Towards Personalization: Strands Founder Francisco Martin (Part 7)

SM: Having raised $55M, do you think that is too much money?

FM: Initially some people thought it was too much. Now we are very happy we closed on that amount.

SM: From the point of view of valuation and return on investment as well as in terms of what you can sell a company for or take it public, it is going to be hard to rationalize that amount.

FM: I am focused on bringing in the right components to the project. Maybe this is very Spanish but I prefer to have 5% of a big company than try to get 25% of something smaller.

SM: That is not my point. My point is that in order to give a sufficient multiple to a $55M investment you are going to have to get to a valuation that is $150M to $300M.

FM: From my point of view it only means that our ambition is bigger than many people think. I prefer to have 5% of a little than 95% of many of the companies we see these days. Our ambitions are very high.

SM: What is your revenue level right now?

FM: The only numbers we have made public to date are last year’s revenues. We sold $12M in B2B revenue. This year will see a significant change but we do not want to make these numbers public. We are seeing a significant increase, in the thousands, in the purchase rates since last year. There is going to be a big change in terms of revenue.

SM: But it will still be in a B2B business model?

FM: We do not pay attention to B2C that much.

SM: After listening to you I would play this as a B2B company, at least for a while.

FM: I think that makes a lot of sense, at least for a while. The revenues are there and investors are happier with those numbers. Google did the same thing. They were a B2B company for a while licensing their search technology. That allowed Google to make some money while Yahoo was struggling to sell advertising. Once we have the right product then we can turn and face the consumer. We are going to be keeping the licensing for a while. We want to experiment with the consumer side until we can come to market with the right tool for the consumer. It is hard to experiment without revenue. When you have some revenue you can experiment a little bit and you can make riskier decisions.

SM: Have you talked to Google or Yahoo at all?

FM: No, not at all. Since 2007 all of the big companies have approached us, but I think those two have enough internal talent to create these things. There were some people within Google who saw the potential for recommendation but they did not have the power to get the company to change course.

This segment is part 7 in the series : Towards Personalization: Strands Founder Francisco Martin
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