Founder Mason: Nashville's StudioNow eyes M&A,|
capital, global markets and $1BN revenue goal
By Milt Capps
DAVID MASON, founder and CEO of StudioNow, says the company he started in Nashville, then sold and later spun-back-out of AOL, aims to be an M&A consolidator in its sector, and is likely to make a decision in 2018 regarding capital and possible sponsors and strategic partners.
Mason said he's had discussions with potential investors and investment bankers, and the company maintains an M&A pipeline of potential targets. "We're always talking," he said, but he indicated there's no process underway at this time.
Asked whether the company holds to its earlier expressed goal of attaining at least $1BN in revenue, Mason promptly replied, "For sure."
He emphasized that the company plans to take steps financially and operationally to ensure that it reaches that revenue mark expeditiously. Asked about options, including IPO, he said "We're looking at 'all the above'."
That said, he added, "For us, it's just kind of 'pedal to the metal' time," with primary focus on growth.
He added that the global market for content creation has been estimated at $275BN, while, as yet, there is no Amazon-like entrant dominating what is still a largely mom-and-pop sector of the economy worldwide.
Mason said the key to reaching his goals for StudioNow are tightly tied to pentrating the market of the Global 2000 companies, he noted. Forbes 2000 here.
StudioNow's credentials include having supported video content production projects in 60 nations, while maintaining a talent network that has passed the 10,000-professionals mark. Its corporate clients include Coca-Cola, McDonald's and Humana, among others.
The company now has about 85 full-timers, with about 30 of those working from its Green Hills offices in Nashville, and the balance working in Jacksonville, Fla., at the offices of Bluwave Productions -- which StudioNow acquired in 2014 on undisclosed terms -- or on clients' sites.
Asked about advisors, Mason said attorney Alston Hamilton of Miller & Martin has been with him since StudioNow's beginnings. The company relies on BDO for accounting and it banks with Square1 (PacWest Bancorp).
Mason said he also relies on his board of directors and investors who have seats at that table for guidance.
Mason in 2007 founded StudioNow, which he said has evolved into a hybrid SaaS software and services model, and which for now remains focused on video-content owners who use StudioNow's proprietary software platform that supports users' spend- and production management, bidding, bidding, contracting and collaboration.
In 2018, the company is likely to begin moving stepwise not only with respect to M&A and corporate capitalization, but also with regard to exploring establishing an office in Europe.
The company may also begin expanding its relatively modest presence in segments adjacent to videography, such as high-end still photography, said the CEO.
Mason said he sees continuing and possibly accelerating consolidation in the video-content creation sector, and pointed to Accenture as one of the most salient acquirers and noted that he expects increased activity among private-equity investors and others.
He noted that Accenture's buys have included a number of boutique interactive agencies, which generally trade at agency EBITDA multiples, whereas deals involving content creators -- such as Adobe's acquisition of a stock-photo provider in 2014 -- may have brought a 10X revenue multiple. TechCrunch reported Adobe acquiring Fotolia that year for $800MM cash.
Notable in the context of the Photography segment, VNC research shows that a 2015 Adobe investor presentation on the addressable market for Adobe's Creative Cloud tools and services could be markedly expanded by increased emphasis on the Photography market.
Mason and many of his team have been around the track more than once.
Mason and his brother Michael in 1994 created an online retailer SpeedServe. The sold a share of the company in 1996 to Ingram Entertainment (led by David Ingram), and in 1998 merged the company with California-based Buy.com. Mason was subsequently based near Paris for two years as managing director and interim CEO for Buy.com Europe.
After gaining at least $120MM investment from Softbank, Buy.com IPO'd in early 2000 with a total $195MM proceeds, but after its initial surge, the stock slumped amid the Dot.com crash.
Entrepreneur Scott Blum later took the company private and in 2010 was among investors who sold to Japan-based Rakuten for a reported $250MM cash. Mason had exited his involvement, prior to that.
Around StudioNow's third birthday in 2010, the startup famously sold to AOL for a reported $36.5MM, after months of AOL-as-customer closely assaying the startup.
Then, in 2013, StudioNow was spun-out from AOL, with AOL transferring certain assets to the newco.
Mason explained that, while AOL today is probably one of the "top 4 or 5" video-viewing and -monetization platforms -- alongside Google, YouTube and Facebook -- the impetus for the spin-out was their shared belief that there are probably at least 500 more "AOL-like" producers of content that StudioNow could be serving as an independent firm, provided it gathered the needed capital, team and technologies.
"We all realized we had an engine" and as a somewhat captive AOL unit "we were really leaving a lot of chips on the table," Mason told VNC.
During the 10-year history of StudioNow, 2007-17, investors including local VCs FCA Venture Partners (an affiliate of VC Clayton Associates) and Claritas Capital invested about $20.3MM in the company collectively, Mason confirmed. Crunchbase entry here.
In addition to those VCs, VNC reported in 2009 that other investors had at various points included Claritas Capital and FCA Clayton Associates; plus, such individual angels as Fred Goad and Jim Kever, then dba Voyent Partners; Rock Morphis and David McClellan, at Heritage Group; Charles Goldstuck, the former president and COO of Bertelsman Music Group (U.S.) and a private investor at Falconhead Capital; and, investor Wally Loewenbaum.
Update: Following publication of this story, Launch Tennessee was pleased to remind us that the U.S. Treasury-funded INCITE co-investment program it managed for the state invested $375k in StudioNow, matching FCA's investment in a 2014 round.-Ed.
Mason, who will soon turn 45, earned his bachelor's in history at Sewanee, the University of the South, in 1995, and he is a graduate of Nashville's Montgomery Bell Academy.
He told VNC this week that based on his experiences with startups based in both Nashville (SpeedServe, Studio Now) and in California (Buy.com), he's sold on Nashville as a great place to start a new business.
Mason, his wife and their six children, the youngest an infant, reside in Forest Hills.
TECH note: Mason said he has tracked Bitcoin and blockchain or distributed ledger for a considerable period, and understands the potential for employing smart contracts applications atop the technology for support of such functions as rights management, but StudioNow has not taken on such functions. VNC
. last edited 1809 8 Nov 2017