Growth Business: Growing pains

Monday 25th September 2006

Growing pains

in association with Ernst & Young:

Barry Houlihan, managing director of mobile services provider Mobile Interactive Group (MIG), has created a £21 million turnover business in just over two years. Without careful management, this kind of accelerated growth can cause serious growing pains or, at worst, complete derailment. Houlihan explains how MIG has tackled the challenges that come with rapid growth.

In the year to April 2006, MIG generated revenues of £21 million, compared to just £252,000 the year before, and is currently on track to achieve around £40 million in 2006-2007. A little over two years from now MIG has ambitions to be a £100 million business. From talking to managing director Barry Houlihan it becomes clear that such achievements aren’t down to luck. MIG’s high growth rates stem from the management team knowing its market, capitalising on an early opportunity, and choosing customers wisely.

MIG specialises in the delivery of mass mobile interactive solutions for the likes of network operators, media and entertainment companies, and consumer goods businesses. It can run mobile adverts for drinks brands, create videos linked to TV programmes, and enable fans to buy tickets for concerts through interactive text messaging.

The company’s first big success was to develop the text-based competition for Bob Geldof’s Live 8 concert last year, in which over 2.1 million text-message entries were received within seven days.

MIG’s team is now focusing on developing five key parts to the business: mass participation (as with Live 8), mobile video content production, billing capability, marketing and advertising services, and mobile software development. ‘We are creating a mobile business that offers a truly converged service offering, where there are economies of scale,’ Houlihan says. ‘In each respective area we want to be the leading provider within that field. They are self-contained units, but they all feed into the mothership.’

Build on experience
MIG’s founders were not exactly starting from scratch, having previously built up 02’s Mobile Interactive Services division. Although not unsuccessful, it wasn’t considered as successful as other parts of the 02 empire, and the decision was taken to downsize it.

Having built such a business once, Houlihan and his two MIG co-founders – Anthony Nelson (commercial director) and Nick Aldridge (product director) – believed they could do it again, this time for themselves. They took redundancy from 02 and set up MIG in May 2004 with the assistance of a £125,000 loan from the Department of Trade & Industry. Knowing it would take some time for 02 to run down the division, the three MIG founders initially worked as consultants around the world, with Houlihan based mainly in Singapore, and his colleagues in Washington and the Caribbean. ‘We knew that we wanted to come back to the UK and take new business on, but we had to bide our time. 02 were winding the division down, but were still operationally running it. We needed to wait for the right moment.’

That moment came towards the end of 2004. Houlihan and his co-founders regrouped in the UK in December and in January 2005 raised £250,000 from a Canadian private investor. ‘He understood our world and what we were trying to do,’ says Houlihan. Another two former 02 colleagues joined the MIG team in February 2005. ‘We launched in May and quickly entered into a lot of tender processes to win business.’ ITV, for example, had been one of Houlihan’s customers at 02, so he set out to win its business for MIG. ‘They made us go through a rigorous tender process, competing with some large players like BT. We pitched against companies that were ten years old and had track records. Although we had a track record from our previous company, we were a new technology business and the risks were much greater.’