IAC Stays Competitive Due to a Division You’ve Probably Never Heard of
Why the company’s Applications group is the unsung hero behind the scenes.
PHOTO CREDIT: Getty Images
IAC (NASDAQ: IAC), the leading media and Internet company, is for the most part made up of widely known consumer brands like Vimeo, Dotdash (formerly About.com), The Daily Beast, Investopedia, and Dictionary.com. It also includes ANGI Homeservices Inc., which operates HomeAdvisor and Angie's List, not to mention Match Group's online dating properties (Match, Tinder, OkCupid, and PlentyOfFish).
While that's a lot of consumer-facing brands, every successful company needs a solid workhorse that makes substantial contributions without making headlines, and IAC has that in its Applications group. Sometimes, the amount of press you get isn't correlated with the amount of money you contribute to the bottom line. That's certainly true of IAC Applications; while it's little known outside of its parent company, it is the largest single EBITDA contributor within IAC. In many ways, IAC Applications is the powerful backend engine of IAC.
Excluding the expenses relating to the combination of HomeAdvisor and Angie's List to create ANGI Homeservices, IAC operating income would have been $104.3 million. To put the Applications group's importance in perspective, its operating income was $29.4 million, representing nearly 30% of IAC's total.
According to Tim Allen, the CEO of IAC Applications and a 17-year veteran of the organization, it's a bit like being the backend engineers for a large tech company. The front-end engineers and the product people get all of the recognition, but it's the backend engineers who build the groundwork for their success, and without their skills, the product people would have nothing to sell and the company would be losing money. For example, Amazon Web Services (AWS) has become a core part of Amazon's business, but it's not what gets them in the news - that's generally reserved for things like Amazon Prime. "It's tough to identify the silent rockstars," Allen laughs.
Right now, IAC Applications is focused on several different projects, one of which is working on trying to modernize "legacy" applications and ensuring that desktop software remains PC utility. "We believe in the PC," says Allen. "We believe people are keeping their PCs far longer than anyone would think."
They also have a mobile division, Apalon, which was acquired by IAC in late 2014. Apalon has quickly become the #1 paid global app developer of "essential apps" (non-games) on the iPhone, and have over 40 unique apps across the iOS, Android and Samsung platforms, with over 190 million downloads. Not unlike Cheetah Mobile, their portfolio includes award-winning apps such as Weather Live, My Alarm Clock, Calculator Pro and more. The unique blend of passion and skills that make up Apalon's DNA enable the company to deliver unrivaled products to millions of consumers.
Apalon is a large and fast-growing segment of their division. They look at the legacy part of IAC Applications as independent from Apalon, but with a major commonality: the ethos of "providing the right application at the right time to the right consumer." Apalon has grown vastly since it was first acquired, but Allen has been committed to ensuring that it retains the culture of a startup while also giving it the autonomy and resources it needs in order to maintain its upward trajectory.
Because so much of what IAC Applications does is behind the scenes, a lot of energy and dialogue is directed towards ensuring that employees remain motivated and invested in the organization. For Allen, the best way to do this is simply to give plenty of leeway to his staff, giving them freedom and empowering them to make change. "We are responsible for moving the barriers, not creating the barriers," he says. Giving employees the ability to communicate amongst themselves via tools like Slack, and making sure that management doesn't become a roadblock, and good things will happen.
The hardest thing, Allen says, is balancing the legacy business with a mobile entity that needs love, care and a lot of attention, and is growing very quickly. His first experience like this was with Vimeo when it was part of the Applications group, when he was saying it had such potential - at time there were 9 people. Internally, he kept saying "there is something to this."
Management had a "if you break it, you bought it" perspective, Allen jokes, so they gave him Vimeo to run. Subscriptions started to get traction. Growth was so strong that, after a while he felt he couldn't give it the love it needed, so he went out and recruited a GM to lead it. Allen applies the same principle today, adding a GM role to IAC Applications, which lets him give the love to Apalon that it deserves.
"The thing I like about IAC is, you can have a startup within an established company," says Allen. It's that kind of thinking that has led IAC to continue to be competitive in an increasingly challenged market for media companies.