Mike Kappel builds Patriot Software from the basement, up

 

Standing in the Canton headquarters of Patriot Software LLC, Mike Kappel can see the new 20,000-square-foot building the company just purchased in the Belden Village area. He bought it with the expectation that he’ll fill it. Not shift the 141 employees from the current 24,000-square-foot Dressler Road headquarters to the new place, but expand so much he’ll need the additional building to hold everyone.

“It’ll just be building No. 2. If we need to go get another one, we’ll end up getting another one,” says Kappel, the company’s president, CEO and founder.

Patriot Software, a private company poised for what Kappel characterizes as significant and disruptive growth, has grown organically since 2002. In July, Patriot was in the process of a private placement, selling stock in the company to help fund future ventures.

Partnerships in the works that are expected to drive exponential growth were progressing at a faster rate than he had anticipated. But while his outlook is positive, Kappel didn’t always have such a nice view.

From the bottom, up

Kappel began without a company name, business model, product or target customer in the basement of his friend’s father’s factory. It was 1986 and Kappel and his partner, both engineers by training, had a couple of IBM PCs and a problem.

“Nobody understood what to do with these computers,” Kappel says. “I mean, nobody knew anything. There was no software for it and nobody understood the concept of software or writing software. We were too early. We were way too early in the market, and it was very, very difficult.”

The duo began writing and selling custom software for companies in the area, but weren’t making much money — 50 cents an hour by Kappel’s calculations. He set out to find a niche.

After scouring the phone book, he narrowed it down to recruiting agencies. The industry had a lot of data that manifested daily as thick stacks of resumes. Kappel found his niche and an idea for a product: an entirely digital recruiting network.

The paper-reliant industry was slow to adopt Kappel’s new model. But with persistence the business became the largest network of recruiters in the country.

Top Echelon, as the company would be called, grew to have two business lines: Top Echelon Network, the recruiting database, and Top Echelon Contracting, which essentially does the back office work of recruiting firms. These businesses would form the foundation upon which Patriot Software would be built.

Out of the basement

With the success of Top Echelon, Kappel found himself in an unfamiliar position. Both businesses were making money, which gave him the opportunity to consider his future.

He again searched for a niche and soon found it in payroll. He and his team of some 20 people incorporated as Patriot HR and built a web-based payroll software. After a brief stumble with the glitchy Patriot Software 1.0, the company developed a product that could reliably calculate payroll in every state sales tax jurisdiction — roughly 10,000, according to the nonprofit Tax Foundation — and was on a growth track.

Kappel’s early days in the basement of the factory informed his approach to the market.

“We want the small companies,” he says. “I went and looked at the U.S. Census and looked at the statistics on the number of businesses and it’s shocking how many companies are one to 100 employees, or even one to nine employees. I said, ‘Let’s go do that. Let’s go help these little guys. Let’s go back to my roots. That’s what we’re good at, helping these small business owners; let’s focus on that.’”

Kappel was operating without a sales team, relying instead on marketing and an easy-to-navigate website that allowed prospective customers to demo or trial the product without hassle. Once customers sign up for the $10, month-to-month service, they’re welcomed by Patriot’s customer service staff who deliver free, unlimited support.

View from the top

To get potential customers to demo the product on its website, Patriot uses search engine optimization, pay per click, and probably the most recognizable of all, radio ads.

After studying branding, it struck him that his startup story could resonate with those trying to run a business on their own. It would be the basis of his self-produced ad campaign, against the advice of radio advertising experts.

“We started with $10,000 a week on Sirius XM, and boy, it was like a light switch went on. Radio worked, and it was because of our pricing and speaking to small business owners because they could tell the genuineness of these radio ads.”

After years of grinding, Kappel is embracing his role as a visionary. He’s approaching new challenges like he has every other obstacle on the path to success: like an engineer, logically and methodically breaking down problems, and always through the eyes of his customers.

How to reach: Patriot Software LLC: (877) 968-7147 or www.patriotsoftware.com.