Marketing Speak

I have just looked at Recombo 2005 and also Ingenia.

What I saw with Recombo was a very unfocused pitch, obviously made by a sales/marketing guy.  I don’t think there was a buzz word he left out.  I started making a list of them because it made me laugh.  Here are a couple of my favorites:  productization, (huh?) interoperability, bet the company.  Also his “focus, focus, focus” speech sounded like it was straight out of a bad how to book.  As far as I could tell, the only “focus” he articulated was his mission “to be a 100 million dollar company.”

There is an existing product but there is no pay off in terms of investment.  No competitive analysis was provided, there is no clear offering that would make IBM or anyone else buy the company. IBM has been marketing and selling software and hardware solutions for over 50 years.  I find it hard to believe that Recombo is providing any value that IBM could not reproduce on their own.  There are economies of scale to think of.  IBM has the staff, the infrastructure, the expertise already in place.  Why would they think of buying a company like Recombo, unless there were people, (customers or staff) or a product that they couldn’t attract on their own.

The CEO  of Ingenia was considerably more articulate, she had done her homework and at least came off sounding intelligent.

Ingenia is selling a service rather than a product, which in itself forces a more articulate discussion.  If they are trying to sell expertise, one would hope that the person doing the selling could sound like an expert.  The one thing that caught my attention was that it seemed like they couldn’t make it at home, so they are trying to find somewhere they can make it. (Vietnam)  Not the greatest business model in my mind.

My money goes with neither company.  I can’t see either one making it.

Carolann

12 comments


1 davidp { 09.08.08 at 6:41 pm }

I can think of a number of reasons for the purchase of a smaller company by a biggie, that you haven’t voiced in your comments. “Why would they think of buying a company like Recombo?”

Why did Yahoo buy Flickr?
Why did Google buy Skype?

Why would a big buy a small? What’s the value proposition that bigs are looking for in acquiring smaller companies?


2 Susan Wilson { 09.08.08 at 7:31 pm }

Thanks for the link Carolann. The premise looks great. Too good to be true?
How can a company offer expensive textbooks for free?

Trying to save money for the school and time for me, I purchased a PDF Physics text for $600 or something like that. It’s not great, but it makes online teaching easier and it will not get lost or abused like more expensive print versions.

Are schools getting away from having a text for each student?

Wasn’t there a Canadian publishing company that tried to sell cheaper paper resources but charge large fees for professional development (PRIME)??


3 Susan Wilson { 09.08.08 at 7:33 pm }

Whoops – my mistake! The links for Flatworld Knowledge were provided by Laura.

Thanks Laura!


4 David Wees { 09.09.08 at 3:08 am }

I agree with Carolann about the ability of these companies to make it, but we are just basing on their pitches.

Yahoo! bought Flickr because their major competitor, Google has Picasu, and Yahoo! is probably trying to draw users away from Google. Both of these companies are trying to draw in users for advertising revenue by providing services and information for people.

Google bought Skype because the company holds the copyright on what is probably the best VOIP program (or at least the most widely used) in the market. It was also a competitor for its own VOIP, Googlechat. So by buying Skype they opened the door for offering more services, and drawing more customers to them, and removed some competition for one of their popular chat programs.

The problem I see with Recombo is that their sales pitch leaves you wondering what the heck they are offering. So why do I want to buy or pay for what they have? It sounds a little bit like they have some web software which allows for the distribution and aggregation of information between LMS and the web platforms of these various countries. Interestingly enough, I know someone who created a similar platform using the Drupal CMS single-handedly.

Ingenia is providing services, but in a strange place. I live in Thailand, and what seems to be true across South East Asia is a reluctance to try new things. Technology exists here, but is often used to supplement the old strategies. Also, of the 80 million people who live in Vietnam, I bet less than 25% of those have reliable access to internet (this includes even owning a fast enough computer to use the internet properly). As far as emerging markets go, it doesn’t seem like the best place for a start up company with limited resources to cut their teeth.


5 Mary Burgess { 09.09.08 at 8:03 am }

I thought the two Recombo pitches were really interesting too – in the academic LMS world where I work, SCORM has not been nearly the huge thing it was supposed to turn into, I’m not sure how similar that is in the business world. As others have noticed, it was neat to see the evolution away from a lot of products to the realization of what they do really well and what their clients actually need.

What I really thought was hugely missing in the Ingenia was any discussion of how they would tackle cultural differences with respect to the way course materials were designed and taught. I know very little about Vietnam but my guess is that there are some pretty different expectations around the way teaching and learning happens.


6 David Vogt { 09.09.08 at 9:01 am }

While agreeing that Recombo could be clearer on their value proposition, please be aware that stating this is often the *hardest* thing for a company to do, especially in a complex technology space. Our natural intuition is the opposite – we want to shout, “just say it simply!”. But compelling simplicity is incredibly hard to achieve. Within my current CrowdTrust venture we’ve been hammering at it for two years – we can feel the incredible potential of our technology right to our marrow, but crafting a viable position for it in the marketplace is by far the hardest thing I do. I’m not asking you to be forgiving of lame positioning, just cognizant of how much work it takes to get it right.

On a second point, about why a huge company like IBM might buy a Recombo when IBM has so much internal technology, please be aware that innovation in large companies is almost extinct. IBM may have more patents than anybody else, but that doesn’t mean they can make money from them. The business world is so competitive that every large company needs returns on every investment within one or two quarters, which means they can’t justify R&D anymore. IBM still does R&D, but most companies (including IBM) accomplish most of their innovation by buying small companies that have taken much bigger risks and somehow survived. Remember that less than 1% of small companies get bought – that means more than 99% fail – a big company can’t afford a 99% failure rate on anything.


7 Katherine Lithgow { 09.09.08 at 1:35 pm }

I’m finding this conversation really interesting. I can’t imagine how difficult it must be for investors to listen to a series of pitches by different companies one after the other- I”m thinking of that Angel conference, and I can’t imagine how difficult it must be to pitch yourself in 12 minutes!
I too thought that Ingenia was very articulate, and seemingly easier to follow. But I thought they were a bit naive in how easy they make it sound to set up business in Viet Nam. I imagine the culture is very different, as Mary noted, which would impact the way business is run, and the way education is delivered.
And although I am in no way an expert, I thought the ask for $100,000 was a bit small ( is it???)

I seemed to get hung up on travel expenses of 40,000, and legal fees of 10,000. It struck me as an underestimation… I would have expected this to cost more.


8 Jarrod Bell { 09.09.08 at 4:31 pm }

I believe those larger companies purchase the smaller ones for the innovations that they cannot produce because of the behemoth nature, as well as competition, and intellectual property rights. It is likely cheaper to purchase a copyright holding company than it would be to license forever.

I felt the ingenia presentation was naive to think it would be easy in Vietnam, although taking a gamble and being first could be a big payoff in the end. I also felt that they sounded like a loose confederation of consultants vs a dedicated group of people with a vision and goals.

JB


9 Carolann Fraenkel { 09.09.08 at 6:08 pm }

I guess I didn’t articulate my aprehension about IBM purchasing a company like Recombo as well as I had hoped. (but it did stimulate a lot of discussion!)

My biggest issue is that from what I can gather the product that Recombo is providing is trivial. I don’t see it as innovative. As someone mentioned that they had a friend who did this in Drupal in an afternoon. So, in my mind the only value in the company is that they have taken a business risk to market and sell a product, which brings us to my comment that the only reason I could see for a company like IBM to buy out Recombo would be if they had resources (either employees or customers) that would be profitable.


10 Carolann Fraenkel { 09.09.08 at 6:24 pm }

In answer to David,

Yahoo bought Flickr because they had an installed customer base of 1.5 million users who were absurdly loyal, because they wanted to explore user generated content and social media, and because it fit with Yahoo’s vision for where they wanted to go. (not to mention keeping up with google)

My issue wasn’t necessarily why would big buy small, that is obvious when there is a viable product.

Carolann


11 Marc Kampschuur { 09.10.08 at 12:10 am }

In terms of committing resources (whether to develop a product or purchase a product) – likely less risk to commit when the technical feasibility of an innovation is proven and also more return as applications and synergies are more apparent. Hence an incentive to “develop” product lines through acquisition.

May also relate to competitive advantage – is a company in the business of design, manufacturing, distribution, or… i.e. Dell – distribution? Apple – design?


12 Melissa Anders { 09.10.08 at 2:21 pm }

One difference that I think should be remembered when discussing the difference between Recombo and Ingenia is that Ingenia was looking for investors while Recombo was looking for clients, or at least that was how I understood the two pitches.

Recombo was a new company with a product to sell and it was the product they wanted people to buy and use. It was their services which they were pitching. Ingenia on the other hand was looking to develop the product for a distant market and was looking for financial backing. They would be pitching to different people because Recombo would want companies who could use their software, whereas Ingenia wanted people with money to invest. Therefore I don’t think the question should be would you invest in one or the other in comparison to each other, but would you invest in one or the other if you were the target catcher.

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