Richmond Hill, Ontario’s Intertainment Media has been the story of the Toronto Venture exchange this month. The company’s shares are rising on the promise of its real time translation software, Ortsbo. Intertainment, which has traded hundreds of millions of shares en route to rising from eleven cents in late January to a high of $.79 just a few days into February, and have now settled back to the $.50 cent range.
Intertainment Media was formed in 2005 and actually boasts four divisions; itiBiti, a social media app that allows company’s to change the look and feel of their marketing platform in real time, Adtaffy, a georgaphy based IP engagement tool and Magnum, a traditional print shop. But it’s Ortsbo, which was launched last July 22nd and works seamlessly across instant messaging platforms such as AIM, Facebook and Yahoo! that has driven the company to a near $50 million market cap in a matter of days.
Cantech Letter’s Nick Waddell sat down with CEO David Lucatch to talk about where the company goes from here.
David, after the remarkable few weeks of trading shares of your company has had, most everyone knows Intertainment now, but can you fill our readers into what kind of work has been done to get you here?
Sure. Intertainment Media is a company that has been around since 2005-2006, we listed on the TSX Venture through an RTO, a CPC reverse takeover in late May of 2006. So we have been around for quite some time. Initially, we vended in a number of assets that included our traditional print media business with some new media properties. Because “Web 2.0” was just coming back, there was a lot of playing around. I mean we knew the industry, knew the space, but it was just…. trying to find some niches. In 2007 we found our first niche play which was called ItiBiti.
Which is one of your four divisions now…
Right. ItiBiti is really what I would call a combination of Skype and Hulu. For Canadians, Skype and a content play. The idea is to give brands control of the message. These days brands have a very difficult time interacting with their consumers. Where it used to be just television, there are now all types of media, including online media, but the consumer is in control of when and how they receive a message.
I guess someone skipping over television commercials with a PVR would be the obvious example?
Right. We now have the choice to skip. What we decided to was create an entry point for the brand a soon as someone turned on their computer. If you download a McDonalds version or, in the US, and NBC version of itiBiti and you turn on your computer this application pops up. But it not only gives you content and value it gives you free communication. We own our own back end telephony systems that allow us to give you free telephone calls.
So people are arriving for both the content and the free communications…
Yes. And this is a play that you will see a lot more from us over the next few months. Ortsbo has kind of overshadowed everything. So I always like to say it’s like raising children, you want to let your children develop and flourish, but sometimes they don’t always develop at the same speed. From ItiBiti there was a spinoff opportunity in conjunction with some discussions we had with Microsoft Corp in Redmond – that was Adtaffy. Adtaffy is really a business to business technology that ultimately becomes a business to consumer technology. I’ll give you an example. Imagine an online automotive ad – it will take you ten twelve fifteen clicks to get to the dealer. We can actually get you to the dealer with full information and have them on the phone in three clicks. What we do is, and we can do it for different industries but automotive is and easy example, click on the ad that says “find your local dealer” from there an instant map will show up on your desktop. This is different than mobile, this is geo-location on the desktop. A map will show up and show you where you are in relations to all the dealers.
Is that embedded?
Yes. Then the second layer is you click on one of the dealer, who all have different icons. Click on the dealer and a mini window pops up with video, RSS feeds, html, inventory… whatever you want is in that window. That’s two clicks. The third click is basically, enter your phone number, click “go” and your cell phone begins to ring. When you answer you hear a voice that says: “this is Adtaffy, we are completing your call.” The dealer is on the other end of the line. We own all the technology behind that. Now that has been commercially tested by Jaguar, and we have number of US tests going on. That one we think, revenue wise, could be our biggest win ever, and again, we own all the technology. The one that everyone is excited about today is Ortsbo. Obviosly Ortsbo is currently overshadowing everything else.
Did you design ItiBiti and Adtaffy to work in conjunction with Ortsbo?
The idea is that there is synergy amongst all our divisions. Before we get to Ortsbo I don’t want to leave Magnum out. Magnum is a company we’ve had for years, last year we bought it from one of Canada’s oldest and most established print companies and company called Dye Durham Media. What we have done with that is taken a traditional bricks and mortar business and turned it into a clicks and mortar business…
What do you mean by that?
Think about something as small as a business card. For a large legal firm, in the case of a business card there might be a fixed cost of x dollars to buy them. But behind the scenes there’s so much involvement and staff. Staff has to take a direct order from one of the partners, they have to send it over to purchasing, over to the printer, the printer has to send it back with a proof etc etc. What we do is manage all that online. Every single business card is online, every single card depending upon authorization levels can be changed on the fly, and automatically send to a print queue. So we take the traditional work flow and make it a click based workflow. By doing that, we can save somewhere between 23-34% on the internal cost. Multiply that by a firm that has, say, more than two thousands individuals in it, well that’s a lot of money you’re saving. So we really reinvented that business to be much more value oriented in the new media world.
Let’s get back to Ortsbo….
Ortsbo is an interesting situation. With ItiBiti, we developed some technology and we actually purchased a lot of legacy technology. With Adtaffy we spent quite a lot of money to get Adtaffy started. We first used our technology and brought in some development partners that had capabilities well beyond our core. Ortsbo was born out of a group of us who, over the last ten years, really had difficulty communicating with each other. If, as in our case, you have a programmer who primarily speaks another language, it’s a challenge giving direction. In many cases, for instance, a programmer in China may be able to read and write English but to speak it at full speed is a challenge. In North America many people expect everyone to communicate in English, but through Ortsbo we are privy to some interesting information and that info shows much much higher Internet growth in other parts of the world, such as China.
You pointed out in one of your press releases or on your web site that in the past ten years use of Arabic online has increased 2500%.
Yes, it’s amazing. And to see what went on in Egypt for instance is mind boggling. People are on Facebook and tweeting about the experience. They were describing what was going on in Tahrir Square and then translating that tweet into English in real time. It’s pretty amazing to watch all the different situations where people use Ortsbo. That’s why we always say Ortsbo is not about translation, it’s about the translation experience.
OK, the million dollar question, how do you take advantage of all these eyeballs and monetize Ortsbo?
Well, I see two paths to monetization. The first is to generate revenue and the second is to generate value. I see many opportunities in social media. Ultimately, though I see the initial path to revenue through licensing fees. I’ll give you an example: we are just putting the finishing touches on Ortsbo for Outlook. This will allow a person to press a button and send out an email they have written in English to people in many different languages. A company called Xobni, a San Francisco based startup, is doing some interesting things in creating the next generation contact management. I think the way people use email will change and mature and (although we don’t do what they do) I see companies like us and them participating in this change. I think the monetization possibilities are many, and they extend to online gaming, many different forms of social media, even RSS.
Do you worry about Ortsbo plateauing?
I think there is still a lot of room for growth. When I look at the numbers on growth in the countries we are in, I think we are just scratching the surface. We just want to concentrate on delivering a better and better experience.
You recently announced an opportunity for potential US listing and the engagement of The Corum Group, an M&A firm in the US, to look at strategic opportunities. What do you think is the best way to leverage the tremendous success of Ortsbo to maximize value for you shareholder?
Well, at this point we aren’t sure. That’s why we have enacted a strategy that will gather the most information on potential paths for us. But, basically there are three paths we could take. We could keep Ortsbo as a subsidiary of Intertainment, we could sell it outright and potentially crystallize the value today with no upside, or we could create a hybrid which may involve a separate spin out or listing.
Do you have a time frame, internally, on when you will make a decision?
No particular date – but we are working with our advisors, looking at many opportunities and we will make a decision in the near term. Not that I want to wait that long, but Facebook has been rumored to be going public for a while, and as far as I can tell it hasn’t hurt their valuation in the meantime.