Partnerships pay off for IFone

IFone, Morgan O’Rahilly’s mobile phone games developer and publisher, was recently crowned the second fastest-growing technology company in the UK.

The group has partnerships with more than a hundred mobile network operators and is live in 50 countries.

When the business was founded, we managed to raise around £2.5 million from angels and directors. Our competitors at the time raised significantly more but we weren’t able to match their war-chests – we just couldn’t secure finance on terms we found acceptable. This over-focus on finance so early in the game was a mistake – it diverted management and proved a drag on business development and momentum.

When we accepted the idea that we were the underdog, we focused on what our angel investors had seen in the business – its core content offering and our expertise in this industry. And, of course, it made us concentrate on the first business objective – reaching break-even.

Get managers with a long-term focus

If you look at this business, you will realise that we have had two generations of the senior management team. The first was from 2001 to 2003.

Most of that senior team, which believed we were a classic dotcom, has fallen away.

They made a great contribution at the time, but, as we ended up with limited funds, they didn’t want to stay for the five-year slog. The goals and tasks ahead daunted some people. The team went through a natural erosion which, to be honest, we could have managed better. The lesson is simple – hire your management to grow and manage the business, not just to chase a dotcom dream or reel in funds.

Make operational changes or staff cuts swiftly

We started to really recruit in 2001, but in retrospect we realised we were going too fast too soon. We had to handle the cost of developing product, internal fixed costs, suppliers’ costs and aspects of the business not performing. For instance, we used a direct-to-market portal to market our games to the public, which was really launched too early in the game and was bleeding cash. And despite the fact we knew we should be concentrating on research and development (R&D) in-house, we continued to rely on external quality assurance. We did eventually cut out aspects of our operation, reduce staff and bring R&D in-house, but we didn’t appreciate our problems early enough.

Don’t embrace ‘me-too’ business plans

The key to our business is our unique understanding of entertainment content for mobile devices. We are experts in content acquisition, brand extension and have not really made any blunders with any of the games we have developed. Our only clanger was with a football game that we embraced without exercising our usual judgement and for which we didn’t have distribution in place. We recouped about 75 per cent of the investment, but it underscored the importance of having an ‘exploitation and delivery’ plan for everything we launch.

Ignore the USA at your peril

As bizarre as it may seem, I ignored the US market – can you believe that? You see, a few years ago the US seriously lagged behind Europe and, even more so, Asia. IFone focused heavily on Asia and, to be honest, if I had to do it all again I wouldn’t bother trying to grow in this region.

This is because, in 2003, everyone in the US basically woke up and got themselves a mobile phone. Technological change can be very swift indeed. In a short space of time it had the same penetration as Europe. Now the US is fundamental to us, and is growing briskly. We were doing $35,000 a month four months ago – now we are pulling in $500,000.

Delegate, but don’t let go

In the beginning, like any entrepreneur, I was doing everything. I had a tight grasp of cash flow, creditors, debtors – I was basically deciding what bills to pay, which to string out. I was also heavily embroiled in the decisions on which games and entertainment we developed. I have obviously slowly let go of many of these tasks (like all entrepreneurs, probably too slowly). But this business is still a benevolent dictatorship.

I take opinions on board, solicit advice widely and conduct straw polls with staff on major content issues. But when it comes to the crunch, I still believe I have a nose for what will succeed.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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