Monday, July 24, 2006
Interview with Mike Newman, CEO of Accordent
Accordent (www.accordent.com) is a Hermosa Beach-based company which is a local high tech company that provides software for developing online, streaming presentations and webcasts. The online webcast industry has seen a lot of venture capital interest in the last few months. Accordent received a round of venture capital funding earlier this year, and it's not the only firm in this space to do so. Mike told me a bit about the firm's business and why it's raising funding now, along with what he told me is a inflection point in this industry.
Ben Kuo: What is Accordent?
Mike Newman: Our business is broken into two components. The first of which, which we were founded on, was enabling companies to create multimedia content. We call this content authoring. Content includes live or on-demand streaming media, and supplemental graphical content, such as synchronized PowerPoint slides, and interactive content like polling and Q&A. This is on the on the same sort of plane as video conferencing for one on one communications which is very video heavy, and web conferencing, which is more collaborative. We would consider our content we are helping companies to create as one to many. Typically, this is live or on-demand presentations to a broad audience. The second part of our business is to allow people to better administer and manage that content. For example, allow users to search for specific pieces of content, track usage, get reporting on usage, and do everything from certifying users and scheduling events to notifying attendees. On one hand, we are enabling the content creation, on the other we are facilitating the framework to manage that content.
Ben Kuo: How are you funded, how long have you been around?
Mike Newman: We've been around since September of 1999. We were a bootstrapped company, and this was our first formal Series A round that we raised around the end of March. We found that historically, we were able to grow organically with the market and fulfill demand, and were growing on average 100 percent per year. Last year, we saw that the market was growing faster than we were. It wasn't technology or sales, but we needed to make more investment in marketing and internationally. Despite running profitably, it was in our best interest to capitalize in the market as we saw it evolving.
Ben Kuo: What's the sudden interest in this market right now, I see lots of firms are getting funding now in this segment?
Mike Newman: It's a market that has a great foundation. It evolved slowly, but there was a benefit of it evolving slowly. There were lots of data points coming in. Companies in the Fortune 500 that do a rigorous analysis of every technology investment were able to get analysis of the returns on investment. They were very significant. Most of the times when we go in and work with them, we found we were underestimating the benefit to them. In addition, being able to understand how the technology is being used, and being able to use the infrastructure in place--instead of buying infrastructure just for webcasting, we were able to see that most companies have what they need already. We're able to extend the value of investments they've already made. It's lots of different things maturing at the same time. Broadband is not an issue, infrastructure is not an issue, and people are really starting to understand it.
Ben Kuo: How are you different from the many competitors out there?
Mike Newman: There are a couple of chapters in the book. From a global perspective, there are very, very few competitors. When we started this company, there was a lot of money going into this space. By some counts, there we twenty to thirty companies we competed against. Now, there are only two or three companies out there that can offer competition to us, in the sense of understanding the space. And they address things slightly differently. The recent venture financing has gone to those companies that have been around for awhile. From the content authoring standpoint, Accordent is really one of the innovators. Others have migrated to the space from other areas, and we see ourselves as a market leader. We have in excess of 1500 customers, multiples of our closest competitors. It's not that anyone is doing anything wrong, it's that they are tackling different problems in different ways.
Ben Kuo: What kinds of customers use your product?
Mike Newman: When we initially started--and this was unique, as we were not financed--we expected we would not be able to get that big one name brand company. It turned out that the users we were targeting, folks that were charged with creating content for companies, were in companies like JP Morgan, Johnson & Johnson, CS First Boston. We went through rigorous bakeoffs, and they would select our technology. Out of an initial 75 customers, 40 were in the Fortune 500. We were doing very well in audio and video services, E-training, and corporate communications groups. At the end of the day, their job relied on being successful, and we had technology that was working. We were not winning the marketing battle, and hadn't raised money, but won on the merits of our product. As the industry has matured, it's not just the dedicated folks interested in our product, but human resources managers, marketing managers, the sales manager who is using the same technology to convey a message. It's just that technology itself is not their core competency. So our business model has evolved, and it's less about the technology, and making sure that our product works not just for experts but folks who are functional business managers and just want to use our product to do their job better.
Ben Kuo: So it sounds like you went through a startup, things shook up, and you're now just expanding your business. Is that a good assessment?
Mike Newman: Absolutely. We feel like that rich media presentation and webcasting are clearly established. We have really seen success across multiple verticals, and the enterprise has been adopting really rapidly, as have universities and governments. More and more organizations have been involved, more and more people involved. It has been a period where the companies that were able to evolve and maintain technology and work on all different platforms and browsers and they have emerged as leaders. It's extremely difficult to get into the industry today without that history.
Ben Kuo: How much crossover is there from the consumer side--you see lots of video editing, streaming video on the web now, along with software tools?
Mike Newman: What we see as the primary benefit on entertainment and consumer side is people becoming familiar with the jargon, digital video, and streaming media. As far as use, we're not involved at all on the entertainment side. This is strictly about business problems, like uniformity of messaging, cost cutting, and expediting the delivery of information to resellers and partners. However, what you do start to enjoy is symmetry where someone can go home and in one breath see streaming content for entertainment purposes, and then exactly same technology for a sales meeting. It does remind me a lot of 1998 and 1999, where the consumer side of business got lots of attention first. but then it became business to business that garnered lots of attention because it also had lots of positive information underlying it, whether that was ROI and making business processes more efficiently. I think you'll see the same thing. The entertainment side will spread like wildfire, but as all the data gets out to the marketplace on the power of online communications, I think it will not only get more internal corporate attention but funding and institutional investment.
Ben Kuo: It sounds like there's a lot of optimism in this space.
Mike Newman: The companies that continue to be in this industry are very grounded. They've demonstrated traditional business acumen and kept their companies going in tough times. However, categorically, when you start to talk to these companies you'll hear almost universal optimism, which is almost un-natural for companies in our space. It's really an inflection point where people are sitting down at their computers and seeing it as a communications device. I think it's an incredibly important transition, not just for our space, but for communications in general--whether that's for Voice over IP, whether it's related to video conferencing or related to web conferencing. It's a trend that will continue, and we're just one piece of the buffet, but it's certainly exciting being able to participate.
Ben Kuo: Great! Thanks for the time and thoughts...