Aquto CEO Talks Parenting, Tech Bubble, Mobile Engagement

Susie Kim Riley likes to compare entrepreneurship with childbirth.

“When you’re in the throes of it, you’re like, ‘Oh my God, I’m never doing it again,” the mother of two says. “Then you have the kid, things are wonderful, and you’re like, ‘Hey, let’s do it again.’”

Just as Riley and her husband decided to have a second child, she has helped create multiple companies. They include Maker Communications, which was acquired by Conexant in late 1999 for nearly $1 billion in stock; Camiant, which Tekelec purchased for more than $130 million in 2010 before getting bought by Oracle three years later; and her current startup, three-year-old Aquto, which this month raised an $8 million Series B round.

Her spouse, Bart Riley, is also a serial entrepreneur—he co-founded A123 Systems and is currently working on a stealthy energy storage company, according to LinkedIn.

“Serial entrepreneurs are like parents who have more than one kid,” she says. “You get amnesia. You forget all the pain, remember all the good things, and do it again.”

Riley studied electrical engineering and computer science at Cornell University, where she met her husband. She has spent 25 years in tech, mostly with companies tied to the telecommunications industry. That’s the case with Boston-based Aquto as well, where she is founder and CEO.

The company’s software enables smartphone and tablet users to receive sponsored mobile data. It does this through two ways: “zero-rating,” where consumers can download and use apps, view advertisements, and look at content without racking up any data charges; and data rewards, where mobile data gets immediately added to a user’s wireless account in exchange for taking actions to engage with businesses, such as buying a Hershey’s chocolate bar or booking a flight through Expedia.

Aquto gets paid to manage those processes by mobile carriers, like AT&T and Verizon, as well as by the marketers, app publishers, and other businesses trying to reach consumers.

The 25-person company is providing its service in the U.S., Europe, and Asia, with plans to deploy in Latin America this year, Riley says.

Susie Kim Riley

Susie Kim Riley

Xconomy caught up with Riley to learn more about Aquto, her approach to entrepreneurship, and her thoughts on talk of a tech bubble. Here are a few highlights of our conversation:

Xconomy: The value of your product is pretty clear-cut for consumers—they agree to watch an ad or make a purchase in exchange for mobile data rewards. But what’s the selling point for cell phone carriers and advertisers?

Susie Kim Riley: For advertisers, we have seen that users are much more engaged with their content. For example, video campaigns we have run for brands have consistently shown 50 to 100 percent improvement in engagement—which means they are watching much more of the content than the control group (those users whose content was not sponsored).

For carriers, they now have real business with the rest of the mobile ecosystem of app publishers, marketers, etc. They can add value to the ecosystem by enabling them to get more engagement out of users over their mobile device.

Users can engage with more content without worrying about data usage.

X: Is the appeal of these rewards different for mobile users in the U.S. than it is for users in other countries?

SKR: In the U.S., about 75 percent of users are on some form of limited data plan, and over 60 percent of users in a given year at one time or another have either exceeded their data plan or received usage notifications. So, there is heightened sensitivity around data usage.

Outside of the U.S., in the majority of countries, a significant percentage (50 percent or more in many countries) of users with smartphones do not have data plans. Our goal is to make mobile connectivity more accessible to all those users.

[Editor’s note: Riley says these stats come from a combination of company surveys and data shared by mobile carriers.]

X: You’ve spent 25 years in the tech world. What’s the biggest lesson you’ve learned about startups?

SKR: It’s much easier to start something today than it was 20, 10, or even five years ago. Back then, we didn’t have as much VC money flowing, and so convincing someone to give you money was a lot harder, and it took a lot more capital to build things. Nowadays, there is plenty of money, and [it’s] much easier to build because of the cloud and all the tools that are available. But in terms of making it a successful startup, I think it’s just as hard.

To be a successful startup, you have to be resilient, creative, and treat it like you are on a mission. You have to be willing to give it 100 percent.

X: You were working in the tech industry during the dot-com bubble and subsequent crash. In your opinion, how does the current tech environment compare with that period? Are we headed for another crash?

SKR: Back in the bubble days, we did have big valuations, but I think they pale in comparison to some of the things we see today.

The valuations were wild in the public market. Many of the public companies had some financial reporting tactics that were not sound, which made them sound like they were doing much better than they actually were. (Sarbanes-Oxley has fixed this). And some of the Internet high-flyers had unproven business models. All this contributed to the crash as soon as things got shaky—because of the lack of a solid foundation.

I don’t think the public markets are in a bubble now—[valuations] may be high, but not based on unproven or unsound business models.

But what I see nowadays is the crazy valuations startups are getting, with little to no proof points, or unproven business models. This is not in the public market, but in the private sector. There are too many entrepreneurs who seem to be fixated on being the next “unicorn” ($1 billion valuation), and so are willing to accept financing terms that do not make sense, just so they can be called a unicorn. I am hearing that this trend is slowing down due to reduced interest from the venture and equity community to play the game. So, I think the bubble is starting to deflate in the private sector.

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