Matthew Szymczyk and Hans Forsman, co-founders of the Culver City-based digital agency Zugara, were honored in this year's Creativity 50 for their company's innovative work in creating truly useful proprietary AR technologies. Although the digital shop's footing is pretty sure now, that wasn't always the case. Szymczyk explains how a worst-case scenario can turn out to be the most fertile ground for innovation.
So what's the story behind Zugara's launch?
Zugara had a very unique start. In 2000, a few of us were working for a company called Keane Interactive on the interactive side of the PlayStation account. Keane had just acquired the company we had worked for previously, Jamison/Gold, and decided to layoff the entire interactive unit in early 2001. So, we approached Sony about starting a team to continue working on their account and they helped start us up. With a team of seven that were laid off on March 9, 2001, Zugara was born over a weekend and officially started business on March 12, 2001. Red Bull was the other client we had.
Though this is a unique way to launch a company, there were problems. There was no official mission statement, business plan, etc. We basically started up a company to help save our jobs. So in 2008, we took a step back to re-evaluate the company and where we were headed. We had a lot of great clients at that time—Toyota, Lexus, Reebok, Casio, Playboy, etc., but we felt we weren't doing a lot of the work we were excited about or ultimately wanted to do. So most of 2008 was spent thinking about how we wanted to reposition and "reboot" the company, and in 2009 we went about implementing those plans.
So what steps did you take to do that?
We wanted to focus on 4 key service areas for the company—Interactive Video, Mobile Marketing, Social Media and Web/Application Development. In addition, we also wanted to start creating our own proprietary tech. This is where Augmented Reality initially came about as we were more interested in creating the technologies to help advanced the field and the technology itself. We feel we have a good start to this objective with three proprietary techs, ZugAR, ZugMO and ZugSTAR, hat we think will be part of web-based AR development for quite a few years.
On the services end outside of Augmented Reality, we're still heavily involved with creating branded executions for our clients. We've created Facebook apps, interactive video programs, mobile web apps, and more over the last 18 months. Any emerging technology we're looking at though is always based in strategic thinking first. We tend to approach every opportunity thinking "Strategy. Story. Stats." first and foremost.
Speaking of Augmented Reality, your company has developed one of the most talked about practical applications for it. Did you always intend Zugara's AR applications to be proprietary?
We initially started on AR in early 2009. The Webcam Social Shopper application was unique in that it was a collaborative internal idea that just snowballed. It started with the basis of the idea and basic tech (marker), then evolve to using motion capture, then to social media integration and finally to streaming augmented reality (ZugSTAR). Interactive Video had always been our strongest service offering so it was a natural progression of thought process and skillsets to AR. The only difference is that we were now more focused on the baseline technologies we were developing versus the service side executions.
As an interactive marketing company first, we are a strong believer in usability on the web. When viewing AR technologies to date in early 2009, we saw that a lot of the leading companies were using plug-ins. So another reason why we focused on developing proprietary augmented reality techs was to help the web-based AR development market along.
What percentage of your business is now made up of Augmented Reality projects?<br/> Right now, on the services side, our work is split about 50% AR projects versus 50% traditional interactive services like consulting, web design, social media marketing, iPhone app dev, etc. On the product side, we're 100% focused on creating a few platforms based on our AR technologies. Our first B2B platform should launch by June of this year and we're very excited about it.
Last we talked, you mentioned you were building out prototypes of other applications for ZugStar. What stages are those at now?
In the ZugSTAR video you are actually seeing two technologies being displayed. The main one is ZugSTAR and that is the picture-in-picture streaming augmented reality tech we created. This is actually still scheduled to be ready end of Q1 as an addition to the Webcam Social Shopper application we created. We do have it working in prototype form and often show it in meetings or presentations.
The second technology you see in the video where people are moving objects in thin air with their hands, is ZugMO 2.0 (Motion Capture). ZugMO 1.0 is the technology in Webcam Social Shopper where you step away and motion to navigate. This same tech is also being used in the AR game we created called Cannonballz. Like Webcam Social Shopper, once ZugMO 2.0 is market ready (projected Q4 2010) we will create prototype applications for release into the market.
Can you tell me a little bit of the lay of the land of Zugara? What is the makeup of your staff between production/technical/creative account people, and how do they work together?
It's important to note that though Hans Forsman and myself are co-founders of Zugara, we would not be where we're at today without three other key individuals: Jack Benoff, Director of Marketing Strategy; Aaron von Hungen, Technical Lead and Blake Callens, Senior Software Engineer. They, along with everyone else in the company have helped Zugara navigate the recessionary storm and have been instrumental to Zugara's re-emergence as a company.
For the specific layout of Zugara, we decided in 2008 to not be heavily production focused so we do have vendors both nationally and internationally that we work with on the production side. Most of what we do service side internally is more R&D focused, i.e. Augmented Reality techs. So we are about 30% creative, 30% technology, 30% account and 10% production focused right now. We have a very collaborative environment and don't follow a "traditional agency" structure or hierarchy.
We also have had an account services person based in N.Y. since mid-2009. One of our major 2010 initiatives is to open an office in Q3 of this year in NY and in 2011, we also plan to have a satellite office in Europe.
What else is on the horizon for Zugara?
I think first and foremost I feel better about Zugara right now than I ever have since we started. Zugara was started out of chaos (thus why our blog is called We Are Organized Chaos) and for the first time we actually have pretty well defined plans on what we want to do and how we're going to do it. Plus, I think everybody at Zugara is finally on the same page with everything.
Most of this year will be spent developing our AR-based products and expanding both into N.Y. and Europe. Much of the challenge for us will be how we can effectively balance product development with our service side offerings.
What are your thoughts on the importance of proprietary ventures for digital agencies, or ad agencies in general?
I think the traditional agency services side model is dying. Clients aren't going to continue with high cost retainers with little ROI to show for it. Interactive itself is changing so fast every single day that even as a small company it's hard to keep up with the winds of change. So, agencies moving forward will need to be fast and nimble to take advantage of and adapt to these market changes.
On the interactive side itself, it's incredible how fast services are being commoditized. Just last year, iPhone app development was a premium service offering and already you have DIY (Do It Yourself) software to create your own iPhone apps. As an interactive company, I think it's critical that you can develop other revenue streams given how fast services side work will be susceptible to change. Proprietary tech is important for certain agencies that want to have better control over their positioning in the future agency/brand landscape. We are looking at proprietary tech to be our main source of revenue by 2011.
To you, what is creativity?
"Making something out of nothing"
What are your thoughts on taking risks?
"Without risk, there's no reward." We've taken many risks as a company over the year – some have panned out, some haven't. But without taking on many of these risks in the first place, we wouldn't be where we are today.