Motricity’s Ryan Wuerch on the Post-IPO Game Plan, International Expansion, and the New Wave of Mobile
Most companies might consider reining in their loftiest ambitions after an IPO plan falls far short of expectations.. Then again, most companies aren’t run by Ryan Wuerch.
Wuerch is the founder and chief executive of Bellevue, WA-based mobile software company Motricity (NASDAQ: MOTR). The company, founded in 2001, filed for its IPO in January. At the time Motricity, which had generated more than $100 million in revenue in 2008, though it was not yet profitable, was expecting to raise as much as $250 million from investors in its initial public offering.
Instead, the company, met by a tough economic climate, was forced to lower its expectations. First, it sought to raise $85 million, then $62 million, before finally settling on a much lower $50 million to seal the deal. But a less than ideal IPO, Wuerch says, isn’t enough to speak to the well-being of the company, and won’t be enough to curtail its ambitions.
“Stock price doesn’t indicate the strength of a company,” Wuerch says, adding, “We were waiting for that window.” Timing certainly didn’t help Motricity. On the last day of the company’s road show in May, just when Motricity was trying to whip up enthusiasm among dozens of investors, the Dow Jones Industrial Average fell 1,000 points in a very scary 16-minute period. The window Motricity had been waiting for was suddenly gone, but Wuerch and the company decided to move forward with its plans regardless.
“It’s a very difficult market and we feel very fortunate that we did get out,” he says. “We didn’t have to go public.”
The reasoning for moving ahead with the public offering was three-fold. First, Wuerch was eager to have transparency with the customers that comes with the territory of being public. Second, there was an obvious opportunity for the company’s some 355 employees, as of March 31, to benefit from the transaction by enabling them to potentially cash out their stock options. Third, the company had some rigorous international expansion plans in the works that required extra capital.
Motricity had a number of prominent stockholders going into the IPO, including Advanced Equities (28.6 percent), billionaire investor Carl Icahn (13.8 percent), Technology Crossover Ventures (10 percent), and New Enterprise Associates (9.8 percent).
Although the public offering was no doubt humbling, Wuerch says the company has already bounced back. Motricity posted revenue of $113 million in 2009. And although they haven’t yet become profitable, the company’s revenues are climbing and losses are narrowing. In 2008, the company reported a loss of $78 million. In 2009 its loss was down to $16 million.
The company is ready to move forward—and aggressively so—with plans to ramp up its local presence, and expand to Asia and India. Citing the famous children’s fable, Wuerch says actions speak louder than words. His motto around the office is “maniacal execution against the plan.”
“My largest investors actually bought in the IPO, so if there’s any indication to the strength of the company, that’s it,” he says. “It has nothing to do with how much money you’re raising.”
And so far things are looking up. The company’s second quarter results—some $30.4 million in total revenues—exceeded expectations, Wuerch says. As the domestic market has improved for Motricity, Wuerch says it has enabled him to think more about international expansion.
Motricity relocated from North Carolina to Bellevue in December 2007, coinciding with the company’s $134 million acquisition of the mobile division of Infospace. But Wuerch had other reasons for making the switch. The Pacific Northwest is home to two of Motricity’s largest clients, as well as a wealth of technology talent that Wuerch was eager to tap. And with its plans to expand internationally, proximity to Asia was another benefit.
Today less than 10 percent of Motricity’s customer base comes from the international market, according to Wuerch. Its target, he says, is to have 50 percent of its customers coming from Asia, India, and Latin America within five years.
Reaching this goal will require that Motricity stays in front of the market and its fast innovations, which in the mobile industry, is a difficult task. It’s a struggle that Wuerch says keeps him up and night.
“We as a company have to continue to stay ahead of the curve,” he says.
Although no one can be certain where the mobile marketplace will go, Wuerch has his best guess—and he’s using it to guide the company’s efforts moving forward. Mobile, he says, has gone through three stages of evolution. The first emphasized mobile palm synchronization. In the second, fancy devices with flashy ringtones, games, and graphics. The third—where we are today—is heavily centered on device capability, content, and media.
“It’s all about personalization,” Wuerch says. “That pace of content being added or accelerated is only growing.”
By 2014, according to Wuerch, there will be 4.5 billion mobile users on the planet, 500 million of which will be using smart phones. “In that world is where there’s such an opportunity,” he says. If mobile companies want to stay relevant through this evolution and the next, they have to find a way to marry intelligence and innovation. They have to give consumers what they want, and use that discovery to fuel further capabilities.
In this new wave of mobile, Wuerch predicts we’ll see “full, open mobile Internet engagement” from both enterprise and consumer. And the technology, he says, will bring on a behavioral evolution “where the mobile device becomes the primary conduit of what we do.” A person’s entire life—everything from communication, to business management, scheduling, shopping, even banking—will soon be managed through mobile devices. It will be a time when your device intuitively knows you.
That raises all kinds of privacy issues, but the trend in mobile is toward our mobile devices keeping more information about us, not less. Smart phones today have countless apps that allow users to store their pin numbers, passwords, even social security IDs on their mobile device. Some banks even allow consumers to deposit checks into their accounts by snapping a picture on their phone.
While there’s certainly potential for abuse of such data, Wuerch says the vast majority of consumers trust their credit card and social security numbers to their carriers—sometimes over the tried and true file folder buried in your bottom desk drawer. It’s convenient. It’s secure. It’s mobile. And, he says, the carriers haven’t breached the trust of their customers yet. “It’s like a relationship,” he says. If the carriers play their cards right, and protect the privacy of their subscribers, while giving them more control over what they can do with their phones, it’ll be a whole new ball game.
Though Wuerch says this evolution has been a long time coming, it’s just now reaching critical mass, making it an all the more interesting time to be in mobile.
“Look at Amazon Fresh. I never would have thought that Amazon would be delivering my groceries when I bought my first book,” he says. “True innovation happens when you can be part of behavioral evolution.” Google search, Microsoft’s Windows operating system, the Internet—all of these innovations changed the way consumers behave, he says, adding, “we’re at the beginning of that right now with mobile.”