Chris Dalton, Paul Weinewuth and Matt Schmeltz founded the ecommerce and digital marketing services firm Acquity Group in 2001, took it public in 2012, then sold it to Accenture a year later for $316 million. Now, the Chicago-based trio has launched a self-funded, $10 million investment company called Aktion Partners and a cloud-focused consulting firm called Avionos. Dalton explains why the potential for a big exit takes precedence over a big idea in those new businesses.
Q. What’s your vision for these new businesses?
A. Aktion Partners is a vehicle to do investments and explore various opportunities. We have been looking at a number of interesting software companies in healthcare, big data and analytics, as well as ecommerce. We’re still maintaining an active interest in mid-stage or early stage companies that have good business models and are in the technology arena. That also led us to invest in some interesting real estate opportunities.
Q. How is Avionos different from Acquity Group?
A. We’re focused on the “connected” customer and building solutions off of platforms such as Salesforce that reshape relationships and loyalty that companies have with customers. We think there is a tremendous shift of customers who are interested in more cloud-based technologies. You see examples of that in Salesforce, where companies are leveraging that platform to run their sales processes.
Q. What led you to pursue that business?
A. The attractive thing of that type of relationship is you end up in longer-term, annuity-based relationships with customers to maintain, manage and enhance their experiences within those technologies. A company called Veeva Systems built a Salesforce application for the pharmaceuticals industry and built a nice-sized business over six years. Then they garnered a $4.5 billion valuation in their IPO on a $130 million business.
We always look forward in our planning to what the potential exit could be. One of the learnings from Acquity Group is the way Wall Street and the various investors look at service-based companies. Revenue is based on rates times hours for short-term engagements, so it garners a relatively small valuation in the multiples of revenue for an exit. So we need to identify intellectual property or industries or marketplace niches like what Veeva has done and exploit those and bring products and opportunities to the market where they don’t exist.
Q. Isn’t that the opposite of basing a startup on solving some problem?
A. We look at things from an endgame backwards. We like to be much more purposeful and directed toward market trends and behaviors and then capitalize on things that have sustainability, profitability and are achievable within the constructs of what’s taking place in the market.
Q. What’s the best lesson you can share with new founders?
A. You have to have fun. A lot of people forget to laugh and be personal and approachable. As a leader you want people to rally around you. You have to be in a spot where people want to work with you. I talked to a candidate who said, “I heard you can be abrasive.” Being in this position has allowed me to be very introspective. I went through probably the most challenging emotional experience of my life, which was on Monday I was CEO of a company and on Tuesday, I was unemployed. The introspection has been really healthy for me to look at whether I could have approached things differently. And hopefully I was fair and genuine in every one of these interactions. You take the good and the bad and hopefully you get better as a person.
Q&As are edited for length and clarity.