Long Journey to a $435M Exit: Bytemobile Cofounders Chris Koopmans and Nicholas Stavrakos (Part 7)

Sramana: There is so much ubiquitous data use going on right now that it is obvious that carriers need to do something to keep up with infrastructure needs of this pattern. However, the consumer has this mentality that everything needs to be free or flat fee. Today’s Internet is crumbling over a colossal free rider problem.

Chris Koopmans: We are seeing significant reversals of that. People are moving away from services that were traditionally free on the Internet and are now starting to pay for them. Newspapers on the app stores is one example of that.

Internet access can become a public utility offered by the government, or it can be a competitive marketplace. If it is going to be a competitive marketplace, then innovation is going to drive it. While consumers will say they want fixed prices and monthly caps, I think they also know that they will not get the innovations from the carriers they are able to get today.

Sramana: Some utilities have quotas as well. We have a water quota here, and if you go over it, they charge a lot more for water.

Nicholas Stavrakos: That mentality is everywhere. If airlines were free everyone would be flying coach. There is a band of customers who are willing to pay to fly something better. The same will hold true with the Internet. Some will pay more for a better experience. It may be services that differentiate those offerings. That is what we are exploring in our product roadmap.

Sramana: Let’s shift our focus now to your recent acquisition by Citrix. What levels of revenue did you reach, and why did they pick you?

Chris Koopmans: For Bytemobile the market is taking off. We see a huge opportunity over the next three to four years. It took until 2009 for the U.S. to take off. The reality is that the rest of the world is still not there. Even in the U.S. we have just reached 50% smartphone penetration. We are still in the early stages of this.

In terms of how to capture this and how to take our business to the next level, we had reached a point where we needed a partner to get there. Citrix offered unique advantages. They are not a telecom company that is in the market. A lot of the other companies would have taken our technology and merged it into their company. The brand and reputation we have built over the years would have been absorbed. With Citrix we are able to use our brand, technology, and history to form the go to market presence for Citrix.

Sramana: This is the first acquisition that Citrix has made in technology which sells into the carrier market, correct?

Chris Koopmans: That is correct. As a result, Bytemobile has become their go-to-market strategy. We are not just a new product, we offer them a new market.

Sramana: We cover Citrix on a quarterly basis and we know the company well. It was a surprising acquisition to me.

Chris Koopmans: If you look at it from Citrix’s perspective, there are a lot of technology synergies. If you take a look at what Citrix does with their NetScaler technology, you will see they do a lot of cloud enablement and optimization.

Nicholas Stavrakos: There are a lot of synergies, especially with Layer 4 networking and application content delivery. We just address totally different markets. They now have a vision of enabling the mobile workforce. The primary mode of accessing content in the future will be through a mobile device. If that is the case, Citrix is engaged heavily from one end of that to the other. They are on the device with a number of applications, and they are in the cloud and enterprise network optimizing the cloud. The missing piece in the middle was the mobile carrier.

Sramana: Citrix also has a very big presence in the small business market and the collaboration space. It is becoming hard to figure out what their core strategy is, but that is not your problem. What is the acquisition value?

Chris Koopmans: The details of the acquisition were published by Citrix last quarter. What they published was that Bytemobile was acquired for cash consideration of approximately $435 million. The net revenue guidance Citrix provided for their revenue is now in the $635 million to $655 million range, following the acquisition.

Sramana: Great. This has been a good story. Congratulations on a successful conclusion to your journey.

This segment is part 7 in the series : Long Journey to a $435M Exit: Bytemobile Cofounders Chris Koopmans and Nicholas Stavrakos
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