SOURCE: VantageWire.com — If you have not followed the happenings at Intertainment Media (TSXV: INT.V) for a few months, you missed a flurry of activity.
The company completed the sale of its first-ever acquisition, Itibiti Systems Inc., which it helped evolve into a social media platform well beyond its initial scope. It rescued Poynt Corp. from near collapse and has already set it on a path to a greater future. And in the most exciting and fast-paced development of the last quarter, Intertainment spun off Yappn as a public company.
This is all in a day’s work for a firm that has served as an incubator for social media technology since 2006. But nobody at Intertainment is taking a break. The company can’t afford to relax because the world of social media, and the opportunities that come with it, change every day.
The last report detailed the sale of Itibiti to a private technology group. Intertainment has since closed on the $3.5 million deal. AdTaffy, a location-based click-to-call platform, was also part of the sale given AdTaffy’s dependence on the shared technology of Itibiti. The sale allows both products to potentially flourish under a combined and dedicated independent management team. “We had a great opportunity to partner with a private firm that had more industry experience than we did,” said David Lucatch, CEO of Intertainment.
Intertainment is maintaining close ties with Itibiti, taking back a note convertible to cash and retaining up to 40% of the firm and one board seat. Intertainment receives 30% of any subsequent exit up to $5 million, and then up to 40% thereafter. “So we have a two pronged exit event,” said Lucatch. “We get a bonus on an exit.”
As two members leave the incubator, another joins the family. Intertainment -- in conjunction with another partner -- placed a successful bid to purchase the assets of Poynt Corp., a free mobile search application. Intertainment, which had previously securely loaned money to finance Poynt Corp., made the bid after the company entered into bankruptcy. The move protected Intertainment’s position in Poynt Corp., and ultimately Intertainment’s shareholders.
Demonstrating Intertainment’s knack for quick improvement, Poynt’s technology was moved to a cloud format, made more efficient, and recently released on new platforms, including a BlackBerry 10 version. Much of the credit for Poynt’s turnaround goes to Intertainment’s President and COO Anthony R. Pearlman, a well-respected technologist appointed to head up the new entity, Poynt Inc. by Intertainment and its bidding partner in Poynt.
Even though Intertainment has sold its Itibiti and Ad Taffy properties, the door remains open for future Itibiti/Ad Taffy and Poynt integrated apps. Now the goal for Poynt Inc. is to continue getting it back into robust shape, then find an alternative to full ownership. Currently, Poynt Inc. is an investment of Intertainment and has little integration with Intertainment’s other properties.
Richmond Hill, ON-based Intertainment Media invests in and develops technology properties focused on Internet marketing and social media. Since forming through a reverse takeover, it has evolved into an acquisitive technology incubator, focused on nurturing talented companies with potential in the space. Initially it focused on complete acquisitions and the occasional in-house development, but it has lately acquired non-controlling stakes in companies that fit with its existing portfolio. To date it has invested in or started a total of 10 companies. It operates three divisions: Ortsbo, Magnum Fine Commercial Printing, and dealfrenzy. It is also continuing to develop its Sweet Card program.
Now there’s a new member of the family, as Intertainment Media has given birth to Yappn. Yappn is a multi-lingual discussion platform where people can meet, chat, engage and consume content, individually, in groups and by topic, regardless of the language they speak. Its mission is to improve the way users engage with each other and brands by focusing on the propensity toward common interests. Powered by Ortsbo, it removes the language barrier and allows the entire world to open up to an entirely new paradigm of communication.
Yappn is the brainchild of Lucatch, who surveyed the social media landscape and discovered a void. Whereas Facebook exists to connect friends, Twitter allows people to talk in the moment and Instagram unites people through pictures, “there’s nowhere in a modern social sense to really chat about things that you like, to others that have the same interest as you, with no language barrier,” said Lucatch.
Speed is a hallmark of Intertainment, and Yappn is no exception. Lucatch conceived the idea late last year and made it a product by the first quarter of this year. It’s nearly ready to go into full beta mode and is expected to launch in the summer of 2013. And despite its youth, Yappn has already been spun off into its own public company (OTCBB:YPPN).
Intertainment closed the deal in late March, forming the separate Yappn Corp., which is based in New York. Intertainment has received 70 million common shares of Yappn Corp., and the company will control a minimum of 60% of the received shares. The existing shareholders will control approximately 30 million shares.
Yappn is based on the same concept that has made Ortsbo a leader in social media. Ortsbo was originally designed to connect programmers around the world. It goes above and beyond traditional translation programs by understanding nuance and communication. Using patent-pending algorithms and artificial intelligence principles, the program fine tunes itself and learns as it goes. For example, it would eventually learn that the British word ‘kerb’ means the same as ‘curb’ in Canada and the U.S.
Whereas Ortsbo is focused on commercial opportunities, Yappn is a hybrid of consumer and commercial uses. Yappn will incorporate Intertainment Media’s FanTalk technology, creating the Yappn Global Feed platform. The FanTalk technology enables major social media like Twitter, Facebook, Google+, Instagram, YouTube and other applications to co-exist in one location in up to 70 languages. The Yappn Global Feed will provide Yappn users with a rolling ticker tape of the latest social media activity about specific discussion boards. This will create a single location for users to pick up all the latest information and discussion on virtually any topic in almost any language.
Yappn features a coin platform, which people use to start a discussion board. Users do not have the ability to open a topic board just because they want to, thus avoiding the common problem of orphaned message boards. Contributors pool their coins together to start one. This will encourage creators, founders and others with a vested interest in that board to stay engaged. People will continue talking and sharing, everyone having their own unique dashboard.
One of the advantages that Yappn will have over other social media platforms is the ability for corporations to maintain control of their brands. A company’s brand is often its most valuable asset, but in the wild west environment of social media, it’s difficult to maintain control of brand messaging. This puts companies at risk for suffering damage to brand reputation and brand equity.
Corporations and brands today want to be part of the dialogue while keeping some governance over how their brands are portrayed. Yappn essentially gives them a new home for their message. Yappn discussions can be private and campaign-based. They can even be run on a company’s own website.
Intertainment’s leadership realized early on that Yappn’s growth potential was stronger outside its incubator. Knowing that the U.S. is where social media is strongest, Intertainment explored making Yappn a U.S. firm. One of Intertainment’s U.S. investment groups heard about Yappn and proposed a takeover. In a mere 20 days, the company was spun off and listed on the U.S. over-the-counter bulletin board (OTCBB). “That’s generally unheard of,” said Lucatch. “And we are just getting started.”
Intertainment is also in the process of working to spin off Ortsbo. The pending sale is a prime example of Intertainment’s value proposition. The technology behind Ortsbo originally came to Intertainment through one of the latter’s shareholders. The parent company took that raw material and built a marketable product around it, and supported it with a comprehensive marketing scheme. But the sale won’t end Intertainment’s relationship with Ortsbo. Intertainment will retain a significant interest in Ortsbo and it will remain a part of the family through a licensing deal with Yappn.
Each of the companies and transactions mentioned demonstrate Intertainment’s knack for spotting technology opportunities and combining them to make a whole that is worth more than the sum of its parts.
“Sometimes developing new technologies is as easy as recombining elements of existing programs or as difficult as inventing solutions to new problems in the emerging social sphere,” said Lucatch. “It took Milton Hershey a number of tries before he invented his most famous and successful invention, the Hershey Bar. Sometimes you need to persevere through the minor accomplishments and failures before achieving your true goal.”
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