You would have had a hard time missing VMob in the news over the last few weeks.
The company made finalist in multiple categories for the NZ Hi-Tech Awards 2014, and also won the Emerging Market award at the I-COM Big Data Venture challenge in Spain.
For Scott Bradley, charismatic CEO and founder of the firm, these are all merely steps to what he is aiming for the firm – “global domination.”
Nevertheless, it is still a notable set of achievements for a firm that was merely an idea less than five years ago.
“The business started with Phil Norman, non-executive chairman of the company and myself working on some ideas. The business was formed in September 2010, and we grew out from there.
“We are at around 30 full-time staff currently and we have around 15 contractors that add to the business. So we go up to 45 staff, depending on the project and business. It has been great to grow out the team over the last three and a half years that we have been running it,” says Bradley.
VMob was driven by a passion to integrate technology and marketing for more personalised communication.
“My passion was around technology and marketing, and when smartphones started to mature, I saw the opportunity of allowing brands and retailers to engage with consumers through smartphones on a very personal basis and also measure the performance of that engagement.
That was the idea for Vmob,” says Bradley.
“We started off with a pilot in NZ, and that validated the business model. We had 100 retailers using our platform over that the first period, including people like McDonalds, which subsequently became a client. And then we tried to take the technology, the underlying IP of the business that we had developed, and make that available as a platform to telcos. This is when we started working in Indonesia with the Telkom group, and some subsidiaries within the group,” says Bradley.
It took around six months for the firm to build out the technology that supported the 100 retailers and around 20,000 customers. However, working with a telecom that had a 120 million customers, with requirements to track location and social information, and link it back to loyalty and billing systems, took VMob to a different ball game. It also demanded much more development time in making the base platform enterprise-grade.
“We really needed to build an enterprise grade platform that could handle 200 or 300 million concurrent users. And that took us another 18 months to build. That became deployable only around June 2013 really,” says Bradley.
The company’s two initial big international clients, McDonald’s in the Netherlands and Mobil Exxon in Norway, were enabled off the back of the strengthened platform. With Telkom Group going into bankruptcy, the firm also decided to shift its focus to providing its technology directly to bricks-and-mortar retailers.
“We have a dual model. We have a direct sales approach. We have a direct relationship with the likes of McDonalds and various other clients around the world. But we do work with channel partners. We provide our platform as a white label option to partners like the Omnicom group – the biggest advertising group in the world, and they rebrand the platform for the various agencies. DDB Tribal is one of them and they rebrand our platform Tribal Target and they use it for their clients.
“So we have a very scalable business model because we provide our platform as a white label platform through those channel partners, to enable them to deploy globally and that allows us an efficient distribution channel for our technology on a global basis,” says Bradley.
The development of the platform remains in the firm’s home ground of New Zealand, while mobile apps for the different clients are developed by local partners, who understand the nuances of each of the markets that VMob addresses.
“We have been pragmatic about IP protection. When you go to emerging markets, IP protection is a real concern for businesses like ours. As soon as you release the code base to a foreign market, we increase the risk for a loss of some of that IP.
My preference would be to continue to have a single development team with a single code base at a single location, because you can manage the IP protection far more carefully than otherwise. I would like to have hubs of commercial and tech support in markets but the core development to remain in NZ as far as possible,” says Bradley.
The struggle that was
Besides its New Zealand base, the firm currently has offices in Sydney, Singapore and the UK, with plans to open more offices in the US and South America. However, things weren’t always rosy for VMob.
“The biggest challenge for us was to develop the platform itself to start with. Delivering mobile vouchers to NZers is very different to delivering location based offers to a 100 million people in Asia or Europe. Just working with Microsoft engineers to get the Microsoft Azure platform working in the way that we wanted it to work took a huge amount of effort and frustration.
“Then attracting developers that understood Microsoft’s Azure cloud environment – you know - finding those very talented people in NZ is a challenge and creating the right culture and environment for those developers was and still is a key focus for our business,” says Bradley.
All of this required capital, and lots of it.
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“One of the challenges for us in the early stages of the business was being a private company. It is very easy to raise a small amount of money – $50,000 or $100,000 of seed capital for investment. But NZ has got a very small base for raising a lot of capital – we don’t have a lot of venture capitalists, we don’t have a lot of those $2 million to $5 million range capital base in NZ for businesses, especially those going offshore.
“So we decided to go to the public market in 2012. We had to get a reverse listing to do that, and what that allowed us to do was to access capital far more quickly than we were able to do as a private company.
“The reasons for that is that as an investor it becomes easier for them to trade stock, and that’s a key fact driving the business. The other is transparency.
“It is very difficult to attract an international investor to some company in NZ where there is no visibility to governance, compliance and audit trail. But when you are a public company, international investors understand the regime and the level of sophistication that the business has to have to be in the public domain. And that is why we are able to attract business out of Australia as a public company far more easily than as a privately held company,” says Bradley.
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Over the last year alone, the firm has been able to raise nearly $7 million, through a combination of placements, investor options and institutional investors. Most of the funding in the last 12 months has come out of Australia and around 30 per cent of the firm’s current investors are from the country.
“The NZ market is far more buoyant now and more supportive of tech companies with the success of the likes of Xero and Vend. Professional investors have more of an appetite for those kind of companies. So we are likely to see more capital base coming out of NZ investors going forward. But we think we will have a mix of Australia and NZ investors going forward,” says Bradley.
The going gets no less tough
Growth has come the firm’s way, but with it has come its own set of challenges.
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“You have got those growth challenges of bringing in mid-management, scaling the business, putting in discipline around your development process, your sales and marketing strategy and others. Those are the challenges that any business has, and I reckon it is the same for us. But we are just growing at a far more rapid rate than most companies.
“Scaling a business globally is an expensive job when you are located in NZ. So everytime you hop on the plane to go overseas it is a $5,000 to $10,000 exercise, so very effectively managing your investment is key. You don’t want to run out of money and it is a key for any business, regardless of how much equity you have got in the bank,” says Bradley.
VMob takes time to qualify a market and looks into how it can build a sales funnel without putting extensive resources on the ground each time. The company also uses reference clients, builds a profile for itself and uses automated marketing systems to develop qualified opportunities before entering a market with direct personnel.
“These are disciplines that we need to put into place before moving into a market. But a lot of this knowledge and experience is already present in the board of the firm. We have got the experience in the team to understand the challenges and it is just about managing the risk,” says Bradley.
He advices tech firms that are starting out in NZ to strive to build just such a world-class team, to surround themselves with people with knowledge and experience, to achieve world-class success.
“You can’t do this by yourself,” he says.
Global domination
With global domination in its sights, Bradley remains confident of VMob’s offering and approach.
“We have got a very exciting business model. We have proven that we are working in a number of markets and verticals. Our approach is to look at all those different industries, all the bricks-and-mortar retailers - women’s and men’s clothing, cinema chains, pharmacies – get them and deploy with each of them in one or many markets.
“So it is just about putting disciplines in around growing the business out on a global basis across as many industry verticals as we can. That gives us reference clients and sites. It can be a simple process – we have to show them the success,” says Bradley.
And such success will breed more success, he concludes.