Action Engine set to build on buzz of iPhone's debut

From Scott Silk's perspective, wireless executives are running scared after Apple sold 270,000 iPhones during its first 30 hours on the market.

As chief executive of Action Engine, Silk plans to capitalize on that trend instead. The Bellevue company expects to announce today it has secured $20 million in venture capital to ramp up sales and spread the word that it has a software alternative to the sleek-looking iPhone.

"There's a lot of paranoia by mobile executives — a lot of them are nervous that Apple is doing in mobile what they did in music," Silk said.

As a result, Silk said it has created a fair amount of potential customers, "who were caught without a response to the iPhone."

Action Engine has built a software platform that can deliver Web sites and other content on mobile phones while allowing users to take fewer clicks to get what they're looking for.

It also has an advertising platform that enables media companies to sell ads similarly to the way they sell them on the Internet today.

The company's two biggest customers are MSNBC.com and TiVo, but Silk said more will be announced soon.

The problem of usability has existed for years, but Silk said only now is it receiving attention — because of the iPhone.

"We just don't have the visibility," he said. "A big guy like Apple gives us that."

Action Engine has waited for this moment a long time.

The company, founded in 2000, initially developed its software only for high-end mobile phones, which made up a fraction of the market.

Chad Waite, a venture capitalist with Kirkland-based OVP Venture Partners, was an initial investor but dropped out two or three years ago because it seemed too difficult for Action Engine to wait until the market matured.

"We lost confidence that the company was going to be able to develop a product on the amount of money that it would take to make a return on the investment," Waite said. "It was too long of a road."

Intel Capital also dropped out, but the rest of Action Engine's original investors continued to fund the company. Baker Capital, Northwest Venture Associates and The Spangler Group participated in the most recent round.

To date, Action Engine has raised a total of $65 million.

"The company had a brilliant idea but it was early to market," Silk said. "Do you shut a company down because they are doing it right but it's early? No."

Silk joined the company in 2004 and led an initiative to redevelop the software for mass-market phones that use Qualcomm's Brew and Java programming platforms. Later this year, it will also run on Research in Motion's BlackBerrys.

The next challenge the company faced was selling its software to wireless carriers, a notoriously difficult job.

Silk said Action Engine instead opted to sell first to media companies. Once those picked Action Engine, the media company would be the one to pitch the wireless carrier — an easier sell because wireless carriers want more content.

The MSNBC application is supported by advertising, and users can download it themselves. The TiVo application, by contrast, is downloaded but only available through subscription with Verizon Wireless.

"If you close a top-tier content company, the operators are clamoring to get the content," Silk said.

Other companies competing in the same business include Bellevue-based UIEvolution, Nellymoser of Arlington, Mass., and SurfKitchen in the United Kingdom.

Silk said Action Engine is "having a good time right now and growing aggressively." But he acknowledged his company has something that could be financially beneficial to a larger organization.

"We aren't out there saying 'Buy me' or shopping the company," he said. "But those are the times, too, that the suitors come to you."

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com