MVP Market Value Partners

 

 


Success Stories

Below are brief descriptions of a few of the projects MVP has been involved in over the last year. Given the confidential nature of the work that we do for our clients, the names of these organizations have been changed.

MVP works with large Fortune 250 companies to small start-ups. The business challenges vary significantly, as do the project deliverables. Offering a full suite of service options, MVP works closely with clients to assess their business requirements and to tailor our services to the specific client situation.

If you would like to learn more about MVP client projects, please contact Dennis Bruno at (650) 948-2786 or info@mvpventures.com. Client references are available upon request.

Company and Product Positioning for a Mid-Sized Public Software Company

Business Model Development for a Consumer Software Start-Up

Product Positioning Project for a Private IT Integration Outsourcing Firm

Business Plan Development for a Financial Software Start-Up

Valuation Analysis for a Private Software Outsourcing Firm

Product Positioning for a Public Messaging Firm


True Software
Type of Business:
  • Public
  • Mid-Sized
  • Software Company

MVP Services provided:

  • Market Opportunity Analysis
  • Competitive Analysis
  • Market Value Maps
  • Partner Strategy
  • Branding Strategy and Plan

Length of the Engagement:

  • 4.5 months

As one of the first text-search engines, True Software was a well-known provider of robust and highly scalable search engine technology for many of the largest web sites on the Internet. It was typical of many technology companies, as it could be described as:

  • - engineering driven
  • - inwardly focused
  • - thinking primarily of competition and customer value in terms of product features and benefits.

A new CEO had come on board within the last year. He was successful in quickly turning several quarters of losses into a string of increasingly profitable quarters through a sharp focus on improving sales effectiveness. In spite of this success, he was dissatisfied with True Software's share price and recognized that more needed to be done to create the sustainable double-digit growth that would result in a high market multiple for the company's stock. He saw several enterprise portal start-ups that were successfully leveraging True Software's core technology to achieve fast growth and market recognition. Many industry analysts predicted that the portal market could potentially grow as much as fourteen billion dollars in next five years. He reasoned that True Software's experienced engineering team could quickly improve upon the existing portal product offerings.

Under pressure to launch the new portal product, True Software's vice president of marketing engaged MVP to help his small team with the complex issues surrounding the positioning of the new product in the market. The marketing team was totally consumed in working through product issues with engineering and had not yet identified some of the larger implications of a new product offering. The Market Value Process quickly revealed:

  • What market needs would be satisfied with their new portal product and how these needs might vary among different market segments.
  • Which markets to focus their marketing and sales efforts on.
  • That they would now have a much larger number of competitors, including some of the largest software and computer companies in the world.
  • How they were going to sell and support the new product.
  • What new partnerships they might need to deliver complete solutions.

Up until MVP was brought in, the marketing team had focused on matching the product features of the still small enterprise portal competitors, not looking at how companies such as IBM, Oracle, Microsoft and Sun/Netscape might respond to this large new market opportunity. Moreover, the team's assumptions were that the new product would principally be bought by existing True Software customers. They assumed also that these customers would want to buy the new product right away, ignoring the fact that they would be perceived as a new entrant into a new and rapidly evolving market.

As this reality quickly sank in with the team, MVP was able to help the marketing team to develop a broader and more in-depth understanding of the competitive landscape. This work in combination with the development of several value maps helped the team understand that they could not expect to successfully compete in all market segments, but instead had to pick and choose segments where True Software's portal product could deliver the greatest value. It also helped them understand that they could not expect to create superior customer value by solely pitting their engineering team against that of another company. Instead they needed to think about how they would meet customer's non-product needs, such as: brand, company viability, education and training that are often more important than specific product features.

Once the marketing team had completed the Market Value Process, they then saw that building a complete solution was not viable, but that it would be necessary to partner with other companies with complementary technologies. Furthermore, they would need to re-orient a portion of their sales and support organizations to sell and support this product.

Finally, the True Software marketing team recognized that they needed to carefully reposition "the company" in the market. Through its network, MVP was able to bring in one of the top branding experts to meet with True Software's top managers, who now with a much better understanding of their competitive positioning, were able to quickly make the decision that a new branding strategy and larger investment in marketing was necessary.

In conclusion, True Software launched its new portal product offering. The company continues to grow revenues and has succeeded in re-inventing itself and now has significantly improved market prospects. Top of page


Voila Software

Type of Business:

  • Start-Up
  • Private
  • Internet Software for the Consumer Market

MVP Services provided:

  • Competitive Analysis
  • Market Opportunity Analysis
  • Market Value Maps
  • Product Pricing
  • Business Plan

Length of Engagement:

  • 10 weeks

Voila Software was a new start-up with tremendous engineering talent and an initial product that demonstrated extremely well. The VCs liked the product but wanted the company to develop a stronger business model. Voila had no in-house marketing talent to turn to.

Voila had an initial customer in the on-line photo market with deep pockets. They offered to become a first round investor with some stipulations.

The terms of such an investment would include a two-year exclusive within the "on-line photo market". Voila could not offer their technology or product to competitors within the tightly defined market space. Voila could however expand beyond this market without violating the exclusive.

MVP studied the competition and helped management to outline the characteristics of an ideal market. MVP was able to quickly identify and research numerous potentially attractive markets. MVP proceeded with completing various value maps and the financial implications of eventually participating in these markets. MVP then ranked the attractiveness of these markets. MVP identified appropriate market positioning and pricing options in the top market categories. The business plan was rewritten to include the expanded view of the potential markets, new product pricing, and a significantly solidified business plan.

MVP advised Voila to work with this initial customer as a first round investor. As suspected the exclusive could be negotiated down to a more acceptable time frame. The analysis also indicated that the exclusive only impact a small portion of the existing market opportunities. This "partnership" would also strengthen the operating track record of the Voila engineering team and minimize the initial dependency on the VC community.

MVP's work saved Voila significant time and allowed Voila to focus the company on the most promising targeted market opportunities. The more robust business plan served the company well. Top of page


Re-Tech Corporation

Type of Business:

  • Mid-sized
  • Private
  • IT Integration Outsourcing
  • Software

MVP Services provided:

  • Competitive Analysis
  • Market Value Maps
  • Marketing Plan
  • Communications Plan

Length of Engagement:

  • 10 weeks

Re-Tech Corporation was an ambitious private company that specialized in "IT Integration Outsourcing". Over the last five years they had grown from a two young and bright entrepreneurs to a team of 50 integration specialist. While successfully serving an established and growing customer base they had ambitions of evolving into a "products company" by using some of the core technology that they had developed and evolved while serving their many clients.

Re-Tech had spent the previous year funding an internal software product development team and establishing a separate "Products Division".

The Product's Division had developed a sophisticated software quality tool and was about ready to bring their product to market. The Products Division had recruited a sales manager but did not have an in-house marketing team. Re-Tech Corporation initially asked MVP to assist them with a Marketing and Communications Plan. The project team, consisting of the sales manager, MVP representatives, and Re-Tech management quickly came to the conclusion that a more fundamental market strategy assessment was needed.

It was decided that Market Value Maps would be developed for both the Product Division and the Consulting Division. The Product Division had been funded out of profits from the Consulting Division. Cash flow was limited and the principals of the company were unwilling to seek outside funds, so the allocation of the existing resources had to be well thought out.

MVP set about documenting the competitive environment that the product would confront and presented its findings to the project team. A Value Map was completed so that the project team could visualize and fully understand the product's expected market position and potential. The value map quickly revealed that the market for the product had in fact turned into a commodity market with many established players with significantly deeper pockets. Potential customers for the product were more interested in the cost of the product than the sophisticated new features that Re-Tech's product would be offering. In delivering the marketing and communications plans, it was also determined that if Re-Tech wanted to make a real dent in this market they would have to decrease the expected price of the product and spend significant amounts of money on advertising and channel development, thereby realizing a much slimmer margin that originally conceived.

On a more favorable note, the Value Map for the Consulting Division revealed that despite zero investment in marketing or sales that they were in an exceptionally strong market position. In fact they were in such a strong market position they were close to 92% utilization and the company appeared to be leaving a fair amount of money on the table with each engagement.

The company's management team had two clear choices:

1) Raise outside funds to

a) develop other products that would eventually serve more promising markets, and

b) properly support the Consulting Division

2) Cancel the pending product release and use the limited existing funds to fund the Consulting Division while also potentially raise consulting fees.

As the company's young management team did not relish making this challenging and difficult decision, they initially delayed decisive action. The product came to market and as suspected was slow to sell against the entrenched competitors. The company's management then forced to cancel support for the Product's Division and to re-invest their waning funds in the profitable and growing Consulting organization. MVP's market value maps helped the management team understand their options and the consequences of their choices. The Consulting Division is now back on track and is growing and prospering. Top of page


Aspiration, Inc.

Type of Business:

  • Privately held Start Up
  • Financial Software

MVP Services provided:

  • Competitive Analysis
  • Market Value Maps
  • Business Plan

Length of the Engagement:

  • 10 weeks

As the name would indicate, Aspiration was a start-up with a preliminary product concept and high hopes. Aspiration was a very small company with no internal marketing team.

Aspiration's management asked MVP to help them develop a formal Business Plan for their innovative product concept.

MVP worked hard to complete a full competitive analysis and a market sizing analysis. MVP also completed a series of Value Maps. The results of the analysis indicated that Aspiration did have a promising product concept. The market sizing data however, indicated that the market was still small and it would take some time to grow. The market sizing data and the competitive analysis were included in the business plan.

The issue for Aspiration became one of product development execution. It was imperative that the engineering team delivered on all the promised product features that would put Aspiration ahead of the existing competition. As all forward success depended on the product coming to market delivering significant innovation. MVP assisted Aspirations management in finding additional engineering resource to deliver on the product development. Top of page


Avolivo Software

Type of Business:

  • Private Mid-Sized
  • Engineering Software Outsourcing Consultancy

MVP Services provided:

  • Market Value Maps
  • Valuation Analysis

Length of the Engagement:

  • 5 weeks

Avolivo Software was a growing and successful software architecture and design firm. They had many well known and prestigious clients that depended greatly on Avolivo's development talent and re-known project management. The company garnered a very healthy premium for their services.

One of Avolivo's largest client was a very well funded enterprise software company that was growing at a torrid pace. Avolivo had over 30 software engineers working on this particular client's account.

The client had approached Avolivo's management to discuss acquiring the entire engineering team for either cash or stock. The initial prospect of being part of such a successful software firm was conceptually appealing. This would enable Avolivo management to reap some of the financial benefits of all their hard work and potentially allow them to own a substantial amount of stock in a thriving and promising products company. They also greatly admired the management team of the acquiring company.

As Avolivo was consumed with the day-to-day delivery and management of client projects, they asked in MVP to help them analyze and potentially negotiate a deal. MVP immediately launched into a thorough study of numerous companies that had been acquired in the last year to provide a well-grounded comparables analysis. MVP reviewed in detail 25+ similar companies that had been acquired over the last year. MVP also worked with numerous industry analysts for confirmation of trends and assumptions.

Unfortunately the multiples paid for such acquisitions over the last year had dropped precipitously. In Q1 and Q2 the multiple to revenue were in the range of 2.5 - 2.8 x. By the end of Q3, the multiples were down to 1.1x - 1.3x. The closest comparison was a company that was acquired only two months earlier that had received a 1.7x multiple to revenue. Unfortunately during the brief negotiations, the stock of the acquiring company had also significantly declined given the overall Nasdaq decline.

MVP reported on all the contributing factors to the multiples decline and was able to construct potential future scenarios for decision-making. MVP recommended proceeding with the acquisition if the bulk of the deal was in stock and within an acceptable multiple-range. As suspected, the offer to acquire Avolivo was lower than even the Q3 multiples range. Avolivo politely and skillfully declined further acquisition discussions and decided to continue to serve its existing client base, with the expectation that the market would eventually come around. If multiples improve the door is always open for future discussions. If the market for such an acquisition should improve, Avolivo's management team is now armed with all the information they need should they choose to proceed at some future date. Top of page


SparVision

Type of Business:

  • Small Public Company
  • Software Applications for Telecom, Wireless, Universal Messaging Private Mid-Sized

MVP Services provided:

  • Market Research
  • Market Analysis
  • Market Value Maps

Length of the Engagement:

  • 3 weeks

SparVision is a Canadian software company that has developed applications for sending wireless messages from a PC to pagers, PDAs and cellular telephones. As the market for unified messaging (UM) evolved and started to gain some momentum, SparVision saw that there was a rapidly expanding opportunity to create value-add applications on top of these industry-standard platforms (Microsoft, Sun, Lucent, Nortel).

SparVision had internally funded the development of its initial product, but needed additional capital to bring the product to market and to continue the development of follow on products. The company's CEO realized that for investors to understand how his company would successfully compete in the UM market, he needed to precisely define his market strategy. Furthermore, he realized that he needed a carefully thought through market strategy to focus his marketing and sales efforts. Our Canadian Partners, Software Technology Group (STG) were developing a launch plan for one of SparVision's new product. STG turned to MVP to lead the SparVision team through the Market Value Process.

As MVP began working with the SparVision team, the team learned that SparVision was continuing to position its new product against its existing set of small competitors rather than articulating how the new product fit into the much larger and as-yet poorly understood unified-messaging market. Moreover, through the Market Value Process focus on understanding customer needs, the SparVision team was able to understand that while some customers might initially accept a point solution that needed to be integrated into an overall unified-messaging solution, buyers would eventually need a complete out-of-the-box UM solution that could be tailored to their specific business requirements. The work also led to the conclusion that the Telcos and Celcos, which would be the largest channels for UM services, and were likely to brand the services of unified-messaging ASPs, rather than internally developing this capability. Hence, SparVision was able to recognize that one of the key elements of its market strategy would be to cement relationships with leading UM ASPs. This would allow them to focus product development, marketing, and sales on delivering innovative applications that ASPs could easily integrate with their service offerings to create additional revenue and and market differentiation. Top of page

© 2002 Market Value Partners