Value Added: Second Chances

Here's Tom Heath's latest column on Washington's entrepreneurial set:

When Arman Eshraghi's representatives pitched me on a story about his Reston-based start-up, I thought to myself: another software company that loses money but is valued at millions of dollars. I thought most of those went boom with the tech bust of 2000. And besides, those companies bore me. Remember, I am over 50 and am challenged by my cable-TV clicker.

But I listened. And I liked what I heard about Eshraghi's love for the United States and our culture of giving people a second chance. I can relate to second chances, as I have had my share of screwups.

Eshraghi, 41, is a math whiz, born in Tabas, Iran, a city of 10,000. A self-proclaimed "software guy," he pursued programming and software in high school. You have to pick out your career early in Iran. This led him to electronic engineering at Ferdowsi University, in Mashad, Iran's second-largest city.


Arman Eshraghi

He worked with punch cards and main frames and fell in love with the old Commodore computers, which connect to televisions. He sold his Persian-made car for $10,000 to start his first computer company, which software and hardware work and sales, as well as computer training. He grew it to 60 employees and returned 40 times on his investment. He sold his share to his fellow shareholders. He started a second company in 1993, and named it for his newborn son. The company was a pure software play called Aryasoft.

He and his wife, Kathy, emigrated to the United States in 1996 after winning a green card lottery. He gave his interest in Aryasoft to fellow employees and left for the United States, where he settled in Fairfax County.

Eshraghi couldn't understand more than four of five words of English, so he spent hours in the library at George Marshall High School learning the language.

That same year, he got his first job through a help-wanted ad in The Washington Post. It paid $40,000 to develop software. Less then a year later, a headhunter contacted him and he got a new job that paid quite a bit more.

"I said, 'I am happy with what I am doing, but I will go if you can double my salary,'" he recalls. He still had a rough time with English, so he drew diagrams on a white board to answer interview questions. He was hired, but the company was soon after bought by Wang Global. It was tempting to wrap himself in Wang's corporate blanket, but Eshraghi's entrepreneurial bug surfaced and he left to start his own company.

LogiXML was born in 2000.

He was going against the prevailing headwinds.

"A friend introduced me to someone who said they wanted to see who is the crazy guy starting a tech company after 2000," Eshraghi said.

LogiXML is a business intelligence software provider that helps clients from the U.S. Army to universities to small companies keep track of information. If a consumer-product company wants to know how many of its shirts are flying off the store shelves or how many aren't, they can use LogiXML. Its competitors in the business intelligence field include Business Objects, owned by German firm SAP, and Cognos, owned by IBM.

"It helps companies increase their sales," he said.

So how is LogiXML doing? Sales last year were $5 million. Eshraghi expects sales this year to hit $8 million. He has 70 full-time employees and 10 part-timers and consultants. He has 400 customers around the world, including in Austria, Britain and South Africa. Local clients include Harmony Systems in Reston and Spectrum K12 in Baltimore. The company has opened a London office and bought a 10-person company in Los Angeles.

Eshraghi said the company swings between being cash positive and cash negative. He estimates that his and Kathy's one-third of LogiXML is worth $10 million. That makes the company worth $30 million? I asked him if we were back in the bubble days, where companies could just declare revenue and say they are worth a fortune.

Eshraghi said Updata Partners, a Northern Virginia venture capital firm, last November invested $5 million in cash in LogiXML. It also bought up another investor's shares, giving it about a third of the company. Eshraghi also owns a third. Angel investors, stock options and employees make up the rest. Eshraghi said his back-of-the-envelope estimation of the company's value is $25 million to $35 million.

"We are close to break even and we want to grow fast. As we make money, we reinvest in the company."

Updata partner Carter Griffin called Eshraghi "the classic entrepeneur who came here 10 years ago and sort of on his own has figured this thing out and has a company with a ton of momentum. We saw and opportunity to add some fuel to the fire with the investment. They have been able to do it the old fashioned way: to build a real company."

Eshraghi said his stake may be worth $10 million on paper, but he doesn't have a plan to cash out. He began taking an annual salary of around $100,000 the last couple of years. He lives in a townhouse with Kathy and their 15-year-old son, and putters to work in a politically correct Toyota Prius Hybrid.

I asked him if being Iranian in the United States, which isn't on the warmest terms with his native country, was a problem. Here is his response:
"I have never experienced anything negative. Everything I had was help and support. I don't think it was just a matter of luck. We are talking about more than 12 years. It's part of this country. I have a lot of respect for the values here and I resonate with that kind of culture - giving people a second chance. In the U.S., people don't dismiss you just because your software isn't working. They give you a chance to prove yourself. And I thrive."

By Terri Rupar  |  June 24, 2008; 4:31 PM ET  | Category:  Value Added
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Comments

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As the son of an immigrant, it's heartwarming stories like this that make me proud of this country. I wish him the best of luck and hopes he does cash out at some point so he can sit back and enjoy life.

Posted by: American Dream | June 24, 2008 5:26 PM

Our history shows that our strength as a nation comes, in part, from immigrants who have brought energy, imagination and hard work to our shores. Their hard work has benefited themselves, their families and everyone here. This story has played itself out countless times. This article is just one other wonderful example of what freedom really does bring to everyone.

Posted by: David | June 24, 2008 5:45 PM

25-30 Million Value? - 5 Million in Sales, needed 5 million in cash infused, the architect only makes 100k per year, and the cash position swings positive and negative - Sounds a little overvalued to me, but who knows. I wish them success.

Posted by: Equally Skeptical | June 24, 2008 6:13 PM


ANOTHER EXAMPLE OF SUCCESS.

OPPORTUNITIES EXIST IF ONE PERSISTS.

THIS IS THE AMERICAN DREAM.

Posted by: R.S. | June 24, 2008 7:52 PM

Great to see Arman become so successful working his way to the top.

Posted by: Fellow Persian | June 24, 2008 9:27 PM

It is wonderful to witness the success of an Iranian immigrant in the United States.

You have proven yet again, that discrimination against minority immigrants in the United States, from a country such as Iran, are non-existent when Diligence, Perseverance, and Trust in the American system describe your work ethic.

Kudos to you and the best for LogiXML.

Posted by: American-Iranian | June 24, 2008 11:07 PM

LogiXML occupies an important niche in a rapidly growing market segment. There is no doubt that this company will continue to expand.

Posted by: Gordon Jones | June 24, 2008 11:08 PM

Arman Eshraghi demonstrates that hard-working, ethical people with good ideas and entrepreneurial zeal can succeed in building viable businesses. In addition to his keen insights in technology and his ability to create software solutions, Mr. Eshraghi's humble and generous nature undoubtedly has contributed to his success. This is validated in his earlier start-ups, and what appears to be another winner with LogiXML.

May Arman Eshraghi and LogiXML continue to flourish and prove that the American Dream continues to thrive!

Posted by: Michael Kremin | June 25, 2008 2:06 AM

Tom, I have a hard time understanding what the "computer guys" actually do, so I appreciate your explanation and some humor.

For a go-get-em entrepreneur, Eshragi sounds like a humble man, which is so refreshing. Immigrants are the life blood of our nation; people like Arman Eshragi know what it takes to succeed, which includes a lot of sacrifice, and sacrifice is something which too many young Americans known nothing about.

Posted by: SB | June 25, 2008 7:27 AM

I can totally relate to the punch card days - reminds me of working with FORTRAN and mag tapes back in the day (I'm dating myself). More importantly, this is the kind of guy the US should be seeking out. People with vision, desire and some friggin' gumption built this country in the past and they'll build it in the future.

Not certain on the valuation here - I'll leave that one to the bean counters - but I think the bigger point is that a bootstrap guy like Eshraghi can come to America, swing for the fences and connect in a way that no other nation allows.

Posted by: Fred Sornce | June 25, 2008 8:41 AM

Glad to see the ancient Persian sense of entrepreneurialism is alive and well. The fact that he immigrated to the U.S. makes me wonder how this guy would have fared in Tehran.

Posted by: NorskSoft | June 25, 2008 8:52 AM

Great story and very inspiring - I can see even more success coming his way.

Posted by: Eddy | June 25, 2008 9:25 AM

This is an inspiring story that everyone should pay attention to. Our country provides opportunities for those who have a dream, a goal, and who work hard to succeed, including immigrants. So many people say they are down on America, but they don't realize that our freedom gives us so very much compared to some other countries in the world. With tenacity, Arman has worked to fulfill his dream, to contribute to our area, and to provide an example to inspire others.

Posted by: SK | June 25, 2008 9:25 AM

It is wonderful to see someone who has persevered and created a successful life for not only himself, but to the employees of LogiXM. It just goes to show that through determination and motivation, anything can happen to anyone.

Posted by: Melissa | June 25, 2008 9:40 AM

This is a great story of how the early stage technology business works in the US. It does not care who or what you are only that you are truely solving a real problem, provide real value, at an exceptable price. Mr. Eshraghi values,vision and persistance is why he has and will continue to successful.

Posted by: Clark French | June 25, 2008 9:53 AM

Interesting. Small outfit but there's growth in this sector - also some sharks. Probably too small for Larry Ellison's radar right now but hey, who knows?

Posted by: ORCLGuy | June 25, 2008 9:58 AM

Mr. Eshraghi's story illustrates what makes our country so great. It's just too bad he had to bring in a venture capitalist. I wish him all the best.

Posted by: Don H. | June 25, 2008 10:03 AM

Arman's story is inspiring and represents what this country stands for. If you have a dream and are willing to put in the effort with pig-headed determination to succeed, anything is possible, but only in America.
LogiXML is going to be a huge success, guaranteed. All the best, Arman.

Posted by: BM | June 25, 2008 10:13 AM

Great article, good guy.

Posted by: John Smith | June 25, 2008 10:17 AM

This coincides nicely with the report that stated that the New York and Washington D.C. metropolitan areas have a substantial pool of technical talent and these areas are showing strength through the economic downturn. Optimism, faith, hard work, conviction and quality can overcome bad periods in the economy and in fact will lead us out of the current state we are in. My hat is off to Arman and I hope that others are inspired to set on the path he has taken. The vision of this one individual has provided a future for countless others and they too can possible dream creating something big.

Posted by: Fellow Programmer | June 25, 2008 10:21 AM

Great testament to persistence and vision. Also great validation that Updata is behind them. I echo earlier comments that this is exactly the magic of the U.S. - one that we can't afford to shut down through xenophobic fears.

Posted by: Christopher Gergen | June 25, 2008 10:24 AM

Very interesting article....the kind we used to read about all the time but don't see often these days...I hope the company continues its upward swing and proves that the "little guy" can still provide value to investors with a great idea and hard work.

But the real question is....do they need a general counsel? :)

Posted by: MD ATTY | June 25, 2008 10:29 AM

I took a look at their company and they have several sites. I liked www.widgenie.com as I was able to build a few reports right away.

Posted by: Zepher | June 25, 2008 10:37 AM

Arman is a class guy. I have heard that he works none stop ...being the last person to leave the office each night and an open door policy that anyone can always come to see him. That type of drive is what make the US a special place to live and to develop a company. Also that he has made a decision to staff all of employee engineers in the US is also a sign of what he thinks of the US.

Posted by: MB | June 25, 2008 10:59 AM

This is a great story.....Arman has done something that is very hard to do.....build a company from scratch, with a great idea, hard work and personal investment. With a revenue forecast of $8M for 2008, he has reached a point where his success and momentum will carry him to much greater levels.

Having a local investor put in $5M also represents significant validation for his company.

Arman has done something that is very difficult to do. This is a most impressive story.

Posted by: Dave MacS | June 25, 2008 11:21 AM

Arman's story personifies the American Dream. He started with a bit of luck, by winning the lottery for a green card, although very few people would be willing to apply knowing that he would be giving up his software company to start a new life in the US without even speaking English. He has made his own luck since arriving to this great country and after a few years he was able to start a software company, grow it to $8M in sales and get $5M in venture capital funding. A truly inspiring story.

Posted by: Carlos P. | June 25, 2008 11:39 AM

What a great story! My neighbor mentioned his company uses their software... very innovative, architectually sound and affordable compared to the other BI dinosaurs out there from what I gathered. I wish Arman and LogiXML the best! So when do they go public?

Posted by: RobbiWanKenobi | June 25, 2008 11:49 AM

This is a great piece, I know Arman but wasnt aware of this story so its great to see this see some light. Keep it up Arman.

Posted by: Tony | June 25, 2008 12:26 PM

The type of story one wants to read. Immigration and the pursuit of the American Dream. The Consitution gives us the right to pursue Happiness, it does not guarantee it. Amazing how we have forgotten that. Occasionally we need a story like this to remind us.

Posted by: Dan S NYC | June 25, 2008 1:46 PM

I am very familiar with LogiXML and know Arman (I cover them for a business intelligence publication). His company listens to its customers and innovates. The business intelligence space has undergone a lot of consolidation and change this past 18 months LogiXML has taken advantage of the changing market and emerged as a leader. Great article!

Posted by: Shawn R | June 25, 2008 1:54 PM

So refreshing to see stories like this!

Posted by: ALD | June 25, 2008 2:57 PM

Our business has allowed us the opportunity to work with many tech executives (Silicon Valley and the DC/VA/MD areas especially), from early stage to those with billions in revenue. It is still very, very tough to raise money even when you can demonstrate earlier successes and an attractive current business plan: it is often like going on repeated casting calls in Hollywood where regular rejection is a big part of life.

But as one of my favorite entrepreneurs, Darioush Khaledi, who migrated to California from Iran some thirty years ago and has built the very successful and beautiful Darioush Vineyards, put it, "When you want something badly enough, the whole universe conspires in helping you achieve it."

May Amran and his colleagues continue to reap the rewards of their drive for achievement.

Posted by: Elizabeth | June 25, 2008 3:11 PM

Several of our clients use the LogiXML application and rave about its value. I din't know the background of its developer till I read this article.

Congratulations, Amran! I know that starting a technology company from scratch isn't an easy task.

Best of luck,

Ron Monford, Chairman and CEO
Mindover Corp. Austin, Texas

Posted by: Ron Monford | June 25, 2008 4:01 PM

An amazing and enlightening story about Mr. Eshraghi. I am extremely impressed by all that he has done. Thank you for sharing this and it is a great and inspiring story.

Posted by: DM | June 25, 2008 5:29 PM

I grew up in the Foreign Service, traveling from one country to another and was exposed to many different cultures and points of view.

A point of pride for me has always been that this country has a foundation in innovation and a foundation in hope.

I know and you know that we have lots of faults, but how cool is it that we live in a place where innovation can thrive and dreams can and do come true.

As Buzz LightYear says, "To Infinity and Beyond!!" Congratulations Arman!

Posted by: Corrine | June 25, 2008 6:25 PM

Another great article Tom, thanks for sharing this impressive and inspiring success story. For fellow entrepreneurs, who face continual challenges of both ups and downs along the path to success, its helpful to get a weekly boost from these pieces you write. They reveal both the human and business dramas that exist in our daily lives - something most of us struggle to balance, and yet a topic that most other business news coverage often fails to point out. Appreciate the insight.

Posted by: mezz | June 25, 2008 7:18 PM

If you want a testament to what has made this a great country for more than 300 years, the more than 35 comments to this blog - every single one of them positive - is all you need. Our economy is faltering, the stock market is volatile, fuel prices are oppressive, employment is shaky and our political relations with Iran are tense, and yet there is nothing but an outpouring of appreciation for the spirit, work ethic and success of Amran. Whether it was Europeans a century ago, Asians in the latter part of the last century or now immigrants from the Middle east, we still welcome those with energy and drive with open arms and applaud their accomplishments which make us all better. Perhaps it is as simple as the fact that almost all of us trace our roots here to Ellis Island. Nice piece, Tom.

Posted by: Cooper | June 25, 2008 9:17 PM

Very inspiring - truly a great entrepreneurial story portrayed in terms of Mr. Eshraghi's personal as well as business accomplishments and successes.

Posted by: ET | June 26, 2008 12:28 AM

Having been around the Business Intelligence space for more than ½ my 20 years in the IT industry...it is extraordinary to me that entrepreneurs like Arman and his company can innovate so successfully in producing such differentiated software of such quality without the "mega-bucks" of the established players.

This story is not just about the American Dream and "second chances". I sense this story reveals the social and economic model that makes America so successful in competing globally. It's a strategy that turns openness into a win for everyone and a strategy that recognizes innovation isn't "conventional wisdom" nor simply the domain of the established players.

Posted by: DomD | June 26, 2008 3:37 AM

Great story of the American dream and business start ups. We need more positive stories like this one about our economy, culture and country.

Posted by: Neil | June 26, 2008 10:01 AM

Good venture story: He has a useful product, has amassed a large enough client base so that he's beyond "the usual suspects". He's built the company in lean and mean style. Its a very scalable business model, and with tight execution the valuation will take care of itself very nicely.
We are a nation of immigrants and need more like him.

Posted by: Jim | June 26, 2008 8:27 PM

It sounds like a lot of hard work is paying off. As a small business owner I can relate to taking a small salary and putting the rest of it back into the company. Good luck Arman, I hope LogiXML continues to prosper!

Posted by: Paul | June 27, 2008 1:57 PM

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