencing and went to solve it,” Bagdonas said. “But they didn’t ask restaurants whether their problem was shared by the restaurant. They thought ‘I’m having this issue, other people must be having this issue, if I solve it, people are going to love it.’

With the founding of Mahana with serial entrepreneur Bryan Menell, Bagdonas began with market validation, asking restaurants about their pain points.

“Not once did they say paying by credit cards was a problem,” he said. “They don’t need you to order a beer or food on your phone, they have someone there to take your order. Just because that person might be busy doesn’t mean they want to replace that person with something else…. Their biggest problem is there’s a chair over there and nobody is sitting in it and nobody is buying food. If they don’t sell the food, it has to get thrown out. They have the food. They have the staff and they have the chair that’s worth maybe $40,000 a year.”

Restaurants needed butts in seats. They needed people coming in, and people coming back, because the cost of acquiring a new customer is just as daunting for restaurants as for other businesses. They needed to be able to identify their best customers and to communicate with them in a way that doesn’t burn them out.

Stuart Thomajan, co-founder of Swift’s Attic and a partner in other popular restaurants such as Uchi and Delish, said that Mahana helps restaurants give valued customers that red carpet treatment, even if it’s the hostesses first day.

“People will go through histrionics to show the hostess they’ve been there before. They’ll say ‘Is Stuart here?’ or ‘Do you have that table in the corner?’” Thomajan said. “They’re trying to let the hostess know ‘Hey, I’ve been here before….’ When you’re serving 2,000 people a week you don’t always have the opportunity to know everybody. We want complete consistency in service. We want to make them feel special. I hoped somebody would develop this tool. Manaha gives us the opportunity to show customers the respect they deserve.”

As a former bartender, Chin said, he cultivated the ability to remember customers’ drinks. He uses that same skill to identify restaurant customers and reward them. Mahana adds “a superhero level of memory to my management.” Nor do customers seem to feel it’s “creepy” that the restaurant is keeping tabs on them. If the restaurant was doing it without getting their opt in. he said, it might be different. But customers treat this as a rewards program.

One of Mahana’s more valuable features, Thomajan said, is that it lets him send emails selectively to customers who would be interested in special events or new menu items at the restaurant without barraging customers with mail constantly. He doesn’t want to send customers emails about specials they wouldn’t be interested in–like sending an email about a steak dinner to a vegetarian or news of a Bourbon special to an alcoholic. “The next time they get an email from Swift’s Attic they won’t open it,” he said. Being able to build relationships with customers, he said “is huge to me.”

Thomajan though is less excited about the feature that lets customers know how long the wait is before they even come to the restaurant. At Swift’s Attic, it can be two hours.

“I’m not loving the idea that a two hour wait will be published to the world,” Thomajan said.

From Southern California to Austin

Before starting Mahana, Bagdonas and Menell founded Subtle Data, a platform for point of sale API developers. But as Subtle Data, they said, they’re “plumbers” setting up the infrastructure. They liked the idea of creating something customer-facing. As business partners, they complement each other. Bagdonas, Menell said, “won’t let me code” because Menell’s IT skills are more dated. But as Bagdonas talked, Menell pulled some documents off a fax machine, pushed them in front of Bagdonas and Bagdonas signed them without dropping a word or skipping a beat. He trusts Menell to be the business guy and “create a structure for the technology” so Bagdonas can keep his focus on software.

“I call him my work wife,” Menell joked.

Both came from Southern California. But they didn’t meet until they got to Austin. Menell was a senior tech consultant for Andersen Consulting working with clients like Apple and with Anderson Windows. After two years, he started his own consulting company Exact Consulting Systems Inc., (Exact stood for Ex-Anderson Consulting). It was the mid-1990s. Computers were still new and companies were beginning to adopt customer relationship management systems. Exact began to implement CRM systems for some of the largest call centers in the world, such as Gateway 2000. The company grew fast to $22 million in revenues. And then he sold it, in 1996 to BSG in Austin and that’s what brought him to town.

Bagdonas grew up in Southern California and had been writing software since he was a kid. In high school, his teacher offered to teach a semester of Pascal. The students loved it so much, they wound up studying it for four years and writing programs that, Bagdonas has no doubt the teacher was selling to industry. At the age of 14, Bagdonas and some friends got interested in voice recognition. They worked tirelessly on creating a voice recognition program but eventually the project failed. For one thing, they had no money. For another, the technology just wasn’t there. Later he realized voice recognition is still one of the hardest things for a computer. Too many words sound the same, even when spoken in a neutral accent. Add a regional accent and the opportunity for mistakes grows exponentially.

But Bagdonas had caught the entrepreneurial “bug.”

“I realized, oh my God, you don’t have to aspire to go work at IBM. You can aspire to be IBM. That’s a beautiful thing,” he said. “I’m very much the scientist but through business I get the opportunity to be creative.”

At 16, he launched a mobile mechanic business, going to people’s cars and fixing them wherever they had broken down. He wore fake glasses in an effort to look older. The business lasted five years and he employed three mechanics. His next venture was to learn to be a commercial pilot. His father, who died when he was 12, had been a pilot and Bagdonas was working his way through his licenses when he got in a horrible motorcycle accident. He needed 11 grafts, some with artificial skin. The damage was such that he was unable to pass the FAA’s health screen for pilots.

He became assistant vice president and director of emerging technologies for Prosoft, a company that trained aerospace engineers to program. While there, he authored four books on data communications, telecommunications, the convergence of voice, video and data and data for sales people. Prosoft moved Bagdonas to Austin. Around 2000, Menell incubated one of Bagdonas’ companies and Bagdonas built some support software for one of Menell’s customers. Menell was an advisor with SpeedMenu and later left the Dachis Group to be CEO of Subtle Data.

Right now, they said, Mahana is going to work to “crush” the Austin market, though there are restaurants in Washington D.C. and New York waiting to get on the list. Thomajan said the founders are very responsive to every suggestion he makes as a customer. He and Chin will also be including Mahana in their new restaurant, Wu Chow.

Now, Mahana’s wrapping up its seed round of financing and getting ready to expand. SXSW, they said, “was very good to us.” The company won, among other things, the Silicon Hills News/Austin Technology Incubator and Central Texas Angel Network pitch competition, which entitles them to a series of stories about their entrepreneurial journey. So, SHN will be revisiting Mahana as they work on financing and expand their services.

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