“Mergers and acquisitions without integration” sounds like trying to have your cake and eat it – to have the excitement of chasing and closing a deal without worrying about the consequences of trying to make it fit in with its new parent.
This formula, though, is the secret raising agent behind Movile’s cake becoming larger to the extent that it has pushed up net revenues by more than 100 times in the past five years, according to Fabricio Bloisi, chief executive at Movile. Bloisi attributed much of this success to his chief financial officer, Arthur O’Keefe.
Bloisi said: “Movile’s growth and innovation strategy has bet highly on corporate venture to accelerate our entrance in new business, new markets and to experiment with technology innovations.
“Arthur is in charge of mergers and acquisitions in Movile and he has been responsible for 15 investment deals in the past 18 months to November. Those deals have contributed substantially to our growth in net revenue of more than 100 times in the past five years.”
Movile is a Brazil-based mobile commerce provider covering food delivery, same-day delivery, ticketing, children’s education and logistics and has been backed by South Africa-based media and commerce company Naspers since 2008.
O’Keefe said he joined Movile three years ago to help start its strategic corporate venture capital (CVC) and mergers and acquisitions programme, which had by November invested $100m. He said: “Business development at Movile is still run as a lean startup, with a dedicated team of three.
“We also work closely with the chief executives and chief financial officers of our invested companies in deals there.
“CVC is about re-invention. I love the idea of the phoenix rising from its own ashes and think of the CVC process in this manner. We take people, learning and capital from previously successful ventures and re-invest them into a new future through partnering with entrepreneurs who have great ideas and want to accelerate the process.
“In this way, the role is filled with optimism and excitement as we create hypercharged companies by taking something already moving fast – a company – and accelerate it beyond what anyone thought was possible by adding great people, additional capital, proven processes and super aggressive strategy, particularly mergers and acquisitions.
“From a growth perspective, IFood, our first CVC investment, has traversed most of the development curve. When we invested in IFood three years ago, it was selling 25,000 orders a month. Today, it is taking more than one million orders a month and still scaling quickly.
“The learnings and data from this process were critical in the decision-making process to invest behind other great businesses such as PlayKids, Apontador, MapLink, Rapiddo and Cinepapaya in the segments of children’s education and entertainment, local services, logistics and ticketing.
“Applying our management model has been so successful that we now have a number of businesses scaling and replicating the same CVC model we use inside themselves. IFood has been involved in more than 10 mergers and acquisitions since we entered. Others have started or are commencing now. We dash to scale up our processes to keep up with the companies as they start to take off.
“When I started at Movile, we were a regional company largely known in mobile content. Today, we are the leader in mobile commerce in Latin America. PlayKids has become a global business in Kids Entertainment – and is still growing – and the next challenge is to facilitate more of our investees in going global.”
He summed the strategy as “Mergers and acquisitions without integration – it is a unique model in which we effectively work with the entrepreneur to create a joint venture between management and Movile to create a stronger business that continues to operate independently and retain its own incentive structure.
“It is a tremendous amount of work on the back end, but the results are supercharged companies that change the world in the segments in which they operate.”
O’Keefe is used to hard work and being able “to live in a constant state of disruption”.
He added: “I joke that as you get comfortable with something, that is the time that it should be pushed down – either into a portfolio company or delegated to a new collaborator looking to take on more responsibility. One has to be comfortable with constantly being uncomfortable.”
His background helps with this level of discomfort. After graduating from the George Washington University with a degree in computer engineering, he began his career in the US Navy, where he served as lieutenant on USS Georgia and “ran an 18,000 ton submarine and operated a small nuclear reactor” for five years.
After leaving the navy in 2002, he undertook his MBA at Harvard Business School. Later, O’Keefe became a trader on Wall Street at what was then Credit Suisse First Boston. He moved to become a chief financial officer and chief operating officer in various investment companies in Brazil, India and the US, including shopping club Coquelux, before his move to Movile and portfolio board roles at Better Brand, Apontador, MapLink and IFood.
Sounding as though he has been enjoying having his cake, O’Keefe summed up: “About four years ago I wanted to test my limits and jumped into technology, which led to CVC at Movile and has been the best choice of my career.”