- April 16, 2024
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REVIEW SUMMARY
Company. Inuvo Inc.
Industry. Technology/online marketing
Key. Running leaner to maximize revenue
Richard Howe's corner office on the third floor of the Bayview Pavilion building in Clearwater isn't as lavishly decorated as it used to be, which speaks a little about the problem he inherited when he became president and CEO of Inuvo Inc.
It seems his predecessor in the position, when the online marketing company was known simply as Kowabunga! (including the exclamation point), had ordered $35,000 worth of furnishings. Most of it is gone now, save for a few mysterious trinkets such as a couple of metal statue things that look like giant bullets.
“I don't even know what these are,” Howe says jokingly, adding that every once in a while he's compelled to deposit trash in the openings at the top.
Cleaning out the office was just the start of Howe's process when he took the position in late 2008. In no particular order, he got rid of the company's management team, dismissed its board of directors, rebranded the company and began bringing in new talent, including people he knows well from previous stints as a corporate turnaround guy.
Unique turnaround
The process appears to be working so far. In its latest quarter, Inuvo posted 63% higher profit and 53% greater revenue from a year earlier, and the company's ship runs a lot tighter now, shrinking from nearly 300 employees two years ago to 65 today. (The company projects fourth-quarter annualized revenue growth of 46%, to $14 million.)
“This business turnaround is unlike any other I've ever seen,” says Howe, who has plenty of merger-and-acquisition experience. Over the five-year period before he came on board, the predecessor to Inuvo bought 16 companies, several of which had little or nothing to do with its own business.
Most of those lines have since been sold off or shut down. The latest was RealEstateSchoolOnline.com, which Kaplan Inc. bought in December for $750,000 plus assumed trade debt. Proceeds were used to scale down Inuvo's bank debt, now at $5 million, which Howe says came close to being called early on in the process.
Now that Inuvo is done disposing of its non-core businesses, it can focus on the two remaining segments, dubbed Direct and Exchange. Yet even though the company is on track to reach $50 million in annual revenue, Howe says he still feels like some prior issue will creep up somewhere along the way.
“You're never quite over the problems. They always seem to haunt you,” he says. “We're always looking in the rear-view mirror, but given the constraints we've had, we're doing a pretty good job.”
Buying and selling
Howe, 48, moved to the Tampa Bay area from Little Rock, Ark., where he was chief marketing/business strategy and M&A officer for Axciom Corp., an interactive marketing services company with yearly revenue of $1.4 billion. Before that, he was general manager of the $110-million global marketing services unit of Fair Isaac Co. and was involved in its acquisition of a software company where he used to work.
While his background is in structural engineering, with bachelor's and master's degrees from Concordia and McGill universities in Canada, he says it was buying and selling a dozen companies over the years that brought him to this point with Inuvo.
By the time he came to Clearwater, he was already well seasoned as to what was necessary to put a company on the right track, comparing it to tearing off a Band-Aid rather than going about it slowly. He's also well beyond the opulence to which younger company chiefs aspire, particularly those driving the prior dot-com boom and bust.
Howe's priority from the start was refinancing Inuvo's loans with Wachovia Bank, which had reached at least $8 million. More difficult than that, though, was repopulating the company's managers and directors with people he knew he could rely on, including his mentor, Charles Morgan, a fellow engineer and former Axciom chairman who is now Inuvo's single largest shareholder with 13.6%.
To keep investors happy, Inuvo conducted a reverse stock split, converting 10 shares into one and raising its price on the American Exchange from penny-stock territory to at least $3 a share.
Being surrounded by familiar people, along with having fewer personnel overall, makes running a company a bit easier, Howe says. He values feedback from his workers, some of whom earn six-figure salaries, and emphasizes empowerment instead of retaliation for voicing their opinions.
“Communication is key,” says Howe, who hosts monthly meetings with Inuvo's staff. “You better know what you're doing because they can tell if you don't.”
Like other online marketers based around Tampa Bay, Inuvo aims to drive “clicks, leads and sales” between retailers and potential customers. For example, its BabytoBee.com site provides expectant mothers a wealth of information not only on prenatal care but deals on baby food, cribs and other related items.
BabytoBee represents a potential growth market for Inuvo. Last year, the parent company made arrangements with Orlando-based Contact Centers of America to run call center support for the site, creating more than 200 regional jobs in a segment of the work force that until lately had been moving operations overseas.
Inuvo, which operates other consumer sites such as BargainMatch.com and Yellowise.com, is more easily able to respond to customer trends as a result of downsizing and operating more efficiently, Howe says.
Inuvo Inc. attempts to hire locally whenever it can, but finding people with technology and advertising backgrounds can be tough in a market on the opposite side of the country from the Silicon Valley. Therefore, it has to recruit nationally in order to fill positions that may come open.
While it isn't all that difficult to sell sunny weather, beautiful beaches and the presence of competitive sports teams to a techie, the fact that Inuvo is one of only a few firms of its type along the Gulf Coast can be a bit problematic. It's a point made by prospective hires who are considering packing their houses and bringing their families to the Tampa Bay area.
“They want to know where their next job is going to be after this,” says Richard Howe, Inuvo president and CEO. If something goes wrong and the company closes or conducts a huge round of layoffs, he says, they want to know where else they might get a comparable job without having to relocate again.
While it's a valid concern, Howe says he hopes that won't be an issue for Inuvo going forward. The company is in growth mode, but is neither adding or subtracting employees for the time being, he says.
For those hires who can't feasibly move to Clearwater, Howe says tech accommodations can be made. Weekly meetings via Skype aren't all that unusual and work practically as well as face-to-face communication, he says.
