Small Business 101
Atilla S. Kocsis: President, Digital Phenom

By David P. Marino-Nachison
washingtonpost.com Staff Writer
Friday, November 4, 2005 12:00 AM

When Atilla S. Kocsis left his position working in international trade policy (with a focus on Eastern Europe) for the U.S. Chamber of Commerce in 1994, he and his partner planned to start a business in Hungary.

After considering their options, however, they stayed local: In Alexandria in 1995, they founded USMall Inc., a company that set up online shopping malls.  That was the first but not the last time Kocsis's plans would change. With secure transaction technology lagging, growth was slow and the firm shifted focus to Web site development and hosting in 1997.

Growth in that market eventually slowed as well; so when a customer asked USMall to create an integrated online address book for its worldwide offices in 1999, the company relaunched as D.C.-based Digital Phenom, a software development and hosting company that now creates and maintains Web applications for approximately 50 customers.

You abandoned the original USMall concept within two years. What was the thinking behind that decision?

It was pretty easy, that one was. We basically started out with the idea that we were going to sell things on the Internet. It seemed ideal, since now you could actually see the products using graphics as well as the usual product description. But the component that was still missing back then was secure transactions. Without that piece, a mall concept just wasn't going to work.

The market didn't advance quickly enough for us to do what we wanted to do, so the choice to get away from it was obvious. Another opportunity had presented itself in that we had gained some expertise in other areas while doing our own thing. One door closed, but another one opened for us.

So is the lesson for entrepreneurs to let yourself be guided by the market?

If you keep your eyes open, you see opportunities developing. If you do a cost-benefit analysis and there's money to be made, you take them.

There have been opportunities that we've had to say no to as well -- we didn't think the technology would be around long enough, or there wasn't enough uniqueness to them.

You don't want to pick something that's going to be ubiquitous in a week and so you'll be out of the market in six months. You've got to pick something with legs to it.

Your business requires employees with some pretty specialized skills. Is Washington a good place to find the kind of people you need?

It's a very smart market. There are enough tech companies here in the area to give me the people that I need when I need them.

The technology "hubs" -- San Francisco, Boston, New York, San Jose -- are what they are, but I think Washington is still a central point for tech firms.

Was starting your own company something you'd always wanted to do, or were you following a specific market opportunity?

It was a little bit of both. I've always been a pretty active person. Policy is a very slow-moving beast, and I just felt like a wanted to go and try something on my own.

Certainly, being at the U.S. Chamber of Commerce you're inspired to be entrepreneurial. I don't know if I took the job specifically for that reason, but a side benefit of being there was being exposed to business and lots of start-ups in Hungary.

I had a few contacts. I knew people all over. I was well along the way because my contacts in Hungary were all these American business owners who had gone over there. We ended up on a little bit of a sidetrack, but when a better opportunity appears you have to just take it.