2011 Hall of Fame : Mike Panaggio - An Entrepreneur at HeartSeptember 2011 By Erik Cagle
He picked up his intensity and appreciation for—and the execution of—a quality game plan from his father, a man who coached high school and collegiate sports for 50 years. Panaggio actually spurned an opportunity to play hoops for UMass in order to play at SUNY-Brockport, where his father was the men's basketball coach. Mike's brother, Dan, also played for SUNY-Brockport, and the Panaggio trio have the distinction of each holding the men's scoring record.
"I run my company the same way (as a team): we recruit, find great talent and practice hard," Panaggio notes. "I like to hire athletes and musicians; they seem to be tuned in to hard work and creativity. You're not going to win without talent, and when you add in the right leadership, it's a game changer."
Panaggio considered following in his father's footsteps and becoming a basketball coach, but he wanted a more secure financial future and was fascinated by the brokerage world. After graduating, he started investing in stocks and commodities, and promptly took a bath.
"I got murdered in the market, but I thought, 'Boy, if you can lose this much money, then you can make some money, too,' " he recalls.
Stints with Merrill Lynch and Prudential-Bache saw Panaggio follow through on his money-making conclusion, but the entrepreneurial side beckoned for him to step out of the comfort zone again and try something new. Some clients had begun making real estate investments in Florida as timeshare opportunities began to sprout, and Panaggio came to their rescue in 1982 from a marketing standpoint. With direct mail and premium incentives leading the way, DME was born two years later.
"I always fought against the impersonal, everyone-gets-the-same-letter type approach," he says. "We bought four Xerox 4050s. I thought, wow...we can send people a different letter with a different message, and we can do 50 pages a minute! We came up with wild ways to create personalization."
Panaggio rode the timeshare bubble for several years, but when stricter laws went into force and it was regulated more closely (including the use of sweepstakes as bait), he began to look for a new vertical to tap. That new target became the automotive industry; his biggest coup was attracting Southeast Toyota, which serves a five-state area, as a client. Parts and service marketing, as opposed to new auto sales, fueled their relationship.
Another turning point for Panaggio came when he was introduced to a fellow entrepreneur, Tom Leonard, who owned the Encore Marketing software firm. The pair developed a tracking system (Red Rocket), specific to the automotive vertical, which allows clients to see how their marketing initiatives are performing.
DME soon developed a second major vertical, which traced back to Panaggio's roots. RME, or Response Mail Express, served financial planners, and his client list included heavyweights such as Bank of America, New England Financial and Allianz Global Investors. Panaggio sold that aspect of the business in the summer of 2008 to a private equity firm, at the peak of the market.
In 2007, Southeast Toyota bought a 49.9 percent share in DME Automotive. Today, the automotive operation boasts more than 4,000 accounts. Between selling half of DME Automotive and all of RME, Panaggio cleared $54 million. But, he had exited his two most profitable verticals in the process, making him a king without a country. Instead of big fish verticals, Panaggio ventured into sports marketing and buying, in whole or parcel, small companies (like Rocket Life).
Today, DME is greatly involved with Office Depot, providing various solutions for the office superstore's small business clientele. Panaggio garnered this account in much the same way as Southeast Toyota, by overpromising and delivering.
"The office superstore market needs relevance with their small business customers," Panaggio says. "We specialize in relevance; that's been the theme in everything we do."
Mark Ferrara, senior director of field sales and support for Office Depot's Copy & Print unit, compares Panaggio to Kinko's founder Paul Orfalea, with whom he once worked, calling them both "incredibly visionary" thinkers who help people to communicate better. Panaggio might offer up an idea that Ferrara feels is a bit off kilter, but in time the latter usually comes on board.
"What I like about Mike is that he's not really a linear thinker, he's more synchronistic," Ferrara says. "He's able to take things that other people wouldn't put together and connect them in new ways. He's also someone who genuinely cares about people. He certainly loves business, but it's more about the individuals that make up his company, and he empowers them to express their ideas."
Innovation is a constant theme for Panaggio. DME developed a virtual business card that's optimized on Google, which serves as a differentiator for clients. And another product straight from the Panaggio chalk board, Present Four, identifies and focuses end users on a client's value proposition, providing tracking capabilities.
Panaggio is well-known on the speaking circuit, talking at trade shows, open houses, events, etc., around the world (he has visited the Orient an astounding 76 times). This month, he is speaking at a series of seminars to be held in Vietnam. Earlier this year, he gave a presentation at the Vision 3 summit.
Away from the office, Panaggio enjoys jet skiing, tennis, golf and, of course, basketball. He has three children: a son who is a pretty good basketball player, a daughter who is now a doctor at the University of Colorado Hospital, and another daughter still in high school.
Panaggio will be the first to admit that he's a bit different. "I've never had coffee, wine or beer," he admits. "As the son of a basketball coach, those are things you simply don't do." PI