Collabrys, Inc:

- Real-world decisions were never so clear as they seemed in the business cases
- Situation: the company had 2 strategic options, and they can’t pursue both, the team members
were leaning to an option, meanwhile he wanted the other one.
- The options were about which option can make the company more profitable through the
internet

Company history:

- Originally named flaca was born in 99, when new businesses were just like desert bloom after
rain (internet bubble)
- The new founded companies were either from the B2C, b2b, e-commerce …, and the man of the
year was Amazon’s ceo
- Founders were approaching venture capitalist to fund their activities, and they got the needed
finances.

The start – e-mail communications to health-conscious customers:

- The initial proposal was sending aspiration-based offers to consumers that wanted a better life
(by losing weight for example), and they moved from the weight perspective after that and
targeted more the health and work/finance
- They started getting big customers (Fortune 100 healthcare company for example)
- They saw the business trips as due diligence before doing business  starting to shape the
business concept
- Their basic strategy was to help customers: to deepen their relations with their own customers.
- Most of people creating marketing programs, have no idea about the impact of their programs
(direct marketing)  if the campaign had a direct effect that attracted them to buy the
products, or buy more
- The personalization that started targeting customers at the beginning of the 2000s was
promoted as hot new arena for business.
- Flaca’s biggest competitor was LifeMinders that offered personalized emails and targeted
advertising
- They were learning about the customers by using the history of clicks…
- The only way to know if consumers were using the ads for generating profits for companies was
by experimentation, which means, creating the content, exposing it to consumers and getting
feedback.
- The team didn’t have an answer to the purpose of their business, and they knew that they were
there to combine marketing and media leverage, but no idea about means to accomplish it

A new CEO:

- After Sherman’s decision to leave in April 2000, who was experienced with not a lot of grey hair.
- He wasn’t motivated to join the company at first, for 2 reasons that he specified (page 4).
- 2 concepts underlaid the potential for the company (ability to build an understanding of
individual customer, and taking benefit to make brands more relevant to the customers).
Building a team:

- First task, recruiting new management team on a limited budget:

o First, Ann Villapando-Ibalio, that was attracted to the possibility of building profiles of
customers that could be used for ongoing relationships with the clients
o They named themselves Collabrys (Collaborative branding research systems) after
knowing that they have a strong identity

A strategy develops: personalized e-magazines with rich content:

- They developed some opt-in experiences (that allow to observe customers behaviours on
websites …), the content will be stored in a database combined with information contributed by
the co-branding partner company  as a result, customized messages could be generated and
sent as rich emails
- They composed a long list of competitors that fell into 6 categories:
o Email marketers
o Interactive media firms, customer relationship management
o Enterprise software, digital asset management
o Specialty content/advertising
o Promotion sites
o Interactive marketing firms (combining campaign management and analytics)
- They found themselves competing with different brands from different sectors
- In the end of July 2000, they had 18 content editors on the 40 person staff
- They wanted to derive information from 3 sources:
o In-house writers
o Commercial publishers
o Material provided by client companies
- Started working on the tracking technology to analyse the content and customers’ behaviours
- They had to hire more people to work with them on the project, and software skills were hard to
find, actual workers had done small progress on the more advanced elements of the
psychographics engine

A new channel – selling solutions through advertising agencies:

- Wayne had the idea of selling Collabrys services through the advertising agencies and public
relations firms who had close working ties to large corporate marketing companies.
- The VC viewed this as a creative approach, and even when he hired a VP of business
development, and the idea proved its efficiency when they started getting customers
- They had to educate the agencies at first, and make the workers knowing more about collabrys
activities because it was hard to sell the products with an unproven success record.
- The team started meeting potential partners trying a couple of large visible sales in Fortune 500
companies since that they needed a name to get more customers and point to success

A big break from a small start-up:

- In December 2000, the cosmetics company signed a 12-month contract for Collabrys’s e-
magazine, delivered in e-mails containing lifestyle content and branded product information.
 - After recognizing that working with agencies wasn’t efficient, Wayne and the VP decided to part
ways.

Testing the value proposition – with retail clients:

- After having 2 paying customers, they decided to go for a market validation study to define
which industries are the best for Collabrys
- They focused on learning how companies in various industries valued elements of Collabrys
solution by asking the questions that’re in page 8
- Healthcare, consumer goods, financial services were the most promising ones for Collabrys
- The Collabrys software was called BrandPrint (inspired from fingerprint), to talk about how the
software helps to have a good print.
- The industry trends confused sales situation for Wayne and Fishburne in 2 ways:
o The question of whom to approach as a buyer (groups inside companies?)
o How to tout the sophisticated technology that they were using
- The question is whether they wanted to accept the CRM solution rather than try to differentiate
from other ones.
- After meeting new VCs, there was the decision of going to e-CRM
- After a bad introduction from the customers, they got a test deal of 3 months which led to
Collabrys’s involvement in the launch of a major new branded product from the company
- After having the segmentation of the customers, the client brand was satisfied with the results
that they hired them for working with several other brand divisions and invested in collabrys.

Finding the funding – and building a competitive capability:

- The time was to raise money, because they didn’t have enough cash, and were suffering with the
non-existence of investors.

Developing brandprinttm technology:

- Engineering results were disappointing, and wayne had little time to deal with them.
- After that the eng manager left the company, Wayne decided to recruit an ex colleague from
Associative Computing company, and asked him to work as a consultant
- They started developing algorithms that helped to extract customers information from data
- The work led to 6 major areas of patent application for the company
- With the end of 2000 2001, there was the dot com crisis, where more than 415 000 positions
were cut

An acquisition and additional funding:

- They started looking to acquire a company (Qbiquitiy) whose technology was used to mobilize an
existing customer base of loyal customers, and one employee was acquired with the software
and technology
- In March 02, 11 million was received from Series B financing
- After receiving funds, they started thinking about how to have more customers and increase
sales

April 2002 Sausalito offsite: charting the collabrys course:

 - 2 things that made the company different from competitors:
o Technology based collection of data
o Ability to translate the data into highly individualized customer profiles
- The company didn’t have any repeatable sales model, he wondered whether the company was
suffering from the effect of the economy in general or had a bad business model

Deploying the tiger team:

- Started testing whether the offers can be taken as a package to sell for customers called
LaunchPad
- They started thinking about helping companies in a critical period, and if they could claim a part
of that budget, then they could make money and have a potential profitability

Deciding the company’s future: advanced analytical software or service:

- After years and years of being a startup, and no specific business model was used, a sales
pipeline that was always not that strong and promotive, they have now to explore alternative
strategies
- The 2 options were:
o To be an analytics software company with elements of artificial intelligence built in,
intrigued analysts and customers alike and differentiated the company from everyone
else in the market (the value proposition will be easy to explain)
o The 2nd option is to use the technology in-house as part of a service provision, by being
an agency providing managed solutions for companies during their product launch and
introduction