Having ridden the crest of the internet wave, Martin Casey (pictured) is now paddling in the calmer waters of the post-boom era. What hasn’t changed is his penchant for unusual names.
First it was Zartis, the now legendary web development firm whose rapid ascent at the height of the internet boom in Ireland – and equally rapid descent – became a symbol of those crazy times.
Now it’s Arekibo, Casey’s latest web venture (for the record, the name is derived from a huge radio-telegraph dish located in Puerto Rico which scans the skies in search of evidence of extra-terrestrial life).
But unusual names are about the only thing the two companies have in common. Zartis, which Casey co-founded with four other twenty-something ‘webpreneurs’ in 1999, was the ultimate internet success story. Having seen explosive growth during its first year, it was acquired in July 2000 by another child of the internet (albeit one that was marginally more mature): US-based Breakaway Solutions, in a $18 million (eur18.3m) stock-and-cash deal. A proportion (believed to be one-third) of the transaction was in cash, the rest was in shares and Casey, along with the other co-founders, became a paper millionaire overnight.
The dowry was more than generous but marriage was to last less than a year. Breakaway’s stock collapsed and staff were let go. By May 2001 it was all over; Zartis was no more.
In the same way people ridicule the Hippy movement of the Sixties and its change-the-world ideals, it is equally fashionable to mock the internet generation and its ‘irrational exhuberance’. Looking back, it seems preposterous that a company’s valuation could grow from zero to $18 million in just a year and everyone think it normal. But pretty normal it seemed at the time, recalls Casey. “You have to remember that around the same time we were acquired Esat acquired Labyrinth and Horizon acquired Web Factory. At the time every big technology company felt that it had to have a web company in its service offering.”
Breakaway was no different. At the time the fastest growing company on Nasdaq with a market capitalisation exceeding $1bn, Breakaway has styled itself as the first ‘full service provider’ – an IT company that could meet all of a company’s communications needs from its wide portfolio of products and services. Zartis was to be the European web services arm of the fast-expanding Breakaway empire.
Casey captures the mood of the times: “At the time of our acquisition we had 40 people which we had recruited in just six months. We had won some very good contracts – such as World of Fruit – and the hype was in full flow. Everyone was ultra-confident and felt nothing could go wrong. Like most of the companies at that time, we were in a position where we could basically name our price.
Then Breakaway came along. They wanted to acquire a company that would lead their expansion into Europe. They looked in Holland, the UK and Ireland and eventually chose us. Obviously there were government incentives and all that but still, they chose us! Then there was the whole Wall Street thing where you were being brought around to fancy restaurants in fancy cars… and really, to be in New York in June/July 2000, it was a seriously happening place and everyone was just on a high.”
It didn’t take long for the rot to set in however. That September, Breakaway’s stock price began to fall and the management team started to disintegrate. “By May of 2001, when we decided to call it quits, there were literally two [Breakaway] people left out of the original group of ten who were involved in the acquisition,” notes Casey. “They had gone from the fastest growing company to the fastest imploding company in the States. In a way it was quite comical. They spent way too much and most of their business came from VC-backed companies that didn’t have a very solid business model. Therefore they had not got themselves into the right type of client and things just started to go downhill.”
Casey, along with another Zartis founder, Dervla Cunningham decided to establish Arekibo, which now employs a more modest nine people at its Merrion St offices (Cunningham is head of sales and marketing to Casey’s managing director). Although an e-business consultancy like Zartis, Arekibo feels like an entirely different animal. For a start, it is self-funded and profitable. It is also a much more easy-going operation. One of the features of the internet boom was that cycle times were compressed; business seemed to speed up. The business cycle has now returned to the more manageable six months as against six weeks – the norm during the boom.
Although Zartis was ultimately a failure, it was one Casey benefited from, not just financially but also from a personal development perspective. In his eyes it was the classic learning experience. One of the lessons he has learnt is the importance of building a client base of solid, well-established companies. His client list includes AIB, FAS, IBEC, AOL and Waterford Crystal, as well as several smaller operations. He also appreciates that businesses should grow at their own pace, not at a pace dictated by investors or the market. These have been valuable lessons and, on balance, he feels that the Zartis episode has been much more of a help than a hindrance.
“It was an experience that money can’t buy,” he concludes. “It’s something that definitely helps us meet new clients and open up doors. It’s given us more confidence and made us aware of the pitfalls. It has also probably made us more determined to make it work again because the last thing anyone wants to be seen as is a flash-in-the-pan, a one-hit wonder.”
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