Shareholders of RareMethod Capital Corp. are asking four cents for stock in the Calgary interactive marketer that traded at 50 cents at the pinnacle of the high-tech boom.
On this day, there are no takers for the four-cent ask price on the TSX Venture exchange and the stock will not trade a single share for the 29th time in 30 days.
The stock may be dormant and the company continues to absorb losses, but there’s plenty of action at RareMethod.
There’s a spring in Roger Jewett’s step as the upbeat president provides a visitor with a grand tour of the funky RareMethod office converted from a radio station on 16th Avenue S.W. in Calgary.
|Mike Sturk photos, Business Edge|
|RareMethod president Roger Jewett envisions profitability in next fiscal year.|
On this day, the president is hiring, the creative writer is writing, the composer is composing, the audio producer is producing, the editor is editing, the software developer is developing software and the marketers are marketing.
And there is positive pitch in the boss’s voice as he articulates his vision as the company completes its integration with Idea Machine, a digital agency it acquired in March.
Clearly, at this stage, the dreaded dot-com undertaker has been turned away at the door.
1. Growing up on your family’s dairy farm in New Brunswick, how much thought did you give to being a farmer?
“Never. Not for a minute. My dad kicked me off. I was no good with anything mechanical. I had a brother who was one year younger who loved it, so I used to pretend I couldn’t do things. I’d say: ‘I’m too dumb, I don’t understand this stuff.’ But I loved the country environment. It was a great place to grow up, being able to walk out my door and have acres of land to explore. I recently spent my vacation there. It’s a great place to clear the head. I was always interested in running a company and I was interested in finance.”
2. What was it like taking a technology company such as RareMethod public just as the tech market started to go bust?
“In the middle of all of that, it got pretty frustrating because it was tough to get traction with anything we were doing. Originally, we got involved to catch the wave of the boom and we didn’t catch it. We got the tail, which was going down. The success is in surviving that extremely difficult time. The reason we survived is because, even though we were trying to catch the wave, we established a solid foundation with a traditional business that had customers and revenues and profits.”
3. What makes your company unique in the interactive marketing space?
“We are unique in a sense that we do almost everything in-house. If a customer has a challenge, we take a very consultative approach with our customers and help them develop a strategy. Then, we make recommend- ations and typically produce most of what we are recommending. In-house, we do the audio production, the website development, copy writing, programming, e-mail delivery software, everything.”
4. What division of your company has the most market potential?
“Two months ago, I would’ve given you a different answer. Today, we only have one division (company literature refers to three divisions – telephone message on-hold services, strategic interactive marketing and strategic e-mail marketing). We were complicating our business a little bit by talking about divisions, but really, from a customer perspective, we are presenting our company now as a company that will help you with your problems. Our job is to help our customers solve their problems and sometimes it’s also to help them understand what their problems are. We’re trying to present our company now as a consultative partner to help customers find solutions to their problems. I’ve just sort of crystallized that whole concept and we’re getting a ton of traction in the last two months.”
5. What’s the company’s main focus right now?
“What we hope to do is establish relationships with customers, gain respect and have them bring us in on the consultative side before they jump into their action plans. My focus right now is to establish the trust of our clients so that they bring us in at an earlier stage. Our approach and focus is on developing long-term relationships with our customers and developing recurring revenue. For example, building a website is not recurring revenue. Recurring revenue for us is establishing a relationship with a customer, maybe building them a website, but then working with them on strategy and putting a measurement system in place to track the success of their website and analyse their data to make sure they’re getting results from their website. Business is like baking a cake. We’ve got all the ingredients here. You throw them all together and you come up with a recipe, but you have to keep tweaking the ingredients to come up with that great recipe.”
6. What have you been doing to cut costs?
“I’m always cutting costs, but I would say, rather than downsizing, it has been more a case of right-sizing. In fact, I have a meeting today to hire a new sales rep and I’ve got a sales rep I’ll probably hire tomorrow and there’s another person that I’ve made an offer to on a different job. Yes, we’ve laid people off, but it’s because we didn’t require that specific skill right now. We’re restaffing for the proper skill sets. We have 33 employees.”
7. Are you currently contemplating any more mergers or acquisitions?
“I love acquisitions and the challenges that they present. Idea Machine was a fairly large merger for us that basically doubled the size of our company, so I’ve spent the last six months working on that and there’s a lot of work to complete the integrations. When I’m confident that that has been accomplished, I’ll start looking for other merger or acquisition opportunities.”
8. When will RareMethod become profitable?
“Oh, boy . . . how about next year? You know, I had a bet with my auditor last year that I’d be profitable this year and she laughed. I was so determined to prove her wrong. We’re close. Very close. But not quite there. I’m extremely confident we’ll be profitable for our fiscal year ending June 2004.”
9. What is your projected revenue next year?
“It should be in the $3-million range.”
10. Did you not previously project 2004 revenue at $5 million (in an interview with Profit magazine)?
“It’s been a tough couple of years. My focus is on profitability before revenue and you have to have goals and that was my goal. Right now, it’s $3 million.”
11. What do you need to do to wake up the stock?
“Yeah, I don’t want to be on your deadbeat cold-stock column (in Business Edge), that’s for sure, because one of our competitors was. I think, unfortunately, the investment market has lost interest in this business. So we’re going to make money. That’s how we’re going to wake up the stock. Frankly, we could liquidate our assets today and recover a greater premium (above) what our stock is trading at. We’re trading less than asset value. We’re not a software company where we’ve only developed 80 per cent of our software. We have probably 50 extremely high-end customers that work with us every day, from PetroCanada to Shell to Travel Alberta to Travel Newfoundland. So we just have to make money and, even then, I think our market now is so difficult that even making money won’t get it there. It’ll be making it repeatedly over several years to wake up the stock.”
12. Do you think the Toronto Stock Exchange needs to do a better job of promoting its illiquid junior venture market?
“I think the bottom line is that they let companies go public too early. If they do anything, they should make it tougher to get public, not easier. The rules should be more rigid in terms of profitability records for companies going public. With that said, three years ago they were taking all these tech-concept stocks public. So is that a bad thing? No. Because I’m sure some of those companies actually succeeded. But the success rate of business in general is pretty small.”
13. What’s your five- to 10-year vision for RareMethod?
“My written vision is to change perceptions towards interactive marketing. What that means is that our big job is to educate our customers, our partners and suppliers that interactive marketing is an extremely important and valuable tool within a solid marketing plan. We’ve got a lot of people that tried it and got burnt because they did it poorly, they listened to the wrong experts, they were in a hurry and didn’t do it right. They let their tech guys do it when it’s a marketing medium.
“It’s been a turbulent environment the last couple of years with economic impact, terrorism, wars and airline bankruptcies, and I’ve kind of looked in the mirror a couple of times and said, ‘What am I doing?’ But it’s clear now. We’ve made tremendous strides with the mergers with Idea Machine, a very talented group, and with Advanced Information Marketing. Putting that all together, my confidence has just skyrocketed in the past couple of months.”
14. Are you concerned about the issue of spam e-mail and overall abuse of e-mail services?
“It certainly minimizes the impact of a properly deployed strategic e-mail marketing campaign, which is part of what we do. It’s a huge concern. We don’t have the power to fix that problem, but we would certainly support any effort to curtail that issue. Until that’s done, there’s going to be a lot of negativity toward e-mail. The first question I usually get when I say we do e-mail marketing is, ‘Are you a spam company?’ We’re exactly the opposite of that. We only support permission-based, ethically deployed e-mail marketing. We’re just waiting and hoping for the software to come out that eliminates it or that shuts these guys down who are overseas or offshore.”
15. How would you describe your management style?
“My real business background has been in working in financial restructuring and implementing turnaround strategies. So I think my style changes or evolves depending on the situation. If I get involved with a company that is in financial trouble, I take a fairly dominant leadership role to implement the changes. I start off very strong and, as the situation progresses, I would move to more of a team-based management concept of clarifying objectives for senior managers and delegating authority and responsibility.”
16. So what’s that pool table doing in the middle of your office?
“Well, one of our core values of our company is fun. Our customers like to have fun and we like to have fun, so it’s there to take off the edge.”
17. What do you feel you need to learn to become a better manager?
“Probably, the most difficult part of management as I’ve recognized it is recognizing different personalities and respecting other individuals for the personality type that they have. I can now analyse what my personality type is and what my staff member’s personality type is. What I need to learn is how my personality type needs to interact with each of the personality types of my staff and get the best results.”
18. To what do you attribute the success of your other major business interest, Calgary salon and spa Mirada Capital Corp., and are you able to channel that success into RareMethod?
“We have had absolutely phenomenal success in the last five months at Mirada. Our sales are up 80 per cent in the last five months. (Jewett also is president of Allan Holdings, a New Brunswick salon and spa operator). We’ve found a formula and we’re executing on the formula at our salons. The formula is incredible customer service. That’s exactly what I’m doing (with RareMethod). It’s funny how similar these businesses are. We’re rolling out the same philosophy of customer service across RareMethod.”
19. Who’s the entrepreneur you most admire?
“Probably, Murray Edwards (Calgary entrepreneur) is the one that I respect the most. He’s a turnaround guy. He likes to go into situations and turn them around, which is what I like to do, only I haven’t been as successful as him. I follow his career and I’ve chatted with him a couple of times. Everybody can manage in smooth times but it takes a lot of willpower, determination, discipline and focus to walk into a troubled company and turn it around. The toughest part of it is the changing attitudes of employees and the changing perceptions of customers. I respect any entrepreneur who can have a successful company tank and then have the skill to turn it around to profitability. Murray’s done that very well.”
20. What do you see yourself doing 10 years from today?
“I hope to have everything I have now and have an extra zero at the end of my business numbers . . . . My real goal is to be running companies that are $100- to $500-million companies in terms of revenue. I’ve got a pretty clear path to bringing my current group of companies to at least $100 million (in total) in 10 years.”
IN PROFILE: Roger Jewett
* Born/raised/age: Fredericton, N.B.; Keswick Ridge, N.B.; 39.
* Title: President/chief financial officer, RareMethod Capital Corp.; president, Mirada Capital Corp. & Allana Holdings Ltd. (salon and spa operators).
* Education: University of New Brunswick, Bachelor of Business Administration (graduated with distinction); Chartered Accountant.
* Family: Two children.
* Career: Prior to joining RareMethod in 2000, Jewett was president and CFO of UFX Enterprises, an industrial service company involved in the entertainment industry. Jewett was CFO for the Resorts of the Canadian Rockies group of companies from 1993 to 2000 and manager of the Business Investigations Group for Coopers & Lybrand from 1986 to 1993.
* Passions: Skiing, cycling.
THE COMPANY: Rare Method Capital Corp.
* Profile: RareMethod, formed in 2000 from the merger of a web and CD-ROM development company and On Air Digital Audio, is an interactive marketing studio that designs, builds and implements all aspects of interactive marketing campaigns for clients. The company acquired Idea Machine, a digital agency, in March. Clients include PetroCanada, Shell Canada, Canadian Tire, TicketMaster, Travel Alberta, Spa Lady, SAIT and Mount Royal College.
* Stated Vision: To change perceptions toward interactive marketing.
* Recent Stock Price (RAM-TSXV): $0.04 (52-week range, $0.02-$0.04).
* Website: www.raremethod.com