Sixteen years ago, the Weber brothers started developing download installation software in their dorm room at St. Cloud State University. Originally called Freeze.com, later W3i, and eventually NativeX — they sold the company to Chinese firm Mobvista for $25m in cash at the end of February. We reached out to learn more:
What did it feel like after so many years of hard work to sign your company away?
It felt good really, this is a huge milestone…we’ve had partial exits along the way but this one if of course the biggest as I have no ownership interest left at all.
What do you mean by partial exits?
There’s more than one way to create liquidity events. First, we paid a lot of dividends out over the years. We also sold a subsidiary called ringtone.com for almost $10m just before the iPhone came out, and did some other stuff along the way.
Why did you sell the whole thing now?
It was really for competitive reasons, to be more global. We realized that we could become a much stronger company by combining with others.
…and why Mobvista?
We did have other interest in our company over the last few years, all of who were outside the US. I’m really excited that we found a partner in China, which is currently the second largest market for what we do behind the US, and will become number one eventually.
Combining a strong American company with a strong Asian company will be a force in the market. You don’t get any bonus points for just being in one geography. Our supply side partners have ad inventory all over the world. We’ve done what we could with our team in Minnesota to be competitive everywhere, but we weren’t exactly in the epicenter. It’s hard from a language, timing, and cultural perspective to really cover Asia and other parts of the world just being stateside.
Plus our platform products and distribution methods are complimentary; we’re focused with game publishers and they have always been more on utility applications.
So you and Ryan will be staying here?
Yes to help them maximize the value of this merger.
How will NativeX be situated among the larger company moving forward?
The NativeX technology will continue to be invested in, and we’ll focus on complimenting each others platforms, suppliers and markets.
Where was the company at when sold in terms of headcount?
50 total, 40 of which are in Minnesota between Sartell and Minneapolis, followed by 3-5 in San Francisco and a few remote.
What was the company at during the peak of the business?
150-175 at peak when we had our desktop business cranking, which was very profitable for a long time.
At what point did you start to change from desktop to mobile and why?
We recognized that the PC usage was on it’s way down when you started to see the iPhone shipments pick up in the late 2000’s and the app craze that followed. That continues to have a ripple-effect, I mean, look at what Microsoft is doing now with their whole app store themed OS, which is really disrupting a lot of traditional software companies who have built for Windows since way back when. So we adapted because we saw our traditional business model decline and the opportunity that mobile had to offer in return.
How long are you committed to Mobvista?
Both Ryan and I have a multi-year employment agreement and they’re hiring us to grow this business to become more successful. The market is so big that if we are able to reach the goals we have, there will be a lot of opportunities for us and our employees to capture that upside.
What does it feel like to be the captain of your business for so many years and wake up one day and be an employee?
I might be able to sleep a little better? But really I haven’t been an employee…for two decades. We’re very competitive and that’s what drives us, that’s not going to change, we’re strivingto be number one no matter what – always.
Personally, how will this affect your activities as an angel investor?
Nothing for now. As you know we are partners in Matchstick Ventures, and we’ll continue doing some direct investing from time to time as we have over the years.
How many investments do you count in your portfolio right now?
What is your most recent aside from Matchstick?
What are your greatest prospects?
Probably Field Nation, which we were the first money in on.
Have you had any exits?
A few, but Zencoder has the highest IRR for us so far.
Is there anything else you’d like to add?
We haven’t been hiring as actively over the last year but I will say that if anyone is interested in being a part of the team for this next international chapter, we’ll be changing that this year.