Editor's Note: This article is the fourth part in a series about Utah tech companies that may be on their way to unicorn-dom. The third part can be viewed here. The final and fifth segment will run Friday, Nov. 3.
DRAPER — In the fantasy world, the unicorn is a rare creature. In the tech world, it’s even rarer.
In corporate culture, “unicorns” are what techies and investors have started calling private startup companies valued at $1 billion. The term was first coined in 2013 by longtime tech venture capitalist Aileen Lee when she began researching the probability of discovering and investing in one of these companies.
After some research, Lee found that only 0.07 percent of venture-backed companies reach $1 billion (though the percentage is now slightly higher). There are currently only about 267 unicorns in the world, according to TechCrunch. Utah is home to at least four of those, including tech companies Domo, InsideSales, PluralSight and Qualtrics.
Thanks to Utah’s rapidly growing tech economy, however, there are a few other startups that may be on the path to unicorn-dom.
Though Sorenson Media can hardly be considered a startup now, the Draper-based company has grown over the course of nearly two decades, spawning several successful offshoots and transitioning from digital video encoding to what Sorenson Media CEO Marcus Liassides calls “the future of television.”
Liassides expects the company to reach a $1 billion valuation within the next six to 12 months.
So how did that happen?
About the time the internet was catching on, Jim Sorenson was searching for tech with potential. As a volunteer for the Centers of Excellence program in the Governor’s Office of Economic Development, it was Sorenson’s job to invest in technology to help bring it from the world of academia to the commercial sector.
It was in the late 1980s that Sorenson found what he was looking for at Utah State University.
“I came across this very interesting image compression technology,” he said. “At that time, they were working on applications for NASA … but we saw potential for, initially, medical applications, that is, being able to reduce the size of very large medical imaging files so that they could be more easily stored and transmitted.”
Sorenson Media employees at the office. Photo: Sorenson Media
So Sorenson licensed the technology and in 1995, Sorenson Media was born. While the technology was not quite ready for the medical field, it did catch the eye of Apple, which needed video codec to help the budding computer company compete with Microsoft. Soon, the technology became ubiquitous on computers around the world, and Sorenson Media developed a video encoding software called Squeeze, still in use today.
Sorenson Media also spawned several offshoot companies, including Sorenson Communications, which offers a video relay service allowing the deaf and hard-of-hearing to make calls via a sign language interpreter on the internet. The offshoot sold later in 2005 in what was then the largest private equity transaction in Utah.
What makes Sorenson Media different?
“Everything we’re doing now is completely new since 2013, but still goes down to the DNA of digital video, which has been the DNA of all of our successes along the way,” Liassides said. “Our focus now is around TV and bringing the best of digital to the best of television and making content better for consumers, making advertising more focused and targeted.”
Since Liassides joined Sorenson Media four years ago, the company has focused on helping TV catch up to where digital has gone recently.
“A lot of money over the last five years has moved from TV to digital, not because TV isn’t a great format — it’s one of the most powerful formats for reach and brand — but it’s not targeted, and it’s not very measurable,” Liassides said.
The company has developed software that runs on TV sets and collects second-by-second anonymous data on media consumption. That data, joined with other data sets, allow advertisers to personalize ads that viewers see on TV.
CEO Marcus Liassides talks about the company's growth. Photo: Sorenson Media
“Someone could be watching KSL, and KSL would have sold an ad that would have been seen by everyone across the whole market at the same time. What we’re able to do is to replace that 30-second ad with a personalized ad for that individual household based on whatever data points we have about that household,” Liassides said.
Those data points could include everything from the kind of car viewers drive to their credit score, essentially data that’s already available to web advertisers.
Sorenson Media doesn’t have a like-for-like competitor in the industry, according to Liassides, and the technology the company has created took tens of millions of dollars to bring to fruition. The CEO doesn’t see any startup competitor popping up anytime soon, giving the company a lot of free range over the next few years.
What’s next for Sorenson Media?
When Liassides joined in 2013, Sorenson Media had a total of 23 employees, mainly because the company had so recently sold off larger offshoots. Within four days, the company more than doubled that number and now employs a total of 260 people. It’s also seen a 1,500 percent revenue increase in the last four years and was listed on Inc. 5000’s list of fastest-growing companies.
“Our ambitions are high. We have a lot of technology that we’ve been developing that we haven’t even announced or talked about yet, so I think it’s going to be a very, very exciting couple of years for Sorenson Media,” Liassides said. “We’ve had numerous approaches to acquire the company over the years … (but) we believe this is a multi-multi-billion-dollar opportunity.”
Sorenson Media took a round of funding in early 2016 and plans to complete another round by the end of October or the beginning of November. And Liassides believes the company will be valued north of a billion dollars within six to 12 months, though he sees an even longer road in its future.
“If we were to exit for a billion dollars, it wouldn’t be the outcome we believe is possible here. I think this can be a very significant business in Utah and our industry,” he said.