nGage Labs Is ‘One To Watch’

Editor’s note:  The winner of Talk Business Arkansas’ 2014 “One To Watch” award is nGage Labs.  Benji Hardy is the author of this story, which appears in the latest magazine issue of Talk Business Arkansas.

Ten years ago, a phone with Internet capacity was strictly a tool of the business class. Five years ago, the first generation of iPhones were an expensive novelty. Today, smartphones are a necessary requirement for everyday life – around 56% of all Americans owned one as of June 2013, according to a Pew study. But Rod Ford, president of emerging tech company nGage Labs, says that the advances of the past decade are only the beginning of a coming revolution.

“We’re just on the precipice of what’s going to happen with our lives with mobile,” the Arkansas entrepreneur and Saline County native says. “It’s going to drive you crazy, the stuff that’s available out there – wearable devices by Nike and Underarmor, nanotechnology…it’s just absolutely exploding.”

And he intends to capitalize on that.

Ford has a long history of successfully ramping up companies and spinning them off. He’s carving his latest niche at the intersection of mobile, retail, and big data: nGage allows retailers to provide personalized promotional offers to consumers based on their individual data profiles.

At its heart is an “analytics engine” – software that digests the vast sea of consumer information in real time and then generates carefully calibrated deals and ads that drive traffic to vendors. Ford says he is on the brink of several deals with “the biggest brands in the world.”

Although Ford is a native Arkansan, nGage is a newcomer to the state. The company is based in Scottsdale, Arizona and only announced in October its plans to open an Analytics Innovation Center in Little Rock’s River Market. Right now, nGage has 12 employees in Little Rock, but the company will employ about 40 when it moves to a new home on East Markham later this year. That could be a harbinger of big things in the tech sector in Central Arkansas – especially when combined with developments such as the Innovation Hub’s planned creative and co-working space in Argenta and the announcement that the Little Rock tech corridor will locate on Main Street.

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“It struck me that this device that is so personal, so intimate,” said Ford, picking up his phone contemplatively, “the way marketers talk to this device is non-intimate.”

There’s nothing new about the idea of advertising promotions to consumers via mobile. GroupOn, for example, is built around using technology to efficiently push mass deals. But while consumers may love those large-scale coupon campaigns, they are a double-edged sword for retailers. Promotional offers are necessary for stores to win and retain market share, Ford explained, but those same discounted prices can heavily erode margins. Ten thousand customers cashing in a 15% discount means a lot less cash flow that quarter.

What if a store could instead offer a discount only to those customers who actually need a coupon to be convinced to shop there? This is the innovation offered by nGage, made possible by the immense amount of data generated by individuals’ Internet use.

It’s no secret that your every online click, search, and purchase is tracked, and nGage’s analytic engine uses that data to deliver a sales pitch targeted specifically to you, delivered via text message.

Different consumers respond to different “cadences” – some like frequent deals, others are annoyed by frequent contact. Young, old, male, and female shoppers tend towards different products. And perhaps most importantly, some individuals make purchasing decisions based almost exclusively on price, while others will buy a new product simply if they’re told it’s available. Eighty percent of shoppers, Ford said, don’t necessarily need a discount to be coaxed into making a buy.

“We will predictively produce the next best offer, with the optimum cadence, to your price sensitivity,” Ford declared. “And then we sell that technology to the biggest brands in the world, and they use that technology to deliver something very appropriate, very personalized, very sensitized to your appetite for offers…When ten women walk into Old Navy, they’re going to get offered ten different deals for jeans on their phones.”

Essentially, nGage is promising retailers they can drive the same amount of consumer traffic but give away less money in the process. “This is about margin-maximization,” said Ford. “On a macro level, what I’m trying to do is disrupt the GroupOn model.”

It’s not just limited to stores like Old Navy. nGage also serves hundreds of college campuses and bookstores across the country. Texting personalized offers to sports fans during a break in the action of the game has been very successful in early trials, said Ford. And the same analytics technology can also be used outside of mobile devices – nGage offers some retailers in-store kiosks that nudge consumers towards a purchase by giving them coupons targeted towards their demographic.

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Ford didn’t found nGage. The company was started about three years ago as a Twitter-like social media product called “Kadoink,” which failed to go to scale. Ford joined in July 2013, encouraged by private equity investors.

As Ford mulled the company’s growth last summer, he assumed at first that nGage would expand its offices in Scottsdale. Two things drove the switch to Little Rock, he says. First, General Motors announced it would build a major research and development hub in Scottsdale, which spelled a shortage of talent for nGage. Secondly, Ford was approached by someone from the Arkansas Governor’s office about relocating, a conversation that led to a $1 million incentive from the Governor’s Quick Action Closing Fund.

“They said, ‘why wouldn’t you put this here [in Little Rock]?’ And I said, ‘well, why would I put this here?’ And that’s when the incentives discussion came about,” said Ford.

Equally important, though, was the workforce available here. Because of corporations like Acxiom and Alltel, said Ford, there’s a good deal of untapped technology talent in Central Arkansas.

“We’ve got the residual workforce to do it. I’d put 500 or so people here against anybody in the world…we’ve just never had what you’d think of as a ‘tech company’ as a visible success.” Of the 40 employees nGage expects to hire by this spring, about half will be drawn from in-state.

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It’s no surprise that Ford has paid close attention to the fraught conversation over the Little Rock tech park, though he says he wasn’t involved directly. “I watched it as a bystander,” he said. “But I have a lot of experience with [tech parks]. I understand the ecosystem.” As for the Main Street tech corridor plans, Ford said, “I’d love to be a part of that.” But, he added, “It’s not clear yet what all the benefits are with that, and how it’s going to play out.”

However, he is unequivocal about the wisdom of promoting technology start-ups in Little Rock.

“It’s absolutely necessary. Absolutely. Here’s the bottom line: every single city is involved in some program to foster entrepreneurship as a hedge against corporate downsizing and unemployment. It’s just good policy.”

If Central Arkansas is to develop a fledgling tech sector, Rod Ford is the right guy to have on board, and not only because of his proven track record in startups.

His approach to business reflects something of the ethos of the tech world — its thirst for innovation and its embrace of constant change.

He favors phrasings that sum up this worldview: “disruptive innovation” and “violent execution.” Ford intends to focus all of his energies on nGage in the coming years, but he plans to keep moving. “For the rest of my career, I plan to do a series of five-year sprints,” he said.

“I’ve been doing this for 25 years,” Ford notes. “I absolutely believe that today, you don’t win because you have a unique idea. You can have a unique idea for about five minutes. It’s not the idea – it’s about the execution. And the window of time has narrowed to about five years – you’ve got five years to get your idea commercialized and up to the point where it has enough economic value that someone will pay you for it. It’s all about speed. You sell it and then you go do the next one.”

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The “One To Watch” award was created in 2007 to highlight a business, individual, or group having a significant impact on the Arkansas economy. The award recognizes and honors a company or operation in our state that shows significant promise to positively change the state’s business landscape. Five to 10 years from now, could this company transform our state economy or have an even larger impact on jobs, infrastructure and business influence? If so, how? These are the guidelines considered when making our selection. The winner of the 2014 “One To Watch” award is nGage Labs.

Previous “One To Watch” award winners:
Baldor Electric
Dassault Falcon Jet
Argenta Development Corp.
Rockfish Interactive
NanoMech