I like to use “the three I’s” when researching tech investment, and you’ll hear me repeat them often: Innovation, Intellectual Property, and Infrastructure.
These three items are the key troves of value for tech companies.
Sometimes, you’ll find one of the “three I’s” in a place you don’t expect.
Take the business of the written word as an example.
If you boil it down until you’ve got just the root elements, what do you have left?
Ideas and glyphs.
These two things make up the infrastructure of the written word, and they serve as the base for everything from news media to advertising to recordkeeping. They even make up the more arcane areas of communication like software coding and database management.
Anywhere there’s an idea being recorded in text, it’s being done with glyphs.
But how can you invest in glyphs? Isn’t that just alphabets and stuff?
Yes, but there’s a whole business side to the creation of text, and it’s evolving rapidly.
One company this week has made an acquisition that reminds us of how that business is changing and where there’s new opportunity in “text infrastructure.”
The Buy
A company dealing with the more traditional side of text — fonts, typefaces, typesetting design, and printing technology — has acquired a start-up that deals with those ubiquitous non-language glyphs known as emojis.
Monotype Imaging Holdings (NASDAQ: TYPE) has been around for more than a hundred years, working in classic typesetting. Since the dawn of the Internet, the company has dealt with the more advanced aspects of digital typefaces.
It was, for example, the first company to tackle the digital versions of traditional Persian and Chinese handwritten scripts. It was also the first company to create software that detected whether systems were using licensed fonts or not.
If you’ve never heard of the company, you’ve no doubt seen its fonts millions of times. Its subsidiaries own what are inarguably the most common, such as Times New Roman, Helvetica, and Franklin Gothic.
This week, the company announced it had acquired Swyft Media for approximately $12 million.
Swyft makes what it calls “stickers,” which are essentially branded emojis. The tiny company saw the popularity of emojis in mobile messaging services and turned them into an item that brands could utilize.
In just a short time, Swyft signed contracts with more than 300 brands, including Sony, Fox, MGM, Hearst Publishing, as well as popular apps such as Kik, Kakao Talk, Renren, and Viber.
These brands can insert themselves into the swelling roster of graphical characters that online messaging clients offer.
Why?
This acquisition comes at the time of a confluence of trends: the popularity of mobile messaging exceeding the popularity of social media in certain demographics; the increased popularity of graphical communications such as image macros, memes, and emojis; and the continued quest for brands to get their messages to these consumers in new, non-display ways.
A pretty great explanation for the transaction was given by Evan Wray, vice president of Swyft Media, in a prepared statement to the media:
People love mobile messaging because it’s content-driven, free and personal. Brands have struggled to capitalize on this channel because direct messages from companies have often felt like an intrusion, rather than something cool or interesting. Swyft Media has created a fun, effective and measurable way for brands to reach consumers with personalized content that both delivers a brand message and makes the consumer happy.
This acquisition is indicative of the ever-changing environment of communication and how advertising changes when language does.
Good Investing,
Tim Conneally
For the last seven years, Tim Conneally has covered the world of mobile and wireless technology, enterprise software, network hardware, and next generation consumer technology. Tim has previously written for long-running software news outlet Betanews and for financial media powerhouse Forbes.
