Managing Multiple Pivots While Scaling to $50 Million: MotionPoint CEO Will Fleming (Part 2)

Sramana Mitra: What was the idea in that business plan that you were signing up for?

Will Fleming: The original idea was to introduce a unique product to certain types of retailers with an emphasis on convenience store chains, drug store chains, and grocery chains. The thought was that we would start with two particular products and then we would expand the products, and eventually have a large and diversified basket of products. That wasn’t exactly the way it went. The first product was called Zipster. It was a fully automated postage centre that never really got to market.

The other one was a prepaid calling card. We began in the very early days of prepaid calling cards. Rather than continue to expand our basket of products and services and become somewhat of a distribution company, we realised that we rather quickly developed a lot of expertise in and around prepaid calling cards. We very much enjoyed creating a market for that offering.

Sramana Mitra: The company was started as a bootstrapped venture?

Will Fleming: This is our earlier business. This was not MotionPoint – the company that we have today. It’s the same business partner and it started as a bootstrapped venture.

Sramana Mitra: What happened to that company?

Will Fleming: We went through a series of acquisitions. We were first sold to a private company and then sold to a public company. Eventually, we were acquired by AT&T. At which point, my partner and I wanted to go back to our more entrepreneurial roots and start again. We spent quite a bit of time trying to think about the key learnings and the skills we had developed in building a business in prepaid calling cards. We tried to generalise from them what we know and what markets we know.

Sramana Mitra: What kind of revenue level did the prepaid calling card business get to before you sold it to the private company?

Will Fleming: That was a little bit north of $3 million at the time we sold it. When we sold the private company, that was about $55 million. The division that we ran exploded from the $3 million to about $30 million in just two or three years.

Sramana Mitra: What kind of a deal did you do with the private company? Private company acquisitions tend to be complex. Was it a cash acquisition or was it a cash/stock combination acquisition?

Will Fleming: It was mostly stock. There was a little bit of cash. The thought that both the acquirer and we had was that prepaid calling cards was going to explode as a market and that, as a combined entity, we would be very well-positioned to grow.

Sramana Mitra: Was the private company that acquired you also in the prepaid calling card business?

Will Fleming: They had fabulous technology. They had capability in the prepaid calling card business. As outsiders looking in, what puzzled us is that they had nearly no market presence and nearly no revenue. What we uncovered was that they had the technology but not the go-to-market capabilities.

Sramana Mitra: What was the draw for you to merge with them?

Will Fleming: From our standpoint, we were looking at a telecom industry that we saw would be consolidating. We thought, “To be successful in prepaid, we’re going to need massive scale. Either we would need to raise a bunch of money and buy or build a bunch of technology and other operations to the extent that we could align ourselves with somebody who had some of it. We chose the latter part.

Sramana Mitra: It makes sense. That business grew to about $55 million and then AT&T acquired your company.

Will Fleming: Right.

Sramana Mitra: What year did the AT&T acquisition happen?

Will Fleming: I believe that was 1998.

This segment is part 2 in the series : Managing Multiple Pivots While Scaling to $50 Million: MotionPoint CEO Will Fleming
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