For Company Called Kargo, Opportunity Rings

This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

The New York Sun

Harry Kargman is a young entrepreneur who combines entertainment product and technology. He is, in short, the hope of the future.


If that sounds grandiose (and more than a little daunting for Mr. Kargman), consider the near-universal conviction that America must supplant its vanishing manufacturing prowess with intellectual product.


We may not be able to produce decent automobiles or TVs, the theory goes, but we’re great at developing the software that opens a jammed car door from far away, or the programming that supplies 1,000 channels.


What does this have to do with Mr. Kargman? His company, Kargo, creates ring tones and delivers content to cell phones. Though his company is small today, with revenues of roughly $10 million, demand for the product is anything but.


People around the world will spend $4 billion this year on ring tones. Why? Because it’s another way to look cool. If you are still summoned by one of the original factory-supplied electro-tunes, you are a serious loser.


Instead, you could be listening to one of Mr. Kargman’s 21,000 alternative offerings, which range from music of almost every sort imaginable – hip-hop, classical, new age – to famous voices doing “schticks.” For example, you could order up R. Lee Ermey shouting out orders drill-sergeant style or, if you can bear it, the Aflac duck.


Creating this astonishing menu has taken the Kargo team several years. As a result, they are way ahead of most of their competitors. The company licenses music from publishers and in some cases hires musicians to create phone appropriate versions of popular tunes.


Every week, the company reviews what’s hot on the music charts and updates their offerings with 50 to 60 new titles. The company also has to ensure that these choices are available through the cell phone operators and that the customer can easily sign up.


The Kargo team is working with Cingular (and the old AT&T), Verizon, T-Mobile, Nextel, and Sprint. All these companies allow subscribers to choose new Kargo tones or other products, with the fees being tacked onto their monthly bill. The company offers buyers a choice of various packages, which allow individuals to change rings frequently or occasionally. Some customers’ ears are so jaded, evidently, that they change their tones several times a day. Talk about needing a life!


There are about 200 million cell phone subscribers in America. The mobile units, viewed as nuisance accessories by some, are described as “remote controls to life” by Mr. Kargman. He sees the cell phone as the ultimate link to the individual. Unlike computers, cell phones go everywhere and are always accessible.


Mr. Kargman’s ambition is simple. He wants to develop more than entertaining ways to distinguish one phone from another. He wants to supply one piece of information, or one service, that everyone will have to have.


To that end, he is continually expanding his menu of offerings. For example, his company can supply movie or restaurant reviews through cell phones. As part of a deal with Premiere Magazine, customers can sign up to view the latest in celebrity photos – just in case they can’t make it through their lunch break without Angelina and Brad.


As Mr. Kargman points out, the processing power of today’s electronic gizmos is constantly expanding, and the networks are becoming faster. This results in ever-greater capacity for phone-delivered product.


All this spells opportunity for Kargo. Much time is spent imagining other information that could be usefully transmitted through mobile phones. Considering that the units have GPS capabilities, video, communications, and billing built in, the possibilities are broad.


Mr. Kargman expects people to rely on their phones increasingly for accessing data banks, paying bills, and locating destinations. For example, befuddled grocery shoppers could get menu suggestions, recipes, and ingredient lists over their phones while at the market. Dieters could get warning directives as they sit down to lunch. The ideas are endless.


Mr. Kargman seems to have been born with entrepreneurial DNA. While an undergraduate at Harvard, he evidently had a very difficult time staying put. In what could be seen as an acute case of attention deficit disorder, the future CEO took any number of semesters off, lured by the dot-com boom.


Between his freshman year and a successfully concluded senior year, he worked for Bell Atlantic researching video-on-demand, in the tech practice at Boston Consulting Group, and in Intel’s business development group.


In 1999, he founded Kargo, which grew rapidly to a staff of 50 who develop software for mobile carriers. In 2001, the bottom fell out. Unhappily, the company had just taken out its first loan, to finance a big contract in Mexico. In the fallout of the bubble’s bursting, Mr. Kargman lost much of the company.


Undaunted, he backed the remains of his venture with what was left of his own money and began to rebuild. Now the company has more than 100,000 subscribers and the bones are in place to add substantial additional revenue producing product.


What’s next? Like Curly in the movie “City Slickers,” Mr. Kargman is looking for the “one thing.” Just one service that all those 200 million cell phone users must have. Given his energy level and enthusiasm, he may well find it.


The New York Sun

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