Lawrenceville firm Songwhale benefits from growth in e-commerce

| Tuesday, March 4, 2014, 12:01 a.m.

A growing middle class in Asia, with greater access to credit cards and mobile devices, is sparking growth for a Lawrenceville technology company.

Songwhale LLC began in 2007 developing technology that connects companies with customers via cellphone text messages. Several Pittsburgh businesses, including PNC Bank, UPMC and the Pittsburgh Pirates, became clients.

Since then, Songwhale has expanded into direct response marketing, or infomercials, a more than $350 billion-a-year global industry that increasingly is dependent on websites to complete impulse buys.

Companies around the world use Songwhale's e-commerce platform to sell “as seen on TV” products, from the Sit N Cycle and DuPont's Scratch Repair Stick to a hair-regrowth formula in Thailand called Velform Hair.

“It's just growing like crazy for us,” CEO Ty Morse said during an interview in his office in the former Lawrenceville Ice House building. “Asia is the biggest growth area for us.”

Fifteen workers staff the office; many share Morse's love of playing music. When they're not writing code for Songwhale's text-messaging service, employees can jam on one of several electric guitars and other instruments in the center of the office.

Morse acknowledges he started a technology company “to make money so we could make music.” But that doesn't mean that Morse, 32, who wrote a rock opera based on the story of Frankenstein with Songwhale cofounder Jon Greenlee, isn't serious about business.

To keep the control of Songwhale primarily with its cofounders, the company mostly has avoided investment from venture capital firms.

“The VC stuff didn't jive with our DNA,” he said.

Seed money came from a $100,000 investment from cofounder Jay DeMerit, a professional soccer player and friend of Morse and Greenlee. All three grew up in the Milwaukee area. “We just boot-strapped it and kept it all,” Morse said.

Morse declined to provide sales and growth figures for privately-held Songwhale.

Songwhale did accept a $1.2 million investment in 2010 from the owners of Christopher Morgan Fulfillment Services, a Milwaukee company that specializes in packaging and distributing products for companies that sell through infomercials.

The deal introduced Morse and Songwhale to the direct response marketing industry, which has become the fastest-growing and largest part of the company's business.

Songwhale opened an office in Milwaukee for that operation, where most of its 100 employees work, Morse said.

Christopher Morgan President Eric Nelson said he and business partner Chris Rebholz were attracted to Songwhale because the company “could combine SMS (text) technology, web service and order processing. ... That's something that we saw Songwhale growing into.”

Songwhale's expertise with mobile technology is helpful as more shoppers turn to smartphones to place orders, Nelson said. Songwhale was “instrumental in bringing mobile into the DR (direct response) space,” he said.

Nelson said Asian consumers are gaining discretionary income, credit cards, smartphones and televisions — key ingredients in a thriving infomercial economy.

“Here, we take it for granted. Everyone has TVs, phones, credit cards,” he said. “There it's not as much of a luxury, but the middle class is growing. They're embracing it, and there's purchasing power there.”

The Electronic Retailing Association estimates infomercials on TV, the web and radio generate more than $350 billion in sales a year, spokeswoman Vi Paynich said.

The association doesn't keep numbers on annual growth of the industry, but Paynich said many members report strong growth in Asian markets.

“It's definitely a market that's continuing to grow,” she said.

Though the company's operations are larger in Milwaukee, and business with Asian firms is growing quickly, Morse said Songwhale is committed to staying in Pittsburgh.

Morse lives here with his wife and young child, loves his Lawrenceville office and relies on the tech talent he finds in Western Pennsylvania.

“Pittsburgh has just been awesome for us,” he said.

Alex Nixon is a Trib Total Media staff writer.

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