Rachael Marret, a veteran Twin Cities marketer, witnessed up close the inauspicious launch of marketing-tech firm Horizontal Integration.
Marret, in 2003, was leading the Minneapolis office of what is now MRM McCann WorldGroup when she hired a consulting computer scientist named Sabin Ephrem to help build a marketing-technology platform for a project for client Microsoft. One of her young marketers, Chris Staley, was leading the project and worked with Ephrem to bring it to fruition in one of the first hybrid “MarTech” projects of its time. It worked pretty well.
Staley, 41, a talkative, energetic University of St. Thomas graduate, and Ephrem, 50, a contemplative, analytical type who emigrated from India at 18, and earned graduate degrees in computer science and business from Northwestern University, found common ground on an approach and a still-prospering business they launched after Microsoft.
Ephrem and Staley had concluded that a merged marketing-IT effort could be disruptive. Traditional ad agencies typically are good at strategy and creativity in attracting interest in products. The technologists focused on IT stuff but less so on customer experience.
They launched Horizontal Integration from Ephrem’s kitchen.
“The two founders saw the opportunity to merge their discrete expertise in digital marketing and technology platforms,” Marret recalled. “They were early on a path to what is now referred to as MarTech, using digital tools and technology platforms to make it possible for marketers to automate tasks and make data-driven decisions. Instead of guessing what works, brand marketers can spend more of their time on creative and strategic tasks.”
The launch, however, did not take off like a rocket. The strategy and digital tools had to be integrated on the fly.
“We had the idea to merge technology and marketing,” Staley said. “We just didn’t have clients.”
Early clients included a business call center and the Chicago Public Housing Authority, which liked the idea of the seamless approach. Staley was the project manager, Ephrem ran the IT, and a contractor was the website designer.
“We faked it until we made it,” Staley quipped.
They lived for the first year or so on savings and invested early revenue back into the fledgling business, including early hires.
“We eventually had the pitch and the process working,” Ephrem recalled. “We just had to perfect that.”
It was good enough to bring in $1 million in sales by 2006 from several clients.
And that year, they hired Jeremy Langevin, 45, an IT staffing veteran, to join them at Horizontal Integration (HI) because clients often were looking to hire internal staff with the emerging digital skill set. That led to a MarTech firm with a staffing agency.
Something’s working. This year, HI will post about $90 million in revenue from about 230 employees in the digital agency, 30 IT employees and up to 500 independent contractors who HI gets paid for placing in temporary or permanent posts. About two-thirds of revenue comes from the IT and digital staffing side of the shop. The rest of the business is HI’s digital marketing client work.
“There’s a lot of cross-pollination here under one roof,” Ephrem said from HI’s spacious, 30,000-square-foot leased headquarters in the trendy West End district of St. Louis Park. The firm has added IT staffing offices in Denver, Dallas and Chicago and has a software development and support office in India. HI has won of slew of local and national awards for its growth from the Inc. 5000 and Fast 50, among others.
Ephrem said revenue growth will slow from 25 percent annually since 2013 to about 10 percent over the next three years as HI invests.
“We’re making the investments to go beyond $100 million in revenue,” he said.
HI works on digital marketing for big business such as UnitedHealth Group, CHS, Raymond James Financial, Allianz Life and Caribou Coffee. It provides IT staff to Target, Medtronic, Best Buy, Xcel Energy, Capital One and others.
“We followed customers to Denver and Dallas,” said Staley, adding that Dallas one day could rival the Twin Cities as an HI business hub.
The Twin Cities advertising scene has been remade in recent years, somewhat around the HI model.
Companies such as Martin Williams, Fallon, Carmichael Lynch and McCann Minneapolis are owned by large national and international marketing conglomerates. They generally are smaller than they once were in this market. And there are more boutiques that serve local clients, often started by veterans of those once-big Minneapolis firms.
Another similar player to HI is the Nerdery, which started out as website and IT support for marketing agencies. It stumbled with management and execution issues after growing rapidly between 2003 and 2014. Advertising customers were bringing more of their IT work in-house.
Adrian Slobin, a veteran technology and digital marketing executive, joined the Bloomington-based Nerdery early this year as chief strategy and operating officer. He said the 400-employee company is growing — it did about $63 million in revenue last year — with a strategy that broadened its services beyond advertising clients.
“We typically don’t do staff augmentation where we send one or two engineers or project managers over to a client to work, Slobin said. “We now partner more with large clients on strategic projects, initiatives that are critical to their business.”
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at firstname.lastname@example.org.