Magic Memories, theme-park snappers, lure Silicon Valley funds with ‘R&D by M&A’ strategy
Magic Memories, which built a $50 million global business taking photographs at tourist attractions and theme parks, has sped its growth by buying companies with innovative technology rather than slogging it out on its own.
The Queenstown-based company bought Centryc Solutions, the Sydney-based developer of MeTag, for an undisclosed price. MeTag's cloud-based technology lets theme park operators interact with visitors even before they come through the gates, tracks what they do and allows real-time communications and social media interactions.
It follows a similar cash and equity deal two years ago when Magic Memories acquired American technology company Jackson Digital Imaging.
The two acquisitions helped speed up the company's technological innovation, says chief executive John Wikstrom. It's called "R&D by M&A."
Wikstrom and fellow director Stu Norris founded Magic Memories in 1995, offering photographs to customers of the Queenstown Gondola. It now operates in eight countries, has 750 employees and is a finalist in the upcoming NZ International Business Awards. Revenue is now growing at 50 percent a year, they say.
The company provides guests at tourism attractions and theme parks with a personalised photographic storybook in both physical and digital form that can be shared through social media.
For example, its work with FC Barcelona's tour experience at Camp Nou, Europe's largest stadium, allows fans of the football club to go behind the scenes, visit the player tunnels, the press box and the club museum. Each fan gets a photographic box that incorporates personalised photos of their visit, along with club souvenirs.
For its award-winning work with the San Francisco Dungeon attraction, visitors get a photobook recording their experiences, including the opportunity to kit up in period costume and make up and an interactive Streets of San Francisco board game that helps them re-live their trip.
The acquisition of Centryc follows a two-year working relationship at Village Roadshow's Wet'n'Wild Sydney theme park. MeTag's applications are wider than just theme parks though. It can be used to give attendees at conferences a tag that identifies them and the sessions they plan on attending. Married with the story photobook, it gives corporate organisers a way of recognising valued customers, while building loyalty through social media.
The technology can also be used to link several attractions in one city such as Orlando or London where the same tourists may visit multiple places.
To help fund acquisitions and growth, Magic Memories issued 1.17 million shares in a private placement last year that attracted new investors including US tech veteran Craig Elliott. He now owns about 0.6 percent of the company and joined the board in October.
Elliott is also a director of Xero and San Francisco-based Kiwi Landing Pad, runs Silicon Valley-based software firm Pertino Networks, and gained early recognition as a 23-year-old at Apple, when founder Steve Jobs presented him with a Porsche.
Elliott says Magic Memories has taken an "old school" business taking snaps at theme parks and selling them to visitors as they leave, and modernised it to include video and the ability to instantly upload to social media such as Facebook.
Foreign direct investment is a tried and true strategy for Silicon Valley companies to speed their growth, such as Cisco Systems, which bought 55 companies last year, Elliott said. That's in contrast to New Zealand firms, who tend to be shy of FDI in the face of failed forays such as Warehouse Group's purchase of the Clint's Crazy Bargains and Silly Solly's retail chains in 2000.
Magic Memories' deal with Centryc locks in founder Dave Aicken and principal software developer Mohamad Ali for at least two years while Jackson Digital Imaging founder Kevin Jackson has committed to staying five years.
Wikstrom said he'd advise other kiwi companies considering an offshore acquisition to ensure both parties have a clear idea of why they're merging and where they want to go.
"Change is tricky at the start, horrible in the middle, and beautiful at the end. You have to be prepared for that journey," he said.