I have come to the conclusion that you don’t. You use a messaging matrix, and you deliver the right message to the right person at the right time.

David talks about a Web site design exercise that uses buyer personas to customize and personalize this process of delivering the right message to the right person.

Creating a site based on buyer personas gets you away from an egotistical site based on your products and services (which nobody really cares about, after all). What people do care about are themselves and answers to their problems, which is why buyer personas are so critical for marketing success.

Read on; this is a very interesting post and one that especially relevant for technology marketeers tackling the issue of multiple decision makers in a sales cycle.

Paychex had acquired Stromberg and its product Time in a Box in 2003 to accelerate its entry in the time and labor management space. Paychex says Time in a Box will continue to be a part of its portfolio while Stromberg will be paired with Kronos, a leader in workforce management solutions that shares Stromberg’s focus on larger clients.

Paychex targets the small businesses with fewer than 100 employees, which are about 7.9 million in number, and has about 600,000 clients. SaaS is a good business model for small businesses, but Paychex has yet to make an acquisition while Intuit and ADP are marching ahead with SaaS acquisitions. Intuit has emerged as a strong threat to Paychex with its recent acquisition of PayCycle. PayCycle targets small businesses with fewer than 20 employees and has about 80,000 clients. I fully expect PayCycle, using Intuit’s brand and channel in the under-20-employee business segment, to grow rapidly in the next 24 months and pose a serious threat to Paychex. PayCycle is much cheaper than Paychex, almost one- third the cost of Paychex or ADP.  That would pigeonhole Paychex’s sweet spot to the 20- to 100-employee segment.

In December, Paychex reported Q2 revenue of $496.6 million, down 5% y-o-y. Net income was down 10% to $125.8 million or $0.35 per share. The company has a strong financial position with cash and total corporate investments of $605 million and no debt. Taleo is one SaaS talent management company that Paychex might consider. It has a partnership with Taleo, which has market cap of about $629 million and annual revenue of $168 million. Taleo, however, is an enterprise solution, and an acquisition would give Paychex a good offering in the higher end of the market.

In the SMB segment, an attractive acquisition prospect would be Intaact, which provides on-demand financial management applications to over 2,500 small and medium-sized businesses. Intaact is doing well as a replacement for people who are outgrowing Quickbooks. In 2007, Intaact was recognized by Inc. Magazine as the “Best for Replacing Quickbooks”. Acquiring Intaact would be a smart move on the part of Paychex to counter Intuit and embrace SaaS.

Paychex’s Payroll Services revenue decreased 7% to $350.8 million as checks per client declined 3.7% in the quarter, versus 5% in Q110 and 1.2% in Q109. Human Resource Services revenue increased 3% to $132.2 million.

The company reiterated that it expects revenue in 2010 to decline 2% to 5% to a range of $1.98 billion to $2.04 billion and earnings to decline 10% to 12%. The stock is currently trading around $29 with market cap of about $10.5 billion. It hit a 52-week high of $32.88 on December 4.

On the other hand, ADP with nearly $9 billion in revenues and about 570,000 clients, targets the enterprise market. DO2 provides electronic invoicing software and with its acquisition, ADP, will be providing solutions to CFOs and finance executives. It looks as though ADP is trying to roll up various pieces of the CFO/finance organization’s workflow. I recently suggested that ADP should acquire Salary.com, which has about 3,500 enterprise customers.

ADP last week reported its second quarter results. Q2 revenue was $2.2 billion, about the same as last year. Profit increased to $315.8 million or $0.62 per share from $300.5 million or $0.59 per share last year. Analysts expected earnings of $0.57 on revenue of $2.17 billion. In the fiscal year-to-date, ADP bought back shares for nearly $152 million and ended the quarter with $1.8 billion in cash. Q1 coverage is available here.

ADP said “key business metrics in Employer Services – pays per control, client retention, and new business sales – declined year-over-year, but the rate of decline has lessened. Dealer Services posted increased new business sales and continued to improve its share of a consolidating North American marketplace.” According to the latest ADP National Employment Report, U.S. private employment decreased 22,000 from December 2009 to January 2010, the smallest drop since employment began falling in February 2008.

With the economy improving, ADP now expects pays per control to decline 4% during the fiscal year, a slight improvement from its prior view of a drop of 4% to 5%. It expects EPS of $2.39 and total revenue to be flat to slightly down, compared with the previous estimate of down 1% to 2%. The stock is currently trading around $40 with market cap of about $20.5 billion. It hit a 52-week high of $44.50 on December 2.

Shan zhai refers to businesses based on producing fake or pirated versions of established brands. These businesses often start from close to nothing and can evolve at a breakneck speed to serve local markets by leveraging their understanding of the local culture and local market needs. Most of the time, shan zhai refers to cheap imitations of established brands, but in some cases shan zhai firms have built on their initial success to go on to create successful IP and product portfolios. The most successful of these defy conventional wisdom and innovate their way past the competition.

Many small handset vendors chose this path in part to escape the stringent regulations that must be met to enter this segment in China. Mobile phones originating in the shan zhai market are classified as white-label phones. According to various estimates, there are 100 to 200 handset vendors that fall into this category. While most of them will fade away, some might  become low-cost alternatives to established brands.

Linley Gwennap estimates that the shan zhai market accounted for 150 million baseband chips in 2008. MediaTek is known to have provided the bulk of these and has thus helped to create a market segment of its own – one that serves the needs of cost- and value-conscious consumers in emerging markets. Owing to the shan zhai market, sales of mobile phones are now being reported by many analysts and firms by two figures: sales from top vendors and sales from top vendors plus the MediaTek ecosystem.

These small firms lack the resources and scale to justify internal R&D teams to design phone platforms. MediaTek fills this void by providing turnkey solutions. The offering includes chipsets, firmware, application software, and integration support — all in one place. This has enabled MediaTek to charge premium prices.

A mobile phone is the only mode of communication for many in low- and mid-income countries. A population that sometimes finds it hard to make ends meet realizes the need for communication and understands the importance of being connected and informed. Much of this market lacks a formal, accountable credit system and there is thus no arrangement of carriers subsidizing phone purchases and recouping costs over extended service contracts. Because they have to pay the full cost of a phone, the consumers in this segment tend to be highly price-sensitive and in most cases do not care about which brand they have. The white-label phone companies that flourished in part because of MediaTek fit the bill perfectly for these customers.

Together, China and India form the world’s largest handset market, bigger than even Western Europe or North America. White-label phones have seen a good uptake in these two countries, and MediaTek’s relationship with the carriers Vodaphone and Spice in India helps explain why. But expect some setbacks in this area as the security authorities and government officials in India and other countries intensify their crack down on this gray market; such phones lack a traceable IMEI code, making it difficult to trace terrorist and antinational activities.

In spite of the huge uptake of its chips for white-label phones, it was essential for MediaTek to gain some big-name handset vendors for continued growth and market share gain. It was also necessary to expand beyond the 20% worldwide market that it served. MediaTek has found some recent success in reaching out to customers beyond China and the shan zhai market. As I discussed in the first post, MediaTek now boasts Motorola and LG as customers. In addition, Garmin selected MediaTek’s GPS chipsets for some of its outdoor navigation devices. Although all of MediaTek’s design wins at tier-1 handset makers are for low- cost phones, the company hopes to move up the ladder based on its continued technological advances.

To be sure, MediaTek supplies to other handset makers as well. By some estimates, only about 10% to 20% of MediaTek’s chipsets are used in shan zhai phones.

MediaTek’s products are not unique. In fact, many companies offer similar solutions; some even have more integrated combo connectivity solutions. But MediaTek has found more success than others. In the next post, we will see what makes MediaTek click.

The company is based in Washington, DC, and was founded in 2002 by Dimitri Sirota, Lonny McLean, and Dr. Toufic Boubez. Sirota is the vice president of marketing and alliances, and McLean is the vice president of sales. The CEO, Paul Rochester, invested in Layer 7 in 2007 and joined the company in early 2009 to help scale operations. Rochester has helped to lead numerous technology companies through their expansion stages, including both large companies such as Sun Microsystems, where he was a general manager and senior vice president, and venture-funded companies like Conformative Systems and PS’Soft/BDNA, where he was president and CEO.

The idea for Layer 7 began as a way to address the challenge of security and networking for applications connecting to one another across the Internet using open Web service standards. The company name derives from the application layer of the OSI (open system interconnection) stack: layer 7. With the ubiquitous and seamless connection of companies and people on the Internet for commerce and information sharing came many new security concerns. Layer 7’s products are designed to protect these Internet-based connections.

Layer 7 aims to simplify and secure the integration of applications across the Internet so that data and business logic can be shared safely among systems in Web 2.0, SOA, and cloud computing. Its products help enterprises to connect corporate applications across divisions, partners, and cloud data centers.

Layer 7’s SecureSpan line of XML appliances are designed with architectural deployment flexibility in mind. All its XML appliances are configurable as edge devices, data center class clusters, enterprise service bus (ESB) co-processors, or counter-posed B2B gateways. Consequently, the SecureSpan line can satisfy DMZ security requirements (a DMZ is like a “buffer zone” between trusted and untrusted networks), performance and availability data center needs, have their functionality callable as a service endpoint off an ESB, or dynamically establish secure and reliable SOA channels across numerous B2B scenarios.

The current market for the gateway technology that Layer 7 sells is roughly $200 million. However, enterprise adoption of cloud computing is dependent on the ability to safely share data and functionality between corporate premises, private cloud, public cloud and partners. This requirement to safely connect to the cloud is expected to increase the TAM to $1 billion within three to four years. Although there may have been a drop in SOA a couple of years ago, people such as Steve Bell, who writes on “lean IT,” feel that SOA’s modular approach with its focus on reusable elements is part of the drive to cloud and is the future of the enterprise IT market.

Layer 7 has a diverse target audience. By industry, leading customer segments include telco, which is a major adopter of both SOA and cloud; the public sector, for its reliance on the secure exchange of information among agencies; healthcare, a growing segment since securing electronic health records is a major concern; and banking, supply chain and logistics companies, business services, and SaaS providers such as Amazon, Google, and Salesforce.

Private sector customers include global and Fortune 500 companies such as British Telecom, Boeing, and Erie Insurance. The Pentagon, the U.S Department of Homeland Security, the Dutch ministry of health, MIT, and the governments of Ontario and Quebec are among education and public sector clients.

Additionally, system integrators like Accenture and CSC, two important partners that have already implemented significant projects with Layer 7, are expanding their SOA footprint, which Layer 7 believes will drive its expansion and adoption as well. It expects more OEM and acquisition opportunities with Internet service vendors such as Sun, Software AG, Oracle, and others. Layer 7 added several new resellers and distribution partners around the world, including JVL in France, First Point Global in Australia, and SeedTS in Brazil.

Layer 7 competes with IBM’s WebSphere, AmberPoint, Sonoa Systems, and smaller vendors such as Vordel and Xtradyne. The company believes that its competitive advantage lies in that it sells hardware, software, and cloud solutions in a single stack whereas many companies sell just hardware or software solutions.

Layer 7’s annual revenue is currently in the low double-digit millions and has grown by double- and triple-digit percentages for the the past four years. Even in the poor economy of 2009, Layer 7’s revenue increased and sequential growth accelerated. The company closed 2009 with record growth and quarterly results, and achieved profitability.

The company has raised more than $20 million from both VC and angel investors, including an $8.9 million Series B in October 2006 led by BDC Venture Capital and the Working Opportunity Fund and managed by GrowthWorks Capital, and most recently an unattributed round of $11 million in February 2009 from GrowthWorks Capital. Layer 7 says that most of the money from this round is still in the bank.

Layer 7 plans continue to aggressively grow its franchises in North America, the United States federal government sector, and Europe. The company is seeing increasing spontaneous demand from the rest of world, including South Africa, South America and Asia. Layer 7 will address these ROW areas with partners in 2010.

The company believes that it has several options for the future and feels no pressure for an immediate exit strategy. Management predicts that Layer 7 is perhaps two years away from preparing an IPO. However, it isn’t ruling anything out at this time. I have to say, there is no way this company will go public in two years from now, when revenues will most likely still be well below $50 million. But it seems to be executing well, so unless the VCs get antsy, it’s perfectly okay to keep building for another three to four years.

Related Readings
Deal Radar 2008: AmberPoint
Deal Radar 2009: Sonoa Systems
Deal Radar 2009: MuleSource

JC: Thousands. What is really important is that we have created an online experience built on best practices we learned from our in-person tutoring sessions. From our standpoint, and from all the years we have studied students, teaching, and learning, we believe that the interaction between students and teachers is important. It can be supplemented with asynchronous material. Certainly students can benefit from spending time on the computer by themselves in self-paced environments, but that is not a substitute for real teacher-led instruction.

We believe the environment we created really does differentiate us from what others are trying to do online. The other thing that is really important is that we have been able to replicate our diagnostic-prescriptive approach to tutoring. It is the notion of assessing a student’s needs and building a relationship around teaching that student according to these needs versus all the other folks, who are trying to teach online with their quick-hit, in-and-out approach. They are targeting students who are struggling with their homework and need an answer to something. While that may be momentarily helpful, it is not a sustainable way to address a student’s educational needs.

SM: How do you see the offshore tutoring services that use in-person tutors?

JC: We have watched a number of them and have not seen any of them get the type of traction that we have been fortunate enough to experience in our relationship with families. I believe the reason for this is that those businesses start with an emphasis on the technology. They are using technology and trying to figure out where they can apply that technology to a business opportunity. That is very different than our approach, where we recognize an educational need on the part of students and we leverage technology to extend our ability to serve those kids and families.

The reason that is so different is at the core of what we deliver is a customer service. It is a relationship. We get to know a student, their family, and their difficulties. The technology allows us to reach them when they want to be reached. In today’s world people expect to be able to access your service and we are able to use technology to make that happen. However, we start with the teaching and learning perspective.

SM: In general, adoption is pretty low for online tutoring.

JC: Yes. The adoption is low today but growing steadily. I think it is growing unyieldingly. We are seeing greater demand and a likely shift to using online as a way to deliver tutoring. Our point of presence in a thousand communities across America allows us to offer something unique that pure online providers cannot offer.

SM: Even with your presence in a thousand communities, you are still only tutoring thousands of students online versus millions. I imagine that there are millions of students in America who need tutoring.

JC: You’re right. We are at the beginning of this. We are at the beginning of an evolution in the tutoring industry. We have been watching it from the very beginning — we built our platform in 2001, when I don’t think anybody was doing it. It is definitely very early. I am proposing that we are just starting to see its initial growth.

Under No Child Left Behind, we are an approved provider in the supplemental educational services program. We are serving over 50,000 students in that program alone. Those programs are typically where a student has a choice. They can choose a provider at their school or a provider that tutors online. Our growth in that program, which did not exist before the 2004 school year, is evidence of interest in and demand for online tutoring.

For example, in the pump industry, it is common for pump manufacturers to attempt to win customers by advertising a unique design feature.

Unfortunately, these design twists often result in no real performance improvement, no real advantage that the customer cares about.

Realizing that they could not differentiate based on a concrete design principle, Blackmer pump took a different tact: to create a USP based upon application of the product.

Their trade ads showed a Yellow Pages ripped out of an industrial buying guide, full of listings for pump manufacturers, including Blackmer. Their company name was circled in pen.

The headline of the ad read, “There are only certain times you should call Blackmer for a pump. Know when?”

Body copy explained (and I am paraphrasing here), “In many applications, Blackmer performs no better or worse than any pumps, and so we are not a particularly advantageous choice.”

But, the ad went on, for certain applications (viscous fluids, fluids containing abrasives, slurries, and a few other situations) Blackmer was proven to outperform all other pumps, and were the logical brand of choice. Blackmer closed the ad by offering a free technical manual proving the claim.

[Nalini's newest series takes us to Taiwan with an in-depth look at MediaTek's past and future.]

For the six to seven years following its inception in 1997, MediaTek, Inc. focused on providing media processor chips for DVD players and optical storage drives such as DVDs and CD-ROMs. It was not until 2004 that Taiwan’s largest fabless integrated circuit (IC) firm ventured into handset chipsets. Now, MediaTek is a major player in all markets it has entered, including DTV chipsets. Over a series of posts, I will analyze the handset division’s moves and prospects.

Hsin-chu, Taiwan-based MediaTek’s rise to prominence can be summed up in just one metric: in 2004, MediaTek’s chips found their way into 3 million to 5 million phones; in 2009, MediaTek powered 300 million phones. It is a tribute to the successful execution of the handset division that it brings in some 70% of the company’s revenue. The group’s wireless revenues grew at a compound annual average growth rate (CAGR) of 262% between 2004 and 2008. In the same period, MediaTek grew from 2% of China mobile phone IC market to over 50%.

In 2009 — widely acknowledged as a challenging year — MediaTek’s revenue grew by 22% to $3.5 billion and it rose to fourth position in the list of top fabless IC suppliers. Aside from AMD, which made the list this year in second position after divesting its manufacturing facilities, only Qualcomm and Broadcom had more revenue.

MediaTek’s strong multimedia credentials can be traced back to the days when its main businesses were ICs for optical drives and ICs for DVD players and recorders. The handset chip market noticed the emergence of a new kid on the block in early 2006, when MediaTek’s handset business revenues accounted for 38% of total revenue, edging past traditional areas of strength.

MediaTek’s fortunes grew in sync with growth in demand for mobile phones in emerging markets. Although the technological competency was not in doubt, the lack any contracts with tier-1 handset makers was seen as an impediment to continued growth. This question was hanging over MediaTek for quite some time, but it was recently laid to rest after the announcement that MediaTek would be providing handset chips for all Motorola phones retailing for less than $150. However, Motorola is not the same force that it was a few years ago — this deal would amount to just 40 million units a year compared to the 300 million units that MediaTek shipped in 2009. Samsung is said to have been deliberating using MediaTek chips in their designs as well.

MediaTek is one of the winners of the market reshuffle in which saw several major vendors exited the baseband business. In 2007, MediaTek acquired Analog Devices’s cell phone chip business. This brought LG on board as a customer. More important, it gave MediaTek an opportunity to participate in and grow with the TD-SCDMA market in China. (TD-SCDMA is an air interface used in UMTS mobile communications networks in China.) While other companies such as Marvell have struggled to leverage and grow their baseband acquisitions, MediaTek has done a commendable job of integrating and leveraging its acquired assets. Today, MediaTek is just one of four companies in the world that control 5% or more of the handset baseband market.

In addition to baseband, MediaTek provides radio frequency (RF) connectivity solutions such as Bluetooth, WLAN, FM, and GPS solutions for handset manufacturers. MediaTek’s strategy to concentrate on low-cost manufacturers has paid off immensely. In tomorrow’s post, we will explore this aspect of the company’s approach in more detail.

In a recent post on chipmakers, I mentioned that Qualcomm has a design win in the Droid for its baseband processor/radio frequency chip, while its Snapdragon chip is in the design for Nexus One. Qualcomm expects Snapdragon to be eventually used in more than 40 devices made by 15 manufacturers, but the chip won’t be limited to phones and should appear in consumer devices like smartbooks. At the recent CES, HP demonstrated its Snapdragon-enabled, Android-based smartbook device while Lenovo displayed a Skylight smartbook and LePhone based on the Snapdragon.

Qualcomm is the world’s leading cell phone chipmaker, and it is now forraying into Intel’s territory, while at the same time Intel is trying to enter the smartphone market with plans to release a smartphone processor called Moorestown. However, both Intel and Qualcomm must be disappointed that Apple has developed its own chip, A4, for the iPad. Lee Gomes of Forbes points to a kind of “democratization” of semiconductor design and says that one day Apple may well develop a chip for Mac, and PC makers like HP and Dell may also start making their own chips.

Another company that is manufacturing its own chips is Samsung. According to Rethink Wireless, longtime Qualcomm customer Samsung is coming out with Galaxy 2, which will use its own ARM-based processor, Hummingbird. Despite this, Qualcomm is a 3G goldmine since it receives license fees from all 3G and CDMA phones, including the iPhone 3GS.

Qualcomm recently extended its licensing contract for 3G and 4G with Samsung and has a 15-year deal with Nokia. Qualcomm also announced that it is sampling the industry’s first chipsets for dual-carrier High-Speed Packet Access Plus (HSPA+) and multi-mode 3G/Long Term Evolution (LTE). With this move, its licensing business is positioned to flourish for several more years as the industry moves from 3G to 4G with HSPA+ and LTE. In the recent quarter, licensing revenue was $917 million, down 9% y-o-y but up 10% q-o-q.

In its recently reported first quarter results, Qualcomm had revenue of $2.67 billion, up 6% y-o-y and down 1% q-o-q. Net income was up 100% y-o-y and 28% q-o-q to $1.04 billion or $0.62 per share. Excluding charges, EPS was $0.50. Analysts expected Q1 earnings of $0.48 on sales of $2.7 billion. The company ended the quarter with $18.9 billion in cash. Q4 analysis is available here.

For the second quarter, Qualcomm expects revenue of $2.4 billion to $2.6 billion, or a decrease of 2% to an increase of 6%; GAAP EPS of $0.35 to $0.39; and non-GAAP EPS of $0.49 to $0.53. Analysts projected Q2 EPS of $0.57. Qualcomm also decreased its full-year revenue outlook from $10.5 billion to $11.3 billion to $10.4 billion to $11 billion. Its annual revenue in 2009 was $10.39 billion and the current market cap is about $64 billion. The stock is trading around $38 after hitting a 52-week high of $49.80 on January 8.

Broadcom, on the other hand, has managed to get into everything: it is in the iPod Touch, the iPhone 3GS, and now Nexus One and the iPad. In Nexus One, Broadcom’s BCM4329 chip integrates 802.11n, Wi-Fi/Bluetooth and FM technologies. It is also believed to have its Wi-Fi/Bluetooth combo chip and a touchscreen controller designed into the iPad.

Broadcom is looking to expand its broadband networking portfolio with acquisitions. In November 2009, the company said it is buying maker of switch fabric chipsets, Dune Networks, for $178 million, and it recently announced plans to acquire Teknovus for $123 million. Teknovus specializes in Ethernet passive optical network (EPON) chipsets and software and has sales, design, and support centers in Asia and the United States. EPON is a technology that provides broadband services at up to 10 gigabits per second, and according to the Dell’Oro Group, the Asia Pacific PON market is expected to grow from 22.8 million to 94.5 million subscribers by 2014. According to Infonetics Research, the worldwide market for PON systems will reach $4.5 billion in 2013.

Broadcom recently reported strong Q4 and fiscal year 2009 results driven by its broadband communication and enterprise networking segments. Q4 revenue was $1.343 billion, up 19% y-o-y and 7.1% q-o-q. Net income was $59.2 million, or $0.11 per share, compared with loss of $159.2 million, or $0.32 per share, last year and net income of $84.6 million, or $0.16 per share, last quarter. Excluding special items, earnings were $0.49 per share versus the $0.44 expected by analysts on revenue of $1.32 billion. For the full year 2009, revenue was down 3.6% to $4.5 billion and net income was down 69% to $65.3 million. Q3 analysis is available here.

For the first quarter, Broadcom expects revenue to be flat to up 5% sequentially. The stock is currently trading around $29 with market cap of about $14 billion. It hit a 52-week high of $32.49 on January 4.

CEO Chris Golec founded Demandbase in 2006 with the vision to help companies generate more revenue from their online marketing budgets. He had spent several years helping companies build and manage demand generation programs in a way that focused on bottom-line growth and revenue risk mitigation. Golec became a software entrepreneur in the mid-1990s when he left GE to start a company called Supplybase. Like Demandbase, it helped different departments (procurement and engineering) to manage their global supplier base. Prior to becoming a software entrepreneur, Golec spent 10 years with GE and DuPont in global marketing, sales, and engineering roles. Martin Longo, the CTO, has also been involved with Demandbase since its inception and brings the technology know-how to the ideas that are generated.

Golec says that when Demandbase was founded in 2006, the appetite for subscription or on-demand software was growing. People in the industry were aware of a need to be more effective in both sales and marketing, but at the time, the greatest focus was on tools for sales productivity. Marketing technology as a general category had not historically generated acceptable returns for the venture community, so the number of financed start-ups was very low and everyone was referred to as doing “marketing automation.”

Demandbase took the view that online marketing was not working and that the problem was not automation but rather that for every marketing dollar spent online, only 1% to 3% of that dollar generated a response. The converse, of course, is that 97% of the dollars spent are, in a way, wasted. Demandbase aimed to create a product that helped customers (B2B marketers) generate more sales opportunities from their existing budgets through better targeting that brought the right people to a site (versus just clicks); faster response by following up when prospects are engaged online with a specific interest (versus no response); and converting more prospects by making it easier for people complete your intended call-to-action (versus accepting 3% conversion as an average).

The company’s four main products are Demandbase Central, a lead generation platform that supports the other products, and Demandbase Standard, Demandbase Professional, and Demandbase Stream. Standard is a pay-as-you-go service that delivers business contacts, either singly or in large batches, with an average cost per lead of $1.80. Professional is a volume-based subscription service that identifies and helps clients to contact website visitors, and it starts from $200 to $300 a month. The company’s newest product, Demandbase Stream, acts like a ticker across the desktop, streaming business traffic in real time. Demandbase also plans to introduce a new technology later this quarter that it believes will enable it to truly scale to the next level. This product will address a range of Web categories including CRM, social media, analytics, lead generation, advertising, search, and marketing automation.

Demandbase said that it had laid out its entire marketing product solution road map that stretched over a number of years. But, in response to industry and initial customer feedback that customers needed a way to target better and were tired of the cost, trouble, and risk of buying low-quality business contact data, Demandbase created its Standard solution, which customers have referred to as the “iTunes for leads” — a way to buy the exact business information needed, one contact at a time, without having to buy large lists. The next solution, Professional, leveraged the data platform that Demandbase had built in partnership with over 100 data sources, and allowed people to get contact data based on the companies visiting their Web site. No one had ever linked the two — interested companies with the right people to call.

One important question that may come to a client’s mind is, can I track Web site visitors? Are there any legal or moral restrictions? As Demandbase and competitor LEADSExplorer themselves point out, around 97% of visitors to a site don’t leave their contact information even though almost all company sites have this function. Visitors may not want to be identified. There are in fact no laws against the kind of tracking that Demandbase and its peers do. It is illegal to track private persons, and, as a commenter to the MIT Technology Review pointed out, the laws by which Internet service providers (ISPs) must abide would prevent a private person from being tracked by Demandbase and similar companies. This leads to a second question: how many useful leads could a service like Demandbase’s then provide? According to Customer Experience Matrix, Demandbase says that 50% to 60% of a site’s visitors are not traceable to any one company because they come from a generic ISP. Typically, only 10% to 20% of the remaining visitors match up with a client’s target company sizes, industries, or regions, which means that Demandbase’s product would report 5% to 10% of a site’s total visitors, more than the 2% to 4% who identify themselves.

At the time of its inception, Demandbase was self-funded by Golec, with investment by a few angels. The first round of institutional financing took place in January 2007 with Altos Ventures and Adobe Systems. In June 2008, Demandbase raised an $8 million Series B led by Sigma Partners, with participation from Altos Ventures and Adobe Systems. The company may raise more capital later this year but is also considering options to expand faster, sooner.

Competitors include LEADSExplorer, ZoomInfo, LeadLander, and Hubspot, and InsideView. LEADSExplorer, like Demandbase, stresses the comprehensive nature of its solution. ZoomInfo has lead generation and management products for sales and marketing staff, but it also has recruiting as a third area of focus with a product for HR professionals to find candidates. LeadLander’s product appears to be less comprehensive than Demandbase’s in that it allows clients to track who visits their sites but does not have a separate validated contacts solution. Hubspot places greater emphasis on designing a customer’s Web site and the content it contains for search engine optimization and to integrate with social media, and its Web analytics product includes information on competitors. InsideView also stresses how its products use information gathered from both social media and traditional sources. Demandbase has said that its new product will address areas like social media but did not specify how. Golec said that he believes Demandbase’s advantage lies in its focus on helping clients to make more sales using the information the analytics portion of its product provides.

Demandbase has over 1,000 customers across all industries in the B2B space, which translates to over 25,000 users of Demandbase software. Customers include Ziff-Davis, ADP, Oracle, SAP, Marketo, Satori Group, Inc., Crown Peak, and others.

The company targets medium to enterprise-sized B2B companies across all industries. Large financial and technology companies are customers, but so are small businesses including accounting firms, manufacturers, and even a local restaurant that is trying to generate more sales of its event space. Golec points out that every company is trying to do more with its Web site than just generate clicks.

The company began 2009 with 30,000 to 40,000 visitors per month and said that traffic grew tenfold over the year. Demandbase matches and scores more than 100 million Web visits each month, and its business contact database has more than 8 million records, 100% with business email addresses that the company validates.

Demandbase says that it gained traction simply by having a product that B2B businesses needed – leads for the sales pipeline in the form of truly validated contact information. The company grew threefold in 2008, and threefold again in 2009. Management expects the pace to continue this year and to achieve profitability by the year’s end.

As for an exit, Demandbase says that as it operates in a $30 billion to $50 billion market, an IPO or a variety of interesting M&A possibilities are options for the future.

Recommended Readings
Innovation in Sales Prospecting: InsideView CEO Umberto Milletti
Taking on Business Intelligence: Lucidera CEO Ken Rudin
Deal Radar 2008: InsideView’s Clever Maneuvering

JC: It feels like a whiteboard. It is a shared environment where both teacher and student can see the lesson plan. The teacher can make comments on the screen and write on the screen, as can the student. Using either a mouse, stylus, or tablet the student and teacher can physically write on the screen.

If your child is in a math program, then the teacher can take that child through a guided practice and show the child how to compute certain equations. They can then turn it back over to the child to demonstrate that they understand the skill. The student can then show the teacher how they solve the problem by writing with the stylus or mouse.

It is very collaborative. It allows for the teachers to change colors, highlight, and give rewards, and it is almost identical to sitting across a desk from one another. The only thing they cannot do is see each other.

SM: You don’t have video?

JC: No, and I am glad you asked that. We found there was no need for it. It takes up a lot of bandwidth and did not add any significant benefits to the teaching or learning experience. Honestly, we like that the two do not need to see each other. It is a tutoring experience versus a personal relationship.

SM: So it is an audio and Web experience?

JC: Yes. It is a VoIP and shared collaborative Web environment that we have built using proprietary technology.

SM: Does a student get a different tutor each time they come online?

JC: It can be a different tutor. That is part of the secret sauce of the Sylvan program. Even in a center, a student can have a different tutor on any given day. The curriculum is what is designed for a student’s needs. Teachers are trained in our curriculum to pick up the lesson plan at the point of delivery and know exactly what to do with the particular child that they are teaching.

That being said, both in-center and online programs strive to keep a tutor and child together if it is working out. There are often times where a parent identifies a teacher who has really found a way to connect with their child and requests that teacher to be the one who conducts the lessons. Obviously, the teacher has to want to teach at the same time that the student is available. If the child and family are showing up at regular intervals and it works from a scheduling standpoint, then we will accommodate that. The system, however, is not dependent on a regular teacher/student match.

SM: How many subjects are covered by your online tutoring?

JC: The online curriculum is predominantly math and reading. It covers beginning math and reading and goes through early high school. On the math side it goes through early algebra.

Technology Stocks
Microsoft’s Future Remains Cloudy Despite Windows 7
Chipmakers And Design Wins
Amazon, Netflix, and Me
Networking Sector: Alternate Fronts Developing
Cisco To Continue Gobbling

Deal Radar 2010: PressOK Entertainment, Urban Green Energy, Webyog

Entrepreneur Journeys Interviews
Blueprint For Saving $11 Billion In Healthcare Costs: MD On-Line CEO Bill Bartzak
Online Tutoring Still In Its Infancy: Sylvan Learning CEO Jeff Cohen

1M/1M Ambassador Program
Click here for details of the volunteer program. Here are also two links with some background on the project: My New Year’s Resolution, and Need Volunteers To Help With 1M/1M.

Roundtables
Click herefor the February 4 recording.

Bootstrapping and Positioning
This guest series continues with thoughts from Anne Clelland, Marc Dangeard, Jonathan Gosier, Marc MacLeod, Cathy Bogaart, Steve McKee, Tom Asacker, and Susan Gunelius

Finally, this week’s Forbes column was A Road Map For India

For example, if your customers perceive your brand as representing poor customer service, make the necessary internal changes to ensure your customers will get best-in-class customer service going forward, and make sure your customers hear about those changes. In other words, make the necessary internal changes to meet your customers’ needs, which will in turn lead to the brand experience and perception you want your brand to convey.

Well, RIM needs to listen to her common-sense advice!