Greg Leman, founder of Durham-based Metagenix, a software start-up that closed its doors in May 2003, says selling food sauces online is a lot more fun than selling new software.

After Metagenix shutdown, Leman and his wife Gloria Cabada-Leman started the Carolina Sauce Company and CarolinaSauce.com. It markets an original sauce Leman developed for wild game and a myriad selection of Carolina BBQ sauces. “We’re ahead of where Metagenix was in the first three years, doubling sales each month,” he tells Local Tech Wire.

Leman’s Metagenix sold the first software application it developed to Essential Software (Nasdaq: ASCO) for $4.5 million, but its second product, data quality software, flopped.

Private investors and Cupertino-CA-based Berg McAfee put $3.3 million in Metagenix, which was founded in 1998. It made $8 million in sales of its products over five years, primarily the first, MetaRecon, which automated data analysis and integration from older “legacy” computer operating systems.

After paying off the company’s debts, Leman tells Local Tech Wire, he sat down with its investors and they decided to use the remaining money from the sale of MetaRecon to launch a second product, MetaPure. Unfortunately, it was a brutal time for small software start-ups.

“We thought we had a better product than the first, which Essential Software has done very well with,” says Leman. The company also met the milestones it said it wanted to reach, then sat down to get investors to ante up more cash. But the Iraq war was going on and, Leman notes, “The IT environment was horrendous.”

The investors, burned by a number of tech investments, had cold feet and decided to shut down the company.

‘Knocking my head against the wall in IT’

Leman operated the company on an unusual “open book” concept that allowed any employee to examine the firm’s financial records at any time. It inspired employee loyalty. Leman said the 14 Metagenix employees probably would have stuck around and toughed it out if he had asked them to.

“Frankly, when the investors pulled out, we could have survived,” he says. “But I was tired of knocking my head against the wall in IT. It was nearly impossible to get anyone to buy software from a small company. Buyers were just so risk adverse. They were focused on how can I outsource this to India rather than how to solve problems here.”

Leman says the open book accounting was a good defensive strategy but he’s not as impressed with it now as he once was. “I’m not so sure it works well in a technology company,” he says.

Leman’s wife Gloria had earlier had an idea for starting a gourmet food store, which Greg thought was perfect for the Web. A hunter, Leman had developed a honey-soy-ginger-onion-garlic sauce for wild game. “It made stuff that doesn’t taste so good taste so good,” he says. “People were always telling me I should market it.”

Actually doing so turned out to be relatively complex, says Leman. “It’s surprising what you have to do to get a sauce made. You need to get U.S. Food and Drug Administration approval, arrange for ingredients labels, manufacturing and bottling.”

Adding more heat

To market test his concoctions, Leman set up a gas grill at events such as ice hockey games in the region and gave people samples, which helped him refine the ingredients. Among other things, “We found out our hot sauce wasn’t hot enough and added more heat,” he says.

Selling sauce is more fun than selling software, Leman says. “When ever you sold software, people were suspicious,” he explains. “In the sauce business, people are nice. They’ll do things without contracts. They say, ‘Sure, I’ll sell your stuff.’ The things I saw customers do to software vendors, us and others, are unspeakable.”

Leman says the company received its first shipment of the original sauces, “Greg’s Happy Sauce,” and “Greg’s Hot and Bothered Sauce,” – 120 cases – last month. “My living room has over 200 different sauces in it right now,” he says.

Leman says the first thing he does every morning is check on new orders on his Web site. ” The Internet store is open 24 hours a day. People buy sauce at 3 a.m. – you want to say, get a life. But we have worldwide sales from Germany, Canada, and every state.”

Leman says the problem many earlier Internet marketers had was thinking the technology would sell the product. “That’s not the case,” says Leman. “The product comes first. Customer service, delivery. Technology is just a tool.”

Leman and his wife are taking a sample of the company’s wares to the National Fiery Foods and BBQ trade show in New Mexico this week.

Carolina Sauce: carolinasauce.com