Michael Schreck Back in Boston as New Zmags CEO

Here in Boston, we fret about losing tech talent and leadership to the West Coast. So today, let’s celebrate the return of one of our own.

Michael Schreck has joined Boston-based digital publishing firm Zmags as its new CEO, as of earlier this month. Schreck, a prominent investor and entrepreneur, has spent the past eight years in the cultural wasteland of Orange County, CA, as CEO and managing director of Equity Pacific Group, a private equity shop. Before that, he made his name in Boston as a co-founder of a number of startups including m-Qube and Upromise, and a co-founder and general partner at venture firm General Catalyst Partners. He originally came to town in the early 1990s to work at Monitor Group and then attended Harvard Business School; now he’s moving back.

These things come full circle. Ten years ago, Schreck was helping recruit big-name CEOs to run companies. Now he is the big-name CEO.

But why Zmags? My colleague Wade wrote about the company back in 2009, when it was best known for its platform for publishing digital magazines (hence its name). Over the years, Zmags also has been focused on digital marketing—helping brands design and develop interactive catalogs for the Web and mobile devices. The firm started in Denmark in 2006 and moved its headquarters to Boston in 2008. This month, Schreck succeeds former CEO Jens Karstoft, a co-founder who is staying on as vice president of strategic innovation.

Zmags is also rolling out a new digital merchandising and e-commerce service today, called CommercePro. The basic idea is to help brands optimize their catalogs, marketing materials, and shopping analytics across iPad, iPhone, Android devices, Web browsers, and other channels. A key feature: the new software lets consumers make purchases directly from within a Zmags catalog or magazine (on a Facebook fan page, say), and also helps brands keep track of what’s working and what’s not.

“You can imagine it, architect it, test it, and get the data back,” Schreck says.

It sounds like an intriguing opportunity for Schreck (see left), who has some deep perspective on digital and mobile marketing. In the early 2000s, he helped start m-Qube, which grew out of a previous startup called Proteus Mobile. Back then, Schreck says, the question was, “Is texting going to be big in the U.S.?” Major wireless carriers thought no—that consumers would leap-frog to an enhanced messaging system—but m-Qube stuck with its plan, keeping mobile-marketing content simple and short via SMS. But marketing via text messages severely limited what brands and marketers could do on mobile devices.

What’s changed in the interim? In a word, the iPad/iPhone. Schreck calls it “the great leveler—nobody could imagine that device [iPhone] until it appeared in our palm.” Schreck’s epiphany for his new job came to him during a boardroom meeting with a bunch of public-company CEOs. Apparently it’s a faux pas to have your laptop open during such meetings. But “we all had our iPads out,” he says. “It was weird, I’ve never seen anything like it.” There were different age groups represented in the room, from junior to senior execs, he says. “It was everybody. You could have an iPad there, it was this sort of information appliance. You couldn’t have a laptop. I thought, ‘This is amazing.’”

Indeed, according to Jeff Glass of Bain Capital Ventures, who worked with Schreck on m-Qube, the three biggest changes in mobile marketing in the past decade are: consumers using their phones for data; device capabilities allowing for a rich experience; and carriers no longer dictating what can be done, “which allows for more scalable business models but also a lot more competition,” Glass says.

(Interestingly, Schreck is not so bullish about the future of mobile apps as a marketing strategy. “Trust me, I’ve downloaded 200 apps to my phone. I look at five every day, and the others are not part of my daily life,” he says.)

Schreck connected with Zmags through his VC friends, and was impressed by its potential. “Now that you’ve introduced the iPad, expectations have changed. Brands have to rise to meet that moment. Giving me a mobile Web page isn’t going to be good enough,” he says. Now it’s about providing rich media—engaging videos and interactive content—that can drive consumers to buy your brand. “Now, all those things you imagined—offline content, online, the best content—you can put into the Zmags digital experience,” he says.

Zmags is profitable and has more than 100 employees worldwide, with about 40 in Boston. The company has raised a modest amount of venture capital (around $7 million) from investors including Northcap Partners and OpenView Venture Partners. Its last financing round was a couple of years ago, so the obvious question is whether Schreck is coming in to raise a big round.

Schreck declined to comment on any specific fundraising plans, but he did say there has been a lot of interest from VCs. Yet he knows to be very careful taking money. Companies are “raising insane amounts of capital because they feel they need to deal with these trends,” he says.

Of course, Schreck knows all the VCs in town, so he probably won’t have much trouble if that’s the way Zmags goes. “He’s a magnet for talent,” says Jeff Bussgang of Flybridge Capital Partners, who worked with Schreck on Upromise around 2000. He adds that Schreck knows how to start, build, and scale companies—especially consumer- and brand-driven businesses—and is a “shrewd investor.”

It certainly sounds like Zmags is thinking big. “We’ve got to figure out how to be effective,” Schreck says. One of the company’s greatest challenges is to “cut across cultural and linguistic barriers to serve [global] customers,” he says. If the firm were to go the VC route, he adds, “You’ve got to align the vision really tightly with the venture capital principal. They have to believe it as much as you do, because there are going to be moments of doubt.”