Smarter Remarketer, considered one of the city's most promising marketing technology companies, has rebranded itself and promoted to CEO an executive who joined the company last fall, the company announced this week.
The company is now called SmarterHQ, and 38-year-old Michael Osborne, who joined as president in September, is its new chief executive. He replaces former CEO and Chairman Howard Bates, who now serves as executive chairman.
"The name was very limiting," said Osborne of the former name of the firm, which was known for behavior-based email automation solutions for retailers.
"We're not that anymore," Osborne said. "We're a much bigger platform for behavioral marketing than our name would allow it to seem like."
Founded in 2010, the company took some impressive strides in 2014, raising $7 million in equity capital from a Boston-area investment firm and securing a $7 million credit facility from California-based City National Bank. SmarterHQ's clients include Eddie Bauer, Finish Line and eBags.
Bates, who will be less involved in day-to-day operations, came under scrutiny in 2013 for potential conflict of interest in his roles at the company and with Elevate Ventures. The Indiana Economic Development Corp. hired Elevate Ventures in 2011 to run the Indiana Angel Network Fund, which uses federal money to spur small business development.
Bates was chairman of Elevate in late 2012 when it invested nearly $500,000 in taxpayer funds in Smarter Remarketer. An investigation by The Indianapolis Star brought the investment to light in 2013.
In June of last year, the Office of the Inspector General of the U.S. Treasury Department said that it had determined in an audit that Elevate "intentionally misused" the money by allowing the investment.
The investment "constituted a misuse in funds because [Bates] had controlling interest and voting stock ownership of more than 10 percent in the investee, which created a 'prohibited related party interest,'" the audit report said.
A review ordered by Gov. Mike Pence in 2013 concluded that more oversight was was needed but otherwise determined Elevate was “substantially compliant” with investment and operational requirements.
Bates departed Elevate Ventures in 2013, a representative of the firm said.
Osborne, who began consulting with Smarter Remarketer last spring, said the issues at Elevate were not a factor in the recent executive shuffle, and that he had not seen any impact on the company.
Osborne said that not long after joining the company, he and Bates “saw eye to eye on how a leadership change could allow for some acceleration, could allow for a different set of eyes on the problem and could allow us to go to market even more aggressively than we had been before.”
Bates, reached by phone Wednesday afternoon, said the issues at Elevate had no bearing on the executive shuffle. He said he had been thinking about succession plans at the company since mid-2013, and Osborne made a good impression he started consulting for then-Smarter Remarketer last spring.
"We brought him on board with the hope that he would be able to take that role on," Bates said. "He has a lot of deep industry experience."
Bates is a founder and early investor in SmarterHQ, and he became its first CEO when the position was created in 2011. He previously was president and CEO of defense consulting firm Haverstick Consulting, which he helped grow to $100 million in annual sales. Bates, 61, said it was time for him to take a step back at Smarter HQ.
"I think we're in a very young, new industry," Bates said, "and I think you need people in the organization who reflect that."
Bates said if he could rewind time, he would strongly consider stepping down as chairman of Elevate when the not-for-profit began engaging in investment discussions with Smarter Remarketer a few years ago. Such a move never occurred to him, he said, because he already took actions beyond what the various check and balances called for.
Since its inception, Bates said, Elevate Ventures' board members–because of their potential business connections–were prohibited from being involved in investment decisions. That's left to the Elevate CEO and its investment team.
On the business side Bates said he disclosed his potential conflict of interest, and he recused himself from the Smarter Remarketer board and any discussions with Elevate.
That didn't cut it.
Bates said Smarter Remarketer ultimately gave the state the roughly $500,000 back with a 15 percent return. He said for him, the entire ordeal was a lesson in perception.
"One thing I learned is that optics are just as important as anything," he said.
Prior to joining SmarterHQ, Osborne spent seven years at Bazaarvoice, helping grow the company from less than $1 million to more than $130 million in annual sales. Bazaarvoice went public in 2012. He also served in executive roles at Coremetrics, which was ultimately acquired by IBM.
A Houston resident, Osborne said a decision on whether to move to Indianapolis is still to be determined. SmarterHQ has nearly 60 employees.
This story has been updated.