Hanging Your
Net Shingle, Part 2: Investors
by Tim Smith, PhD, March 7, 2002
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Corporate web sites are communication tools that can
influence decisions and encourage positive actions. In this second
part of a five part series discussing the content of new venture
web sites, we will explore Neogration's new site, www.neogration.com,
with an eye to how it speaks to the investment community.
Even if the new venture is not going to the venture
market, seek a bank loan, or conduct an IPO, the outside business
community is investing in it when the outside business community
chooses to do business with it. Thus, the questions of investors
reflect the concerns of the larger business community, including
customers, employees, and partners, all of which the new venture
will need to foster positive relationships.
Investors can structure their questions in a couple
of manners. One structure hits the basics of "Can they make
it?", followed by "If they make it, will someone buy it?"
The second structure is more detailed and follows a 4Cs-4Ps orientation:
Company, Competitors, Customers, Cooperants, Product, Price, Placement,
and Promotion.
So, how do these structures play out through the corporate
site of Neogration? Let's start with the 4Cs-4Ps and then back up
to the big-picture investor questions.
Company
Basic company questions include the categorizing factors: Who is
this company? When was it founded? What's the head count? What's
the annual revenue? Although the last two questions are dealt with
as corporate secrets with non-public firms, readers can often infer
them from the management structure or number of clients respectively.
(Furthermore, they may demand answers prior to conducting transactions.)
The next level of questions about the company goes to key management
and core competencies. Since new ventures are about making and selling,
the key leaders are usually those involved in the technology and
project management or in marketing, sales, and partnerships. The
kiss-of-death for a corporate web site is the publication of the
details of only one key leader. In these cases, the site communicates
that the firm is as much about the self-aggrandizement of this one
person as it is about transacting business. Share the glory is one
of the themes championed by Warren Bennis of the University of Southern
California. From the Neogration site, we learn that it was spun
out of ABN AMRO in February of this year but was founded in December,
2001. As expected, the site gives no clues as to how many people
work there, but suspect it is somewhere between 4 and 25. Likewise,
revenue is not mentioned and I suspect that either they do not have
any yet or that they have some revenue from their continuing relationship
with ABN AMRO, but haven't sold anything outside of their founding
firm. Again, they are less than a month old so I can't knock them
for having a short client list at this point. Finally, we get to
the management team of Neogration. Neogration conveniently has a
Management page that tells us that the President, M.J. Qualley,
has a technology and business pedigree that includes XML, financial
trading and banking infrastructure; the CTO, M. Autrata, has a long
list of techy experiences and a PhD, and finally we get to the Product
Manager, J.M.A. Pleyter, who has a sales and market strategy background.
Neogration also has capital from BlueStar Ventures and a 5 member
board of directors.
Customers
Who are the customers the company trying to attract? Does the company
already have customers? These are categorization types of questions,
but they also raises questions of number of potential unit sold,
buying cycles, sales channels, and price tags. For Neogration, we
learn that they are attempting to sell to global enterprises with
significant infrastructure IT investments - sounds like the Global
500 is their prospect list, followed by the Wilshire 5000. Again,
Neogration has ABN AMRO on their client list--not a bad start, but
insufficient if Neogration was 2 years old.
Competitors
I see little reason that any corporate web site should list its
competitors. Why feed customers to competition? If the competition
doesn't find them, that is the firm's gain and the competition's
loss usually. An exception to this rule is when a new technology
is appealing to a standard that was championed by a competitor and
the firm is appealing using it as a point-of-parity in selling its
products. As expected, Neogration does not list their competition.
Cooperants
Who works with the company? Who supplies it with technology? Who
acts as value added resellers? Are there any strategic integration
partners? When building business applications, it might be important
to state that the software works on the Sun versus HP platform,
uses Oracle versus SQL or Informix as a database, and will work
with a MS browser versus Netscape. If it works on any platform,
list them to clarify the question. New technology does get sold
into a vacuum. If the company has a distribution channel of VARs,
these should be listed. If the company has a strategic interface
to a CRM, ERP, SCM or some other widely accepted enterprise application,
this should be listed as well. As to Neogration, I am unable to
tell if they have any strategic partnerships yet, but I can tell
that they appeal to the XML, UML, JAVA, and SOAP standards and that
they intend to set up a VAR channel.
Product
Rajan Kaul of LineSoft asks, "What's on the shelf? What can
I sell?" Simple enough questions but these often get confused
in trying to communicate complex technologies to bureaucratic purchasing
agents and C-level people. Likewise, investors will want to know
if there is a proprietary or patented technology in the product
that protects the firm from future competition. Neogration has labeled
their product WOLF and stated that it is an Enterprise Application
Integration (EAI) tool. Neogration goes further to list some other
aspects of its products and services, but detailed product questions
will be deferred to my upcoming Part 3 - Customers article.
Price
Price is an important product characteristic but should a company
list its prices? Price is important to list when selling commodities,
but new technology is rarely a commodity. When the price is not
stated, what should a reader infer about its pricing? Is it a $20
solution or part of a $10 million product and services proposal?
In selling a high-volume, low-priced goods, it might be more efficient
and effective to list the prices on the web site than wait for customers
to call. However, for complex, high-value, thinly-traded goods,
pricing can vary in a band that reaches above and below the expected
average price by a 15% band. While price is a typical question,
perhaps the best way to handle this for complex goods is off-line.
(It would be nice if we could find a way to communicate the price
range on the web site without firmly fixing a price expectation
in the customer's mind yet this violates a basic rule of negotiation
and the concept of pricing to capture perceived value-add.) For
investors, the price expectation and client list can be used to
infer annual revenues. As expected, Neogration does not list its
price. Their product is complex and would likely be embedded in
a solution proposal or made available to serious investors. So,
the price question is going unanswered, and I will not venture a
guess.
Placement
How does the product get to market? What is the sales channel? Does
the firm service its own products or does it use a VAR channel?
For most start-ups, Geoffrey Moore of The Chasm Group suggest that
much of the sales channel activities will have to be performed by
the firm itself. Once the firm gets going though, VAR channels may
be a more efficient use of resources. Neogration does not have a
published VAR channel yet, but clearly states that they intend to
form one.
Finally, Promotion
Are there white papers? News releases? Downloadable presentations?
Will the company be represented at a trade show near me? Is there
an advertisement or direct mail tie-in? Is there an upcoming event
where I can learn more? Maybe a web seminar? These are some of the
basic promotional tools available to a firm and the corporate web
site is a great means to integrate the various communication tools
utilized by the new venture. Looking at Neogration, we find that
they are mentioned in a number of press articles and hope to soon
have white papers and other material downloadable in the near future.
From this in-depth analysis of the 4Cs-4Ps, an investor
can easily address the fundamental questions of "Can they make
it?", followed by "If they make it, will someone buy it?"
Investors know the team, what the product is supposed to accomplish,
how complicated the product might be, who are the prospects to call
on, and how they will call on the prospective clients. A major purpose
of the corporate web publication is to entice people to gather the
basics then contact the firm for off-line discussions at the discretion
of the firm for further details. Neogration didn't do too badly
with their site in regards to giving the basics and directing people
to contact them for further information especially considering that
they are less than a month old. Having the benefit of being a spin-out
of ABN AMRO surely helped Neogration. The rest of us will have to
put it together on our own.
---
Tim Smith, PhD is a principal at Wiglaf, a Market Research and Sales
and Marketing Strategy consultancy serving tech-driven businesses
operating in business markets. Small and medium sized businesses
select Wiglaf for our quantitative and fact driven approach. www.wiglaf.biz.
----
The May Report, TECH BUSINESS BRIEFS, March 7, 2002
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