Managing Business Strategy in a World Full of Crisis

Every entrepreneur faces unforeseen challenges that require improvisation, or at least a Plan B. This is especially true in the fast-paced tech industry. For chief executives Jessica Rovello of video-game maker Arkadium and Harry Kargman of mobile-ad firm Kargo, their tests included the dot-com collapse, 9/11, computing’s seismic shift to mobile in recent years and Russia’s 2014 invasion of Ukraine.

In their conversation during the CornellTech@Bloomberg speaker series on October 6, 2016, Rovello and Kargman addressed the issues of how to manage such crises and successfully lead a company through a major disruption.

“It’s a matter of attitude and will,” said Rovello. “You need ingenuity and grit and hard work to get you there.”

Rovello founded Arkadium with her husband in 2001 in New York City. Many years later, shortly after opening an office in Crimea to take advantage of the region’s rich pool of talented developers, Russia invaded Ukraine and annexed the territory, resulting in sanctions being imposed by the United States and European Union on businesses operating in the region. “We woke up one morning and the tanks were rolling through Crimea,” recalls Rovello. “Our company stayed in one place, but the country around us had changed.”

Keeping the lights on

To keep the Crimea office running, Rovello moved the studio to the Russian mainland. The resulting loss in talent cut her staff nearly in half, and forced Arkadium to change from developing mobile apps to again focus on the company’s core competency: gaming. This shift in strategy in the face of an unforeseen international crisis not only saved Arkadium from potential disaster, but helped it flourish. Today, Arkadium is a leading interactive gaming content provider with products like Microsoft Solitaire Collection, which comes pre-installed in Microsoft Windows 8 and Windows 10 and is played by over 600 million people around the globe.

Although momentous change can certainly wreak havoc, it can also reveal opportunity. “You have to get to the core of what your company can be great at and deliver on that,” urged Rovello. “It is a question of survival.”

Kargman started Kargo in 1999 to build software for the mobile web. Backed by venture capital, the company eventually grew to a staff of 50 that occupied an office in the Tribeca neighborhood of Lower Manhattan. After the 9/11 attacks, Kargman lost his space and his employee headcount dwindled to two. “That dream was over, so we had to pick up the pieces,” he recalled.

Thanks to a $70,000 grant from World Trade Center recovery funds, Kargman was able to rebuild Kargo, this time without VC investment. The company then went through multiple iterations, including stints in software development and selling ringtones.

During that time, Kargman held on to his belief that a seismic shift from traditional television and radio to digital media — especially mobile devices — was right around the corner and would open a potentially lucrative market for advertising. He eventually pivoted Kargo into the mobile ad-tech sector and is now producing creative mobile ads that use innovative ad placement to grab viewers’ attention. Today, the company is thriving, with 250 employees, and revenue for 2016 is expected to exceed $150 million.

Starting over

Kargman asserts that, after so many iterations, he has learned to be cautious and disciplined about investment and staffing, while also trying to avoid the dangers of getting stuck in the status quo.

“If you focus on the existing business, you will always worry if the existing model is going out of business,” he explained. “Given our market position, if we don’t disrupt ourselves, someone will disrupt us, as we drive a large portion of brand ads on mobile devices.” Currently, Kargman has about 50 employees working on new products to help further grow his business.

Making those decisions involves analyzing trends in the marketplace. But in the end, Kargman advised, you have to rely heavily on intuition.

“I had the internal fire to know that mobile phones would be important and that there would be a place for me there,” he says. “You need the fortitude to feel strongly about what is going to be, and move to where the puck is. And that is important for any entrepreneur.”

You can view the entire interview here.