10 senior executives in private investment funds, pension companies, and hedge funds, who aggregately manage hundreds of billions of dollars, met last week in a building on Rothschild Boulevard in Tel Aviv. The people involved are members of the board of directors of Asurion, which acquired Israeli startup Soluto for $100 million in 2013.
Asurion is a private company founded in 1994 in Nashville, Tennessee that provides support services and insurance for cellular and electronic devices. The company serves over 300 million users worldwide and has over 17,000 employees. Its more than $6 billion in annual revenue makeד Asurion one of the five largest private companies in the US. Over the years, Asurion has acquired 24 companies at prices ranging from a few million dollars to $1.5 billion.
Kevin Taweel, Asurion's cofounder and chairperson, who was the company's CEO up until a year ago, told "Globes" that Soluto was not Asurion's biggest acquisition, but is probably its most important. The US company's board of directors is holding its meeting in Israel for the first time in Soluto's offices on Rothschild Boulevard to celebrate the fifth anniversary of the acquisition and discuss the company's future. At the meeting, attended by Tony Detter, who replaced Taweel as CEO, it was decided to grant formal authority to Soluto founder Tomer Dvir, to lead Asurion's merger and acquisition efforts in Israel. "Our strategy is to continue acquiring companies here and in North America," says Taweel. "We spoke about creating a formal structure of corporate development reporting to Tomer. Our organizational development team is located in the US, and they will cooperate with Tomer in this matter, but he will make the decisions, he and his team in the field, because they're the ones that know the companies."
In contrast to many founders who stayed in the acquiring company to help in the merger process and continue on to the next project, Dvir, 38, stayed to lead Soluto while wearing two hats: CEO of Soluto and SVP product at Asurion. Five years after being acquired, Soluto is still an independent entity without Asurion and has grown from 36 employees at the time of the acquisition to 100 today, with plans for expansion by dozens of additional employees over the coming year.
Dvir now has Asurion's resources at his disposal and a mandate to make acquisitions for the company. He says that there are no restrictions on him or expectations about the number of acquisitions, amounts, or even specific technologies. "There are no rules; we're all open and are constantly searching and looking. We haven't developed the method yet - it's all new, fresh, and exciting. I'd say that I'm looking for good people with vision and no ego."
Dvir: I wouldn't buy Soluto the way it once was
Asurion began providing technical support service and insurance for cellular devices in the US, and later in Asia, Australia, Europe, and South America. With the acquisition, the services were combined in a single platform under the Soluto brand designed "to help people get the most from their smart devices": telephones, PCs, tablets, and devices connected to the smart home and smart car. The company now wants to expand its service into a comprehensive platform that will provide digital asset management service to its customers. Taweel and Dvir claim that the platform will be able to anticipate the customers' needs and automatically recommend configurations, services, and devices capable of meeting these needs in a way suitable for their lives. "The innovation engine for this is here in Tel Aviv," says Taweel.
Even before the acquisition, Dvir developed Soluto with the idea of a future solution that would help people get the most of their technology. Dvir and Soluto cofounder Ishay Green, however, had trouble managing the company, and the broader platform remained a distant vision. Dvir told "Globes" in March, "Our two biggest mistakes were not attaching enough importance to putting things out quickly and not paying enough attention to the business model. Instead of four months, we needed two and a half years to come out with the first version of the product. I wouldn't put money today on a company being managed like that, and I wouldn't accept it on the board. I would come in and tear myself to ribbons as CEO."
When Asurion acquired the company, it had raised $18 million up to that point with no business plan and almost no revenue. Asurion acquired Soluto because of the goal shared by the two companies: "to bridge the distance between the technology and the typical man in the street, who is years away from enjoying its potential, and making it accessible," as Dvir puts it. "Every individual can do more and enjoy more of the technology around him or her. There's something new every month that can help you, but it's hard to find the right services to adapt them to your life, which is also changing. Our lives are constantly developing, and technological services should develop with them. They have to understand you and serve you.
"We will spot, for example, the right time for someone to find a solution for the problem of the privacy of his or her information before he or she even thinks about it, or understand that something in the home needs security updating, or the music service suitable for his or her life if they travel a lot. We can tell a person that they should enlarge the font because they're behaving like someone for whom reading is uncomfortable and difficult. We can know whether someone's child is watching too much television or what to do when they encounter online bullying.
"There are an infinite number of adaptations and configurations for the devices around you to make them suit you. Most of us don't do it, because we don't think about these things. As we as a company see it, this means understanding what is and isn't relevant, what correct and incorrect behavior is, and most importantly, simplifying all of this - finding creative ways to make people do something they never thought about doing." Asurion is already releasing features of this type for hundreds of millions of its customers worldwide.
The mergers and acquisitions were designed to help Soluto and Asurion accelerate development of the platform. That is what happened with the acquisition of Drippler in December. Asurion has emphasized innovation through acquisitions from the beginning. The company was founded through acquisitions made by the founders with the help of a search fund, and they continued acquiring companies in order to develop on a large scale.
Little Soluto changed Asurion's policy
In addition to the acquisition of new technologies, Asurion discovered through its acquisition of Soluto that a startup's influence on a large company can be enormous: Asurion adopted Soluto's method of work - a model of small target-oriented teams developing innovative features designed to get to market within a few months. The work in team is relatively independent and they define the targets for themselves. Dvir and Taweel say that this structure facilitates better communication between different parts of the organization than a traditional corporation structure.
Taweel: "Soluto and Asurion merged five years ago and the adjustment was unusual. Usually, after an acquisition of this type, the startup is swallowed up in the company and disappears, but here it was the opposite. Soluto is still a distinguishable group within Asurion as a startup inside a larger company. This small group is having an enormous effect on us, not just technologically, but also in cultural and organizational innovation in the bigger company.
"We discovered that our approach requires much more time to do things, because communications weren't good or quick, and we were fed up with it. We saw what Soluto does and decided to adopt this change. It was pretty hard and took three years. It was painful and several people at Asurion had to leave. I remember that Tomer was frustrated at first. There were several people wo didn't want to work according to this model, so we said that this wasn’t the place for them, because it requires a certain mindset to work like this."
Taweel adds that Asurion wants to further enlarge Soluto's staff in Israel beyond the planned expansion in the coming year. "The fact that we're here is a big deal. It shows the general importance of Soluto's team to our corporation. Our board contains businesspeople, and our meetings usually take place in Nashville and California. This is our first meeting in Israel, and I believe there will be more. We've had great success in Israel. If we increase the team here from 100 to 200 or 300 employees, the impact on Asurion will be huge."
Published by Globes [online], Israel business news - www.globes-online.com - on August 7, 2018
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