Growing pains: Mobile Interactive Group

Barry Houlihan, managing director of mobile services provider Mobile Interactive Group (MIG), has created a £21 million turnover business in just over two years.

Barry Houlihan, managing director of mobile services provider Mobile Interactive Group (MIG), has created a £21 million turnover business in just over two years.

Barry Houlihan, managing director of mobile services provider Mobile Interactive Group (MIG), has created a £21 million turnover business in just over two years. Without careful management, this kind of accelerated growth can cause serious growing pains or, at worst, complete derailment. Houlihan explains how MIG has tackled the challenges that come with rapid growth.

In the year to April 2006, MIG generated revenues of £21 million, compared to just £252,000 the year before, and is currently on track to achieve around £40 million in 2006-2007. A little over two years from now MIG has ambitions to be a £100 million business. From talking to managing director Barry Houlihan it becomes clear that such achievements aren’t down to luck. MIG’s high growth rates stem from the management team knowing its market, capitalising on an early opportunity, and choosing customers wisely.

MIG specialises in the delivery of mass mobile interactive solutions for the likes of network operators, media and entertainment companies, and consumer goods businesses. It can run mobile adverts for drinks brands, create videos linked to TV programmes, and enable fans to buy tickets for concerts through interactive text messaging.

The company’s first big success was to develop the text-based competition for Bob Geldof’s Live 8 concert last year, in which over 2.1 million text-message entries were received within seven days.

MIG’s team is now focusing on developing five key parts to the business: mass participation (as with Live 8), mobile video content production, billing capability, marketing and advertising services, and mobile software development. ‘We are creating a mobile business that offers a truly converged service offering, where there are economies of scale,’ Houlihan says. ‘In each respective area we want to be the leading provider within that field. They are self-contained units, but they all feed into the mothership.’

Build on experience

MIG’s founders were not exactly starting from scratch, having previously built up 02’s Mobile Interactive Services division. Although not unsuccessful, it wasn’t considered as successful as other parts of the 02 empire, and the decision was taken to downsize it.

Having built such a business once, Houlihan and his two MIG co-founders – Anthony Nelson (commercial director) and Nick Aldridge (product director) – believed they could do it again, this time for themselves. They took redundancy from 02 and set up MIG in May 2004 with the assistance of a £125,000 loan from the Department of Trade & Industry. Knowing it would take some time for 02 to run down the division, the three MIG founders initially worked as consultants around the world, with Houlihan based mainly in Singapore, and his colleagues in Washington and the Caribbean. ‘We knew that we wanted to come back to the UK and take new business on, but we had to bide our time. 02 were winding the division down, but were still operationally running it. We needed to wait for the right moment.’

That moment came towards the end of 2004. Houlihan and his co-founders regrouped in the UK in December and in January 2005 raised £250,000 from a Canadian private investor. ‘He understood our world and what we were trying to do,’ says Houlihan. Another two former 02 colleagues joined the MIG team in February 2005. ‘We launched in May and quickly entered into a lot of tender processes to win business.’ ITV, for example, had been one of Houlihan’s customers at 02, so he set out to win its business for MIG. ‘They made us go through a rigorous tender process, competing with some large players like BT. We pitched against companies that were ten years old and had track records. Although we had a track record from our previous company, we were a new technology business and the risks were much greater.’

Win high-profile clients

Nevertheless, Houlihan quickly landed some well-known clients with perhaps the pivotal break coming with the Live 8 event. ‘We were given this massive global project that we had three weeks to complete,’ Houlihan says. ‘It’s the worst-case scenario. We had just launched our technology. Executing the event was putting all of our values to the test. It was testing everyone’s ability to deliver under pressure. It proved that our technology works. At that time we had decisions pending on four major contracts, and if we hadn’t delivered we would have lost them. There was much more to lose than to gain,’ says Houlihan. Four weeks later, MIG won the ITV business.

Choose the right clients

Taking on the Live 8 challenge might sound risky, but Houlihan disagrees. ‘I don’t think we take risks,’ he says. ‘One of the major reasons for our success is that from a very early stage we have known the kind of business we want to build and we have known who we need to work with in order to build it. We are very careful about who we choose to work with.’ Houlihan believes that being a successful service provider comes down to the 80:20 rule. ‘If you choose the wrong customer, you put a lot of time and energy into having the wrong customer,’ Houlihan says. ‘A lot of energy goes in, you burn a lot of resource and you don’t see a return on it. So from day one I said: here’s the company we will create and here’s the kind of customers we will work with.’

MIG’s high-profile success has given it strong customer appeal. ‘Something we have at the moment, which is really important, which money can’t buy, is positive brand equity,’ Houlihan says. ‘When you pick up big clients and develop a positive aura around your business, people start to want to work with you. People want to work with us because they have heard that we provide an excellent service. It doesn’t necessarily mean they run to us with their arms open and say ‘you have got the contract’ – they still make us jump hurdles and do the due diligence, but it’s a more positive conversation from the outset.’

Strengthen customer relationships

MIG is keen to build on that positive brand equity by cultivating strong relationships with its customers. ‘We are focusing a lot of time on getting closer to our customers,’ Houlihan says. ‘That means we do a lot with them socially. It’s not a small undertaking, when you imagine the stage we’re at – at two years old, every penny counts.’ But Houlihan says he would be happy to end the year P&L neutral as long as any profit not reinvested directly into the business was spent on clients.

‘We are pretty paranoid,’ Houlihan says, ‘and that’s a good thing to be. We are a technology company and therefore we are in the public eye. If we screw up we could end up on the front page of the papers.’

Create the right culture

Houlihan credits much of MIG’s success to its people. ‘Our clients like working with us,’ he says. ‘They like our people. They like the approach, the mindset, the culture.’ It is a positive, can-do culture, reflected in the company’s URL – – though it was chosen simply because and were unavailable. ‘At the time it didn’t really mean anything because it was just getting us round a web problem, but it has become a central part of our brand,’ Houlihan says.

The technology has clearly also played a major part in MIG’s success. In May 2006 the company won the award for ‘Best SMS Platform’ at the Global Messaging Awards. Given that this was achieved with limited funds to invest in the technology, Houlihan is anticipating further success once the company has finished a £2-£3 million fundraising mission.

Get business funding

There has been plenty of interest from potential backers, including venture capitalists, private investors and existing shareholders. ‘We have brokers who see pound signs who are confident they can get us a good deal,’ Houlihan says.

If needing more funding is one symptom of rapid growth, another common growing pain is the need for constant relocations in search of more space. Since moving out of co-founder Anthony Nelson’s living room in January 2005, MIG has occupied three London office locations, with a further move to Waterloo planned for September 2006. This one is intended to last a little longer. With a headcount of around 26 this summer, further recruitment is expected to take the personnel tally closer to 42 in the next year or so and the new offices cater for 45.

MIG’s approach to recruitment has been to win contracts first, recruit second.

Expand overseas

MIG now has a joint venture in Asia, the result of Houlihan’s earlier involvement there, and is developing an Irish business. This began as a result of its work for ITV, which owns part of Ireland’s TV3. MIG assessed the Irish market and realised that there is no MIG equivalent operating there – they are peerless and therefore it presents a strong opportunity for growth.

Once they have tested their proposition in Ireland, Houlihan has his sights set on the US. ‘Some of the money we are bringing in from Ireland will enable us to take the business to the US. The opportunity the US offers a business like ours is massive. But we will get a contract first and then launch in, like we did in Ireland. We had some business, we then put our arms around it operationally and now we are building a business around it. So it’s a sustained profit and loss account already. There’s not a lot of risk when you do it like that.’

Minimise risk

Nevertheless, growing a business fast isn’t easy. ‘You do have growing pains, without a doubt,’ Houlihan agrees. ‘We don’t feel that successful. We feel like we are doing a good job and feel that our clients like us. But you have to keep your wits about you, because whatever success we have had, whatever aura we give out, we are still competing against guys who have more money than we have and therefore they can absorb risks more than we can. We cannot take risks. Everything we do is carefully thought through.’

Does Houlihan have a top tip for other entrepreneurs wanting to grow their businesses fast? ‘Take advice every single day,’ he says. ‘I don’t get enough of it. I don’t have any mentors. We are not enveloped by the comfort blanket of the corporate world anymore – it’s different now. I love getting advice, but I can’t get enough of it.’

This article was originally published in Masterclass magazine.

Marc Barber

Raven Connelly

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.