Michael Avon, founder and CEO of ICX Media and venture investor at ABS Capital, discusses how businesses can use mergers and acquisitions to grow, even in their...
When choosing a company to work with, work for, or acquire, it can be difficult to fully grasp not just their potential for success, but their overall culture and workplace experience. Michael Avon, founder and CEO of ICX Media and venture investor at ABS Capital, is extremely experienced with media and communications, and has a strong sense of how the D.C. region works. ICX Media also recently completed a business acquisition to grow, and Avon has advice on how such operations can improve any company.
ABERMAN: What’s ICX Media doing, and why did it decide to pursue an acquisition?
AVON: Well, ICX Media is a video analytics and intelligence platform for media companies, brands, and independent video creators. And what that means is, we look at large data sets, we use artificial intelligence, to help media companies and brands better understand what their consumers are watching, what types of videos they’re watching, and help them design videos that are most likely to engage those consumers.
We also help match the brands and media companies with independent video creators, from award winning filmmakers like Ed Burns who works with us, and others; social influencers on YouTube, Instagram, and other channels; and kids with phones that video themselves playing Fortnite, or soccer, whatever it might be. We help make a match among all of those, so that independent video creators can create more relevant content, more authentic storytelling, to help brands and media companies better engage younger consumers. We will do all that from here in D.C.
ABERMAN: That couldn’t be more different from the YouTube-style, just-throw-a-video-up-there-and-see-what-happens. So, why does a business like yours decide to make an acquisition to grow?
AVON: Yeah, you know, we’re relatively early to be making an acquisition. We found this great company, a company called Scene, which is based in Columbus, Ohio. The company had been an early leader in social influencer marketing, and that was finding these video creators and photographers on Instagram and other channels, who would tell stories day in and day out on those channels, but also support brands. So, they would find brands that they believed in, and take pictures of, for example, take pictures of people eating healthy foods, or using healthy makeup, or using specific sports gear.
They do videos as well. And we found that the Scene team really had some amazing expertise in how to find these independent video and social influencers, and how to work with brands to tell really authentic stories that fit consumers in specific regions across the country, or with specific interests. So, we found a real expertise in that company. We got to know the team over about six months of working with them, we felt like they’d be just a really good fit for us, and it just turned out that it made sense for both companies to go ahead and make a deal and do an acquisition.
ABERMAN: It’s interesting to me, because, generally, startups don’t really think about acquisitions at all, they’re thinking about four or five years out, or more likely 10, is where they can bought by somebody. But you use acquisition as a growth strategy. Isn’t it really hard, when you have a small business, and you’re building your own corporate culture, to go and acquire another business with a different culture, and a different group of people?
AVON: It’s really hard, and it’s certainly a strategy that can be fraught with peril. I’ve had a lot of experience in buying companies. My last company, we did a number of acquisitions, and most of them went very well. And you know, what I found is that, these acquisitions can go well as a small company when you really do spend time to get to know the target company, and to make sure that the culture is a fit with your culture.
That doesn’t mean it has to be the same culture, but that it’s additive to your culture, that there are similar beliefs, that there’s a similar focus, a similar mission, but you’re going to bring a team in that’s going to add to your culture, and maybe add different twist to your culture. That was certainly the case here. We found a team that had a very similar mission. It was a team that hadn’t spent as much money, or as many resources, on building a technology platform, so they very much appreciated what we had built at ICX Media, where we’ve invested heavily in technology and data science.
The same time, we really respected their background in actually serving clients as more of an agency model, and the relationships they had built up over time. So, we had a similar mission. We were similar types of people, but they brought something new to our culture that I think has built a better culture within ICX Media very quickly.
ABERMAN: I’ve done a lot of M&A over the years in different capacities, and people often talk about culture. That is probably the easiest thing to not tell the truth about in a merger conversation. What are some of the specific things you’d recommend that somebody look at to see whether or not a business’s culture actually will match up with yours? What do you look at? Do you look at the management information systems, or how the office is laid out, or whether they have pizza on Fridays? What do you look at?
AVON: I think the pizza on Fridays, and going out to Happy Hours, is usually not the right thing to look at. That’s really easy to do. It’s really easy to fake it that way, and pretend that that’s culture. I think there’s no replacing spending a lot of time with a team. I find that, if you go and spend a lot of time with the target team, if you build a business relationship prior to the acquisition, you can see what they’re all about.
You can see how the senior management treats the more junior people in the company, how the company treats their partners and their customers, how hard they work, if they’re going to be able to work in a startup environment like ours, where people are working around the clock, and under a lot of pressure. Are they going to thrive in that situation, or are they going to start to snap at people and get frustrated? And so, I think there’s really no replacement for spending a lot of time, and experiencing the other side of the target company, to making sure that the cultures really do fit.
Yeah, there are some tricks of the trade, but ultimately a lot of it comes down to feel, and a lot of it, I feel, is up to the CEO and the senior management, of both sides, spending a lot of time with the full teams of each other and just make sure that they really feel like there’s a fit before you pull the trigger and close.
ABERMAN: It sounds to me an awful lot like just being really good at hiring people, as you get through it all. It doesn’t sound to me like that surprised you very much. What’s surprising about this transaction? I know that this is a cross-state transaction, this isn’t a company here in D.C.
AVON: This was probably the hardest part of doing this transaction upfront, to bring on yet another location for us. As a relatively small company, we’re based here in D.C., but we have offices in New York and L.A., where many of our clients are. Here, we’re adding a fourth office in Columbus, Ohio, which is not a media hotbed. We certainly didn’t target target Columbus up front.
But it turns out that Columbus is actually a great city, like many other cities in the U.S., for a specific type of talent. In this case, for talent around marketing and marketing services. It’s a lower cost city than the other cities that we’re in. There are a lot of people that feel that what Scene was doing there, and what ICX Media is now doing with Scene, is really exciting, so we’re able to attract talent there. It’s only an hour flight away, it’s easy to get to and from.
And we’re able to pull, now, great technologists, data scientists, and others, out of Ohio State University and other universities in the region there. So we now look at being in Columbus, Ohio as a big net positive, and we think we’re gonna build up an operation there, which will be exciting.
ABERMAN: Moral of the story, then, is that Steve Case is right: there’s talent everywhere?
AVON: Well, Steve Case is actually one of our investors, so we do listen to him, and there is talent everywhere, certainly.
ABERMAN: And certainly money, if you find talent. And with that, we’ll leave you. Mike Avon, founder and CEO of ICX Media, thanks for joining us.
AVON: Thanks, Jonathan.
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