Special Report -- Silicon Valley -- The Next Generation
ONLINE ORIGINAL: MARK KVAMME
Perhaps few people are better suited by birth to be a Silicon Valley success than Mark Kvamme. A Valley native, with a degree from the University of California at Berkeley, he literally has entrepreneurial blood in his veins: His father, Floyd, and father-in-law, Pierre Lamond, were both founders of Santa Clara-based National Semiconductor. "When I was 16 and people asked me what I wanted to do when I grew up, I said `be an entremeneur' because I didn't know how to pronounce the word," he says with a laugh. He does now: At 36, Kvamme (pronounced kwam'-me) is CEO and president of CKS Group Inc. in Cupertino, which is building a reputation as a force in high-tech marketing and advertising.
"He's one of those people to watch," says Hal Zwick, chief marketing officer for Wunderman Cato Johnson in San Francisco, the direct-marketing arm of Young & Rubicam. "CKS has set a mark for what you can do for communications with technology."
On the surface, CKS's approach doesn't sound much out of the ordinary. The company sells communications services, ranging from corporate identity campaigns to designing logos, naming products, advertising, and Internet marketing. But to that list CKS brings a sharper focus. The Internet makes conventional mass-advertising campaigns that use TV, radio, and print obsolete, Kvamme argues. "A lot of big ad agencies have these fabulous organizations built on an old model: The whole goal is how big an audience can you hit." At CKS, by contrast, "we are going from mass advertising to one-to-one advertising," he says. "Technology allows us to have millions of one-to-one relationships with our customers." This one-on-one, Internet-oriented part of CKS's business now brings in 27% of its annual revenue, and is growing by 80% to 90% a year, Kvamme says.
For now, anyway, this looks like a formula for success. Founded in 1991 and taken public in 1995, CKS already has a market value of about $550 million. Thanks in part to acquisitions, its revenues should reach $130 million this year, according to estimates from various analysts. CKS is "the leading Internet media-services company, with revenue growth rates averaging 50% every year," says Michael Parekh, Internet and online software and services analyst at Goldman, Sachs & Co.
To hear Kvamme tell it, he's just getting started. His acquisitions strategy has been aimed at collecting the pieces necessary to provide customers with one-stop shopping. "We want to have all the capabilities in-house because that allows us to make things happen faster at a better value and thus more efficiently," he says. With such clients in hand as United Airlines, Clinique, and Fujitsu PC Corp., his immodest goal is "to be the CNN of marketing--real-time worldwide communications." In a $30 million campaign for Fujitsu, for instance, CKS launched its LifeBook notebook computer, named it, created its packaging, handled all its advertising, set up a Web site for it, and produced a corporate video, among other things. "Their strengths really lie in integrated communication--the ability to create one voice across many deliverables," says Dan Yetso, manager of marketing communications for Milpitas-based Fujitsu PC. "A lot of companies and agencies in this Valley talk about it, but they can't pull it off," he adds.
According to industry experts, one reason for Kvamme's success so far is his fixation on new technology. "They've been at the forefront of investing in all the new hardware and software," says Wunderman Cato Johnson's Zwick. Example? In 1994, Kvamme bought a state-of-the-art digital broadcasting studio that had belonged to Apple Computer Inc. so that he could produce his own videos in-house. He also rents out the studio to non-CKS clients.
CKS married Kvamme's expertise in technology with what for him was the new field of advertising. "I had never set foot in an agency--didn't even know what an agency was," he laughs. As a student at the University of California at Berkeley, though, Kvamme worked full-time as a computer programmer at Apple Computer while earning a 1985 degree in economics and French literature. While still in college, he was one of the creators of Apple's French subsidiary and later became international product manager for Apple's IIE and IIC. In 1984, he started his own company, International Solutions, a global distributor of hardware and software products, which folded after two clients went bankrupt.
While looking for a new job, Kvamme and his wife-to-be, Patricia, now 37, started a company in 1986 selling fake cellular phones (they managed to sell about 60,000) that provided wannabe Yuppies "status without the static." That same year, Kvamme got a job as director of international marketing with San Jose-based Wyse Technology, a terminal and PC-clone manufacturer. At Wyse, Kvamme met Bill Cleary, his partner-to-be, who had started his own high-tech marketing firm, called Cleary Communications. In 1989, after a stint working as a marketing VP for a local software company, Kvamme bought into Cleary's business, and the CK part of CKS Group was born. (Tom Suitor, formerly a creative director at Apple, joined in 1991).
Expansion is next on Kvamme's agenda. "I think there's an opportunity to create a very important company in this space--a multibillion-dollar company," he says. Last February, CKS purchased award-winning advertising firm McKinney & Silver for $24 million in stock, thus adding key clients including Audi (currently CKS's largest customer), Sunkist, and Royal Caribbean Cruise Lines. In May, Kvamme set his sights on New York-based Internet advertising agency SiteSpecific Inc. That acquisition, for $6.5-million in stock, industry experts say, will give CKS cutting-edge online database and marketing technologies, plus a greater presence on the East Coast. Kvamme also plans to grow overseas: "I want to be 50-50 (domestic/international) as soon as possible," he says. In January, CKS signed an agreement to acquire Prisma Holding, a new-media marketing communications firm in Hamburg, Germany.
Kvamme sees huge changes ahead in the field of communications, and he plans to help pave the way to the future. "I've heard people call this `an interesting experiment,' he says of his company. If we continue to go where we're going and continue to do what we're doing, we'll prove to them and to other folks that it's for real."By Gabrielle Saveri, in San FranciscoReturn to top