Another beneficial attribute of the company was a very specific focus and area of expertise. Maintaining that focus has allowed them to develop into pureplay domain experts, and depth of expertise is always valued.
SM: OK, so the focus has been on-demand expense management solutions. That has been the case from 2001 until now, right? SS: That is exactly correct.
SM: What is the plan now? How are you going to manage growth at this point, what is the market landscape? Who are your competitors? SS: In January of 2006 we hit another inflection point in our business. >>>
[This part of the story is written by Paul Cook himself]
Late in 1956, I rented a building in Redwood City, bought some used office furniture and arranged to acquire the world’s first commercial electron beam generator from the General Electric Company. I moved in on New Year’s Day 1957. I hired a handful of people in January, Jim Meikle joined as a cofounder in February, and Dick Muchmore as the other cofounder in March. We were in business under the name Raytherm Corporation, but changed the name to Raychem Corporation after Raytheon complained that the name Raytherm might be confusing to many in the industry.
The idea behind the company was to use high energy ionizing radiation to cross link polymers, imparting the capability to withstand high temperatures better and to impart other beneficial properties. I had done research at the Stanford Research Institute sponsored by the Atomic Energy Commission and learned that commercial products made by exposure to radiation might well be feasible. It was my hope that the new GE unit would enable a safe and economic process for irradiating many products. The first product we attempted to develop was a specially compounded electrical insulation extruded on copper conductors and exposed to the electron radiation. >>>
Dealing with and properly addressing change is a substantial aspect of the success or failure of companies. Shifting to the on-demand model without any other examples to follow was visionary, but if implemented incorrectly could have been devastating as well.
SM: How did you change the channel at this point? You shifted to an on-demand model, you would have then had to make changes to the channel as well. SS: The changes were pervasive, and they were not related just to the channel.
In my earlier post on Motorola, I had mentioned their need for a better product mix and a better position in the SmartPhone / Convergence Device segment. There were not many changes in Motorola’s product mix in the second quarter with just upgradings to the RAZR model. This over-dependence on its RAZR model has proved detrimental to the company and it has slipped to the third position in the mobile phone market behind Nokia and Samsung.
Motorola, Inc. (NYSE: MOT) has three business segments: Mobile Devices, Home and Networks Mobility, and Enterprise Mobility Solutions. For the second quarter of 2007, the company reported net sales of $8.7 billion, a 19% decline from $10.8 billion in the year ago period. Net sales were down 40% in the Mobile Devices segment, up 9% in the Home and Networks Mobility segment, and up 42% in the Enterprise Mobility Solutions segment primarily due to the acquisition of Symbol for $3.5 billion in January this year (smart acquisition). >>>
Paul Cook is a legend. I had the great honor to spend some time with Paul over the last few weeks, understanding the story of how he built Raychem from scratch.
Today, Silicon Valley has embarked on yet another evolution in its history, and has been consistently committing huge chunks of capital on a genre of technology companies and entrepreneurs that have popularly come to be known as Cleantech, and encompasses clean energy, water, and other such segments.
My core thesis is that Raychem was a company that succeeded in building an Industrial powerhouse based on innovative technology, and can be a great example for these Cleantech companies and their investors to learn from. >>>
The stock price of Concur dropped before the dot com bust, but while the rest of the industry was faltering, Concur began to climb.
SM: You changed course in 2001. Was that due to the market? SS: The change actually happened in 2000, and it was due to our business strategy transition. The market did not like the idea of us changing our business model. We hit a low point of 28 cents a share after the announcement, and the stock before was $30. >>>
M&A and VC activity
Match.com, a business unit of IAC, acquired edodo in China and Netclub in France in February this year. Match operates 35 country sites in 15 languages. The deal will add 4 million subscribers to Match.com’s already existing 15 million.
In my previous posts, I have talked extensively about Palm’s future in the face of competition from iPhone. In a nutshell, I’ve maintained that Palm either needs to come up with something impressive in the enterprise space, or go for a lower-priced emerging market killer app strategy.