Monday, August 15, 2005
Interview with Mark Sylvester, CEO and Co-Founder of introNetworks
Mark Sylvester is CEO and Founder of introNetworks (www.intronetworks.com), a startup based in Santa Barbara creating a social networking application targeted at trade shows and special interest groups. I heard that introNetworks had raised some money the other day, so I spoke with Mark on the latest on his company.
BK: I heard you received some funding lately?
MS: Yes, we recently received some funding, though not from venture capitalists. Since the beginning we have been customer funded, as well as personally funded by the founders. We've been doing well, but we started getting too much business and taking us beyond our ability to manage it. I said that we're on to something big, so we took some money to ratchet us up to the next level. If that projection proves out, and the markets pan out, we might look at raising a Series A venture round.
BK: What's new with the company?
MS: The last time we talked, a little over a year ago, we were still developing our platform. In February of this year we announced the platform at the DEMO conference, Chris Shipley's conference. Everyone loved the software. We showed our product at three important trade shows this year -- TED, DEMO, and the PC Forum. This really put us into the stratosphere of the digerati--people knowing who we are and what we're all about. So far all of our sales have come from people who used our system at one of the shows. In fact, we just received a project from a Belgian company who used the system at a conference. Apparently the person used it at the conference, and called headquarters right away to get a quote!
BK: So you're also selling to the corporate market?
MS: Yes. Our markets are all based around "areas of interest". Think of it this way – It's an ‘ecology of interests’. When you're growing up you start finding things you are interested in. As you pursue those interests you may go to school to learn more about it. Eventually you graduate and get a job to fulfill that interest even more, and as you mature you start associating with other things that match those interests--for example, read magazines about that interest, join users groups around those interests, and probably go to trade shows around the interests. I call this the ecology of what you do. We're finding because of this introNetworks is finding customers at schools -- we're at Miami University and Georgetown; corporations like Polaroid and Macromedia; and associations such as the ASAE (American Society of Association Executives) and the AIGA (American Institute of Graphic Artists).
We're now starting to talk to magazines, such as Technology Review at MIT, Wired, and others. We've also got users groups and online sites such as Ziff Davis’s Virtual Tradeshows. Our system takes any community of people and allows them to freely put in their professional profile, interests, skills, and allows them to tag these to match up with other people.
BK: How else are users using your system?
MS: We're also finding situations where not only can our system match people to people, but those users can benefit from matching people to things. For example, at a trade show with a lot of sessions and panels, we can match people to the sessions they might be interested in. Having those non-human entities also opens up the space in terms of matching products, companies, articles, and other types of content. We can tag things like authors, types of readers, and place pins on the screen which lets people see things they are interested in. No one has done this yet in context of putting those things together. In this way we are using the matching engine to make recommendations to the user.
This new capability resulted in us rethinking the business model. The way we originally charged was per-person (on who is using the system). Now we provide sponsorship and advertising within the system. We keyword (tag) the ads, and people can see advertising that is close to their interests, they are very targeted and highly contextual. This completely changes everything.
BK: Why does this completely change everything?
MS: Well, with the population pricing we were a cost center. However, with an ad engine turned on for the client (such as a trade show, association, or whoever) they can sell advertising to exhibitors and recoup the deployment costs quickly. The value proposition of sponsoring and advertising in a property that is up for a year is clearly more valuable than a napkin or a banner you put up in a convention hall. Those sponsorships have only a one time use, where the introNetwork system is up a month or two before, during the event, and after the event. It's quite a bit more value in sponsorship and advertising.
BK: So what are you doing with the proceeds of your funding?
MS: We are taking the proceeds to develop a predictable revenue stream and a predictable development schedule. We've targeted our goals for 8 weeks between releases--2 weeks to define the release, 4 weeks to program, and 2 weeks of QA.
BK: So do you see yourself expanding?
MS: Absolutely. The trick is to be very efficient and judicious on how you spend the money. Our goal is to continue to be cash flow positive, and continue to run off of our revenues. We've had 47 deployments as of today. We had 20 by this February, over a total of 3 years. However, we have had 27 deployments since February. We've improved our production process, improved the deployment process, added sales people, and also did some OEM deals. What we want to do is to prove that in fact that these are the markets we want to go after. We've even talked to cruise lines as a perfect place to have this capability, and are looking at an install into a Madison Avenue-style ad agency. We think we have a unique platform for managing brand ID’s, especially with social networking as a brand management tool being very much in vogue.
BK: What the next big things for you guys?
MS: Our next big push is really around strategic marketing. We want to stake a new claim to a piece of land, and run real hard on that until the end of the year. We see ourselves doing the dog and pony show for VCs probably around the first of the year, and figure 3 to 8 months for the funding round to conclude. We've already showed up on a list of companies most likely to be acquired, among such companies like Flikr. We're real happy about that! Our exit strategy is some sort of acquisition.
We're also looking at capturing the in-depth sociographic and psychographic data we are collecting with our system. This is not demographics; we're able to capture a pretty robust profile of people in our system. There's really good data on these groups. We have a marketing team finishing work on how to communicate the strategic value of this new kind of information about large groups and affinity groups, so we can take it to the top 100 brands, associations, human resources, and the corporate market.
BK: Anything else?
MS: We're really excited. It's been over a year since we talked, and everything we said we'd do we did. Very interesting opportunities keep on coming up, these opportunities keep opening up new markets, and we continue to maintain our competitive position. We're not just a social network, we're not just a web application, we're not just a search engine--we're a new vehicle to collect and analyze affinity information. We call it introGraphics.