Interview: Ryan Wuerch, CEO, Motricity: IPO Still An Opportunity; ‘M&A Will Be A Part Of Our Core’
Motricity, the mobile infrastructure company that acquired InfoSpace (NSDQ: INSP) Mobile for $135 million in October, has been relatively quiet following a burst of publicity over its controversial headquarters move, opting to focus on the structural changes, wooing new customers and working on contract renewals. Longer term, though, CEO Ryan Wuerch plans to acquire more companies, raise even more capital and expand outside of its carrier customer base to work directly with media companies and handset manufactures. With such lofty goals, the company has a ton to execute on. For background, Motricity bought InfoSpace Mobile to beef up its carrier storefront and portal services, which manage and organize the millions of pieces of mobile content that end-users consume on a daily basis. To do so, the company raised nearly $200 million, which doubled the amount it had raised to date, and added high-profile Carl Icahn to the board among others. Following the transaction, Wuerch tipped the company on its head, by moving the headquarters from Durham, N.C. to Bellevue, Wash., laying off hundreds of its East Coast employees and choosing InfoSpace’s technology as the platform it will use going forward. After the jump, some lengthy excerpts from a 90-minute interview with Wuerch and Brendan Benzing, Motricity’s SVP of product strategy and marketing.
Disclosure: Motricity was a sponsor of our recent Seattle event
Who’s Motricity?: Wuerch: “We are a brand behind the brand. If you open up your AT&T (NYSE: T) phone today, you see ringtones, games and graphics, that’s us…If you are configuring your portal, and choosing stocks, weather and news feeds, that’s Motricity via InfoSpace. If someone is texting to vote on CNN, whether it’s to Obama or McCain, that’s Motricity…we work with 10 of the 13 top carriers in North America, and the top six use our infrastructure.”
By the numbers: Wuerch: “The core of our business, and majority of revenues this year will be from mobile content. We will have $1.2 billion in gross mobile content revenues flowing through our network… We have positioned ourselves as one of the leading brands in the industry. We are well positioned. This year we will have $100-plus million in net revenues.”
On the integration of InfoSpace Mobile: Wuerch: “We are still in the earliest days and someone is going to build the multi-billion company… Motricity was very strong on the marketing and the sales and forward leaning version and being very loud about it. InfoSpace mobile was very strong on the business side and execution… You’ll see several announcements shortly for renewals with current customers and new wins. We announced at the beginning of the year that this was our new focus and anything on the fringes was out. We sold the direct-to-consumer business and in December we sold eReader.com. We have 350 employees still in Raleigh, but it will come down to 125 at year-end. There’s about 400 people at InfoSpace, and we’ll have 550 by mid-year next year.”
On more acquisitions: Will there be further consolidation? Wuerch: Absolutely. Will you be the one acquiring? Absolutely. What are you looking at? “We aren’t going to speak about it right now, but it’s been in our DNA. Because it’s in the earliest of innings, there’s still some great technologies and companies. There’s things that will help further our core business today that will help the carriers. M&A will be a part of our core strategically domestically and internationally.”
On fundraising: Wuerch: “It typically takes cash to acquire, whatever form that is. You can pay for things in stock or cash.” Are you still interested in an IPO? “It’s all about us executing every single day. And that’s one of the opportunities for the company, but I see that as a financing event. We have large investors that delivered over a quarter of a million dollars in our last round and we were oversubscribed. And the scale of our investors, like Carl Icahn. He is a great person and doesn’t invest in private companies….I have such a high degree of respect for him, we talk very frequently. He delivers a great degree of insight, we aren’t a company that’s public—and he’s not just extracting shareholder value by doing this.”
On the reaction to the InfoSpace merger: You have the distinction of getting some of the most comments on our blog than any other company: Wuerch: “We’ve talked about the screenplay that could come out of it, but wherever there’s that much emotion, you could look at it as bad, but also if someone has that much emotion, than something was really there. You don’t get that emotional if something isn’t that important to you. In Raleigh-Durham, we worked really hard, and I really liked that place, and it wasn’t my intention to leave….I’m the CEO; the buck stops with me. I’ll handle it. If I’m making a decision, a barometer of how I’m doing is am I doing what’s right for shareholders and customers. And every employee we had has options that are exercised, and is a shareholder. So for me, even if I’m making the right decisions for the shareholders – that means even the employees. ... But when people started going after great people, even leave family aside, when they come after your kids it’s another thing. I had to be heads down; even though it hurts a little more than you like, you have to focus on the end goal.”
On morale at Motricity:Wuerch: “It depends on where you are. In Raleigh, in the early days, it was the people leaving that were writing. Here, it’s different. This is where we are growing and because ultimately they were the beneficiaries. It’s something I’m very aware of. I made this statement in an all-hands meeting. I believe the brand of Motricity is going to enable all of you—that won’t find yourself with the company anymore—as benefiting more because you are working with this company because of the brand, because of what you learned here or because of what it empowered you to do. Almost everyone who was reporting to me has gone on to better jobs, higher positions and for better pay.”
On the departure of Steve Elfman, the No. 1 guy from InfoSpace Mobile: Wuerch: “Where did he go? Sprint (NYSE: S). He’s the president at Sprint, which is a customer. Sprint was never a good customer, right? “No, it was never a good InfoSpace customer, but for Motricity it has been a customer for awhile. Stay tuned. We are quiet not because we aren’t working, but because when we come out, we want to come out right. We want to be very clear and have our partnerships aligned.”
On iPhone’s impact: Wuerch: “There’s about 10 million projected devices to to be sold. So it’s a really, really small number, but what Apple (NSDQ: AAPL) has done is that they have raised the bar. But for us as a company, it’s about the mass average user, it’s about a consumer who’s never used a phone to get content…And, frankly, that’s where Motricity lives. We can help facilitate it.”
On Apple disrupting the traditional business model: Isn’t the iPhone changing that, and Apple is in effect playing your role with its App store? Wuerch: “There’s no question it is. And in their world, there’s only 10 million or 12 million phones. But that’s estimated to be a $1 billion-dollar market by some estimates in the first year. “Good. Good. For us as a company, this is where I go back and there will be ways Motricity finds its way to capture something where today it can’t…We want to live where the masses live and make it better. That’s where Motricity is living. We are becoming the enabler of the industry. We are positioned and working hard to become the layer that creates better usage and consumption, and frankly we don’t look at content as ringtones or game, it’s all the above. What’s an ad? It’s a piece of content that’s flowing through the industry. “
On the walled garden: Are the walls crumbling? Wuerch: “I think the wall has come down. What we knew as a walled garden is gone. The moment you created doors, you created open, and the walls really came down. Today, you see things on your phone. You get an AT&T device, and you get what I call AT&T proprietary, which is their store, their portal, called MediaNet and MediaMall. ... It’s still very hard to get out of the walls But it’s getting better….Some of the things we are rolling out this year are very open.” Benzing: “I liken it to the early days of the internet when there were Prodigy, AOL (NYSE: TWX) and Compuserve, and they were building the things they were building because the market was so immature. I see the browser wars coming to mobile…There’s a lot of browsers in the mobile space. If you think about mobile as a platform to develop on things really start to open up.”
On Motricity’s role as carriers become more open: Benzing: “We are certainly a player in that space….We look at this model—what we call off-deck today—and more and more companies will have a need for mobile specialists, and more companies will need help in understanding the ecosystems. So while we’ve dominated in the carrier sector, we believe the market is maturing and will create new opportunities for us. Apple, RIM (NSDQ: RIMM) and now Nokia (NYSE: NOK) are beginning to invest in new services, and that’s a new potential channel for us. What we’d like to see in ideal world, is what if the carrier, our technology and handsets were being built together on a single roadmap. We all have to step up on our game; right now experiences are built to the lowest common denominator.
On the longevity of storefronts and portals: Benzing: ” I don’t anticipate that the carriers will hand that off to anyone and they’ll just ship a browser….We are still very far from the Internet, and the technology being used today around portals and personalization and customization are very much at the forefront of in mobile. A lot of the limitations are in the browser, and you have to ask how much content people actually want to consume and in what format on a mobile phone. But as you start to think about widgets and the concept of info-snacking, and then go to the full Internet browser when you want the meal.”
@triciad
Jul 14, 2008 11:00 PM ET
Posted In: Advertising, Entertainment, Gaming, Music, Media & Publishing, Search, Social Media, Video, Technologies / Formats, Companies, InfoSpace, motricity, ryan wuerch
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