SEOmoz Hands Off Consulting Biz to U.K. Firm, Doubles Down on Software and Tools

2/1/10Follow @gthuang

Don’t think of Seattle-based SEOmoz as a consulting firm. It’s all about software and tools now—and pretty much has been for a couple of years.

That’s the message from founder and CEO Rand Fishkin, who spoke with me last week about the search engine optimization company’s strategy. SEOmoz announced today it is officially handing over its consulting business and existing consulting customers to Distilled, a small search marketing firm based in London, U.K. As part of the deal, Distilled is setting up a Seattle office in the next few weeks, its first in the U.S. The estimated revenue from the consulting business for the first year is $1 million, according to the companies. Meanwhile, the former SEOmoz consulting team is switching over to marketing within the company.

SEOmoz and Distilled have worked together informally since 2007. Their mutual customers include Microsoft, RealNetworks, Avvo, Evogear, Etsy, and Scribd. The new partnership will allow SEOmoz to focus solely on its core software products, which should please its investors. “We have an impetus to maximize the shareholder return and investor value,” Fishkin says. He adds that the move is being made, at least in part, to “maximize the multiplier on an exit.” (Since consulting is essentially a steady fee-for-service business, it has less growth potential than software, which can tap into a much bigger market and therefore command a premium from investors.)

Some quick background on SEOmoz: The company was founded in 2004, originally as a consulting shop, and is backed locally by Ignition Partners and Curious Office. It has 21 employees and generated just over $4 million in revenue last year, up from $1.4 million in 2008. And it has been generating more than 85 percent of its business from its software and tools, which it offers primarily to small and medium-sized businesses to help improve their marketing and Web traffic. (One differentiation from companies like Seattle’s Optify and San Diego’s Covario is that those firms tend to focus on bigger customers, Fishkin says.)

Fishkin says that as he went out looking to raise a Series B funding round last year, some venture capitalists passed on investing because they thought SEOmoz was more focused on consulting than selling its software and tools. “In the marketplace, we’re thought of as still being a consulting shop,” Fishkin says. “We’re trying to fight that perception.”

Meanwhile, Distilled uses the SEOmoz software platform for its consulting work with big companies—which includes online marketing, search optimization, Web design, and reputation monitoring. The company has no external investors, and has been “growing organically as quick as we can, with cash flow,” says Distilled co-founder Will Critchlow. The partnership with SEOmoz and the Seattle expansion are “quite a natural progression,” he says. “It’s a huge opportunity for us.”

Distilled plans to hire five or six people in Seattle as soon as possible. These positions will include experts in SEO, administration, and client services. The company currently has 16 employees, and in its current fiscal year (which ends in March), it is on track to make 1 million pounds in revenue.

Critchlow says Seattle makes him feel right at home. “Rand tells me it sometimes doesn’t rain, but I’ve never seen it,” he says. “I see a lot of similarity in the tech startup communities in Seattle and London. They behave in similar ways”—including entrepreneurs hanging out in pubs and bars.

Lastly, Fishkin says SEOmoz is rolling out a new version of its Open Site Explorer product, which lets people get information about link graphs on the Web. The software lets you view up to 10,000 links to any site or Web page (1,000 for free), so you can see who’s linking to you and your competitors. It’s an alternative to Yahoo Site Explorer, which is rumored to be going away in the wake of the Microsoft-Yahoo search deal.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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