Going with what they know

Narrow market niches put two experienced entrepreneurs to test

By Scott Kirsner, Globe Staff  |  April 11, 2010

You are probably not the ideal customer for Vince Fedele or Ian Agranat.

Fedele’s latest product is a $30 iPhone app intended to help cafes and restaurants ensure the coffee they’re brewing tastes perfect. The newest release from Wildlife Acoustics Inc., Agranat’s Concord-based company, is an $850 weatherproof monitoring system that can let you know how much bat activity there is in a given area — for instance, a hilltop where you’re planning to erect a few wind turbines.

Both entrepreneurs are a wee bit obsessed with their areas of specialization: Fedele fell in love with expertly-brewed java at the original Coffee Connection shop in Harvard Square in the mid-1970s, and Agranat, an Audubon camper as a kid, can identify the call of a tufted titmouse as the audio wave forms scroll by on his computer screen.

Both companies target as their customers a relatively small and very discerning customer base, whether baristas or biologists. Both were founded by entrepreneurs with a track record of success: Fedele developed Mac peripherals that Apple chief executive Steve Job regularly lauded in public speeches, and Agranat sold a tech company for $33 million a decade ago. And both raise the question: is it easier for an entrepreneur to pick a narrow market segment with few competitors and try to own it, or create something for which the whole world is your potential customer base?

Fedele’s latest project, Harvard-based VST Inc., took shape while he was an executive at the George Howell Coffee Co., a coffee roaster and distributor in Acton. (Howell was the founder of Coffee Connection, the late, lamented Boston chain acquired by Starbucks Corp.) One of his initiatives was to ensure that the company’s coffee was brewed consistently in the cafes and restaurants where it was served.

“You might have our coffee at a cafe in the morning, and it would taste different in the afternoon because they were brewing a smaller batch and weren’t doing it right,’’ Fedele explains. “It takes a year to harvest, process, store, roast, and grind coffee beans, and then you can blow it all in the last five minutes when you brew it.’’

So Fedele, trained as an electrical engineer, gave himself a crash course in the chemistry of coffee. He learned about the ideal temperature for brewing (201 degrees Fahrenheit), and the dangers of over-extraction (the size of the coffee grounds or the speed at which water passes through them can make the resulting beverage bitter.)

The results were a $199 software package Fedele dubbed ExtractMoJo and a specially adapted tool called a coffee refractometer. Using data like the amount and temperature of water being used for a batch, the grind setting for the coffee grinder, and brewing time, a barista can set up recipes for the way a particular kind of coffee should be brewed whether it’s espresso, drip coffee, or iced; light roast or dark; from Kenya or Guatemala.

The $359 refractometer Fedele developed analyzes how the way light passes through a small sample of coffee, and tells you the “total dissolved solids’’ in the beverage — essentially, how much of the bean’s essence has ended up in the water. “The ideal range is between 1.2 percent and 1.5 percent,’’ Fedele explains, “but most American coffee is below 1 percent.’’

Coffee mavens seem to love the system. Nikolas Krankl, owner of Taste Coffee Shop in Newtonville, says it is useful for trouble shooting, in combination with his own palate.

“If you’re getting a sour shot of espresso, you can use Mojo, pull a couple shots, and you have fewer variables that could be causing the effect,’’ Krankl says.

Canton-based Dunkin’ Brands Inc. uses the software in its research-and-development labs but doesn’t have plans to roll out to franchisees, and Peets Coffee & Tea Inc. also is a user of ExtractMoJo, though it hasn’t yet rolled the system out to all of its stores.

Within the past few weeks, Fedele bought the ExtractMojo product from George Howell Coffee Co. for an undisclosed amount, spinning it out as its own business, and launched an iPhone version of the software.

Howell “wanted to concentrate on coffee, and I wanted to concentrate on technology,’’ he says. His hope is that the iPhone app, at $30, will enhance the product’s appeal, especially for big chains that might want to equip each of their stores with the system. (The PC software includes some extra features that the iPhone app does not, like large-format charts.) “For less than $400, you can get the app and a refractometer, and practically everyone has an iPhone now,’’ he says. For now, VST Inc. is still a one-man show.

In contrast, Agranat at Wildlife Acoustics just hired his first employee, though the business still operates out of his Concord home, tucked away on a wooded hillside. When he first started the business in 2003, his goal was to design a $99 handheld device that would help outdoor enthusiasts automatically identify the birds around them from their song. “I thought of it as the perfect gift for my sister-in-law, when I haven’t thought of anything else to buy her for Christmas,’’ says Jean Hammond, an angel investor who put some money into Wildlife.

Released in 2005, the Song Sleuth, about the size and weight of a pair of binoculars, was able to identify 60 different avian species but it cost $499. While there were positive reviews, Agranat didn’t have the resources to mount a big marketing campaign. “We spent a ton of cash developing a product for the broad consumer market that I knew nothing about,’’ he says.

After a few inquiries from the US Forest Service, which needs to track endangered and threatened bird species on the land it manages, Agranat decided to narrow his focus. He revamped the device, turning it into a rugged digital field recorder for the biologists charged with tracking what species live where. With just four “D’’ cell batteries, it can record 230 hours of sound over a period of months; the audio files are then imported to a PC for analysis. Most of his customers so far have been using the system to monitor bird and frog activity, but the latest product records the ultrasonic calls of bats (which aren’t audible to human ears), and he hopes to also offer a version for underwater monitoring of marine mammals.

“We talk to every customer and get feedback about what they need from the product,’’ Agranat says, which results in new features like the ability to turn the recorder on for an hour after sunrise or an hour before sunset, even as those times change through the year.

Some entrepreneurs find that tight linkage with a small community of customers appealing (even if it may be hard to build a big business doing so.) Others aspire to the glory of creating something that all of us will be aware of, and may have a need for a product like Google, FedEx, or the Roomba robotic vacuum cleaner. “There are plenty of successful entrepreneurs who favor this world,’’ Agranat writes via e-mail. But “I have learned that I am not one of them.’’

Wildlife has been operating in the black for two years, and Agranat expects 2010 will be the first year the company breaks $1 million in revenues.

Focusing on small markets can naturally constrain a company’s growth potential, says Hammond, the investor. But with Wildlife, the strategy of going after adjacent customer bases like bat researchers and whale researchers has the potential to create “a serious, multimillion-dollar business,’’ she says.

Hammond has also backed companies making products geared to all of us, including the Boston-based Dancing Deer Baking Co., which sells cookies and brownies. The central question with that kind of business is “will you be able to rise above the noise in the industry and get market traction?’’ she says. “And that can be risky and hard.’’

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.