Polarized outcomes: Lessons from some recent exits
Last month voice 2.0 player Jajah exited for $ 207M. This is a great outcome given the crowded, low margin nature of the industry and is a stark contrast to the modest exits seen by Jajah’s competitors including Jaxtr and Mobivox (where I was once CFO).
The difference in exit values between Jajah and its competitors demonstrates some clear lessons that you should bear in mind when considering venture investment and growth strategy:
Market leadership is key: In most technology markets, the market leader usually has a dominant market share. And there is usually a big difference between the top 2 – 3 players and everyone else. Investors know this. So you have to show them why you can lead in your market.
Segmentation, clear value proposition, competitive barriers will all need to be nailed to help investors see your market leader vision.
It takes capital (and sometime lots of it): Jajah was well funded ($ 33M). This gave it lots of staying power to ride out the tough times, acquire bucket loads of users and consolidate its market leader role. Jaxtr came close with $21M in funding. The rest were much lower. If there can only be 1 winner, the company with the most funding, stands a better chance of lasting out the fight.
Strategic partners can be key: Its hard to build a huge user base directly. A big chunk of Jajah’s funding came from Duetche Telecom, who likely brought much more than $ to the table. At some point, strategic partners can take you to the next level.
Interesting Kate. Thanks for sharing the book info. I will check it out
Mark, your exit lessons are great advice, especially the importance of establishing market leadership through a clear value proposition (CVP). Whenever I'm talk with business owners or review websites, the first thing I look for is the CVP. Based on what you mentioned, you may be interested in John Warrilow's new book Built To Sell for your clients and readers. His 14-step plan highlights a business startup with growth pains and reflects what you're saying in a "John Grisham meets Jim Collins" style (I didn't coin that, but it does reflect the book. I'd also add Ken Blanchard into the mix too), and offers lots of great advice to reinforce yours along the way.
Mark, your exit lessons are great advice, especially the importance of establishing market leadership through a clear value proposition (CVP). Whenever I'm talk with business owners or review websites, the first thing I look for is the CVP. Based on what you mentioned, you may be interested in John Warrilow's new book Built To Sell for your clients and readers. His 14-step plan highlights a business startup with growth pains and reflects what you're saying in a "John Grisham meets Jim Collins" style (I didn't coin that, but it does reflect the book. I'd also add Ken Blanchard into the mix too), and offers lots of great advice to reinforce yours along the way.
I had not heard about that exit. How much did it go for?
HI Mark. i agree with you 100% regarding the vast contrast between the top and middle tier companies in each sector. what do you think about globe 7, they seemed to have made a decent exit last month as well ?