All posts in “Business”

Report: SoftBank is taking control of WeWork at an ~$8B valuation

WeWork, once valued at $47 billion, will be worth as little as $7.5 billion on paper as SoftBank takes control of the struggling co-working business, CNBC reports.

SoftBank, a long-time WeWork investor, plans to invest between $4 billion and $5 billion in exchange for new and existing shares, according to CNBC . The deal, expected to be announced as soon as tomorrow, represents a lifeline for WeWork, which is said to be mere weeks from running out of cash and has been shopping several of its assets as it attempts to lessen its cash burn.

WeWork declined to comment.

To be clear, it is reportedly the Vision Fund’s parent company, SoftBank Group Corp. that is taking control, with SoftBank International chief executive officer Marcelo Claure stepping into to support company management, per reports.

The Japanese telecom giant’s move comes precisely four weeks after co-founder and former chief executive officer Adam Neumann relinquished control of the company and transitioned into a non-executive chairman role and about three weeks after the company decided to delay its highly-anticipated initial public offering. WeWork’s vice chairman Sebastian Gunningham and the company’s president and chief operating officer Artie Minson stepped up to serve as co-CEOs.

In the days and weeks that followed, reports surfaced that WeWork was planning to slash thousands of jobs.

Now expected to go public in 2020 at a valuation, WeWork was also said to be in negotiations with JPMorgan for a last-minute cash infusion. The company, now a cautionary tale, will surely continue to reduce the sky-high costs of its money-losing operation in the upcoming months.

WeWork revealed an unusual IPO prospectus in August after raising more than $8 billion in equity and debt funding. Despite financials that showed losses of nearly $1 billion in the six months ending June 30, the company still managed to accumulate a valuation as high as $47 billion, largely as a result of Neumann’s fundraising abilities.

“As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade,” Neumann said in a statement confirming his resignation last month. “Our global platform now spans 111 cities in 29 countries, serving more than 527,000 members each day. While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive. Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.”

Zoho’s Catalyst to Growth

Now would be a good time to put Zoho on your radar if for some reason it isn’t there already. The Austin-based company just announced Catalyst, a developer environment that helps programmers and others to speed development of apps and microservices with capabilities inherited from Zoho’s apps portfolio.

The easiest way to understand this is to say that Catalyst is based on the company’s internal development tools, affording many users with a way to make apps that are contiguous with what they buy from the vendor.

With this Zoho joins a small club of software houses that have exposed their own developer tools to outside customers using their platforms. Part software tools, part infrastructure play, Catalyst layers on top of an infrastructure service that for the last 13 years has enabled more than 200,000 developers to build and deploy 26 million functions.

Catalyst initially offers OCR (optical character recognition) and object detection, and additional services — including anomaly detection and prediction analysis — will be announced soon.

With more than 45 business apps now available and more on the way, Zoho presents the developer community with a big selection of tools and functions that programmers can pick from to accelerate their application development. So what’s so important here?

Grassroots Strategy

Zoho has a reputation for being a low-cost provider. The 7,000-person company has 14 offices worldwide, as well as international headquarters in Chennai, India. In an industry that is rapidly commoditizing, it perhaps represents a second generation of commoditizers.

The first generation is domiciled largely in the U.S. and Silicon Valley, where competition for talented developers has driven up labor rates. The privately held Zoho has kept its costs low by locating development centers in emerging parts of the world where there are large talent pools that simply need better access to the marketplace. Those locations also have significant demand.

It should be no surprise that Zoho’s customers are counted in the millions in markets where publicly traded American companies have a hard time competing, due to a greater need for standardized prices.

I’ve written about Zoho before, noting its technology and approach to the market. I also have advised it on occasion, FYI. Its strategy has been to focus on smaller to medium-sized companies, but there is nothing about Zoho’s technology or market approach that limits its ambition.

At the moment it’s not the biggest player in the U.S. market, but we’ve seen this kind of approach before. Clay Christenson wrote eloquently about it in his classic book, The Innovator’s Dilemma.

A grassroots strategy is often effective at capturing parts of a market that are less desirable to the incumbent market leaders, according to Christenson. Innovation by challengers is sometimes enough to overcome obstacles and turn a challenger into a leader. The best example of this approach for the last 20 years has been Salesforce, which dethroned Siebel Systems — once the CRM market leader — and muscled out and outlasted others.

Everyone should pay attention here, because a grassroots strategy isn’t easy to pull off. It often fails because incumbents remember where they came from. Also, as markets mature it’s hard to find a little white space to plant a new idea.

A Different Animal

Companies like SAP and Oracle have been in the enterprise space for a long time and are trying to navigate the challenges of cloud computing. So far, their technologies are good, but they face an uphill challenge from the likes of Amazon Web Services, for instance, which caters to smaller users.

Salesforce, on the other hand, never really left the grassroots. They’re spending bigly (to coin a phrase, ha!) every year to provide products to small and emerging companies while also going after the biggest enterprises, often in an attempt to take customers away from the likes of SAP, Oracle and Microsoft.

Salesforce’s approach to managing the labor costs of building software has been to encourage customers to foot the bill or to build up a cadre of knowledgeable users through its Trailhead program. Oracle recently announced a similar venture by providing free development environments to almost anyone.

So, things change, and the innovator’s so-called dilemma won’t be playing out today as it did when the book was first written. Nonetheless, a company like Zoho can capture market share even in the most crowded places.

We’ve entered an era when it’s almost impossible for a new CRM system to emerge because competition is so intense, and the same might be said for development tools. It takes money and other resources to launch a new company, and investors may have concluded that the CRM market isn’t the most promising anymore.

Zoho is a different animal. It’s private, profitable and self-funding. It has the maturity to become one of the handful of vendors in an IT oligopoly because it also has the necessary pieces to fit into a marketplace that’s rapidly commoditizing and coming to resemble a utility. Releasing Catalyst is a significant down payment.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.

Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can’t Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.

Creating Brand Loyalty in the Era of Now

Not so long ago, marketing usually meant gathering some demographic data, placing ads in selected print and broadcast media, stuffing mailboxes with direct mail, plastering the countryside with billboards, and more recently, bombarding the universe with spam.

As technology advances and consumers’ expectations and digital sophistication rise exponentially, marketers no longer can focus on delivering static messages, regardless of how “targeted” or “multichannel” they may be.

Rather, brands now must create highly personalized interactions and experiences that they can refine or redirect in the moment, as the customer or prospect moves continuously and seamlessly across channels and devices — from initial awareness through conversion, and ultimately toward brand loyalty.

To deliver the kind of truly competitive personalized experiences that brand loyalists crave, marketers must confront a threefold challenge: gaining an in-depth understanding of each individual; creating seamless journeys that cover the full span of each customer’s life cycle; and being in the moment with individually relevant interactions at each critical milestone in the customer relationship.

These challenges, like most, come with immense opportunity as well. In a media-saturated and omnichannel world, brands stand to gain a significant edge over competition in growth and customer loyalty if they can recognize and delight consumers with frictionless journeys uniquely their own.

Making It Truly Personal

It’s no longer enough simply to greet a customer by name, or to structure an offer or time communications using demographic data alone. It’s been done to death, and customers don’t think for a moment that the brand knows who they are and what they want.

The good news? The world is awash with a deluge of potentially valuable data — psychographic, transactional, social, behavioral, campaign-generated, emotional and more — that brands can use to gain knowledge and understanding of each individual at a remarkably personal level.

Unfortunately, brands often encounter some issues as they try to harness deeper data for their personalization efforts. For starters, they often find that much of their available data — the first, second and third-party data, as well as the structured and unstructured data they need to develop a detailed, comprehensive single view of customers — lies buried deep across the multiple systems that sit in functional areas across the organization, usually in isolation from each other.

This makes it difficult, if not impossible, for marketers to gain a current and complete view of their audience members, something absolutely essential to truly personalized marketing. Neither integrated nor analyzed, this siloed data lies untapped, preventing the brand from maximizing its potential value and greatly increasing the risk of irrelevant communications and fragmented customer journeys.

In addition to encountering resistance when attempting to break down organizational silos, brands also may struggle with the sheer scope and scale of available data, as well as with the disruptions and inefficiencies caused by new technologies that do not integrate well with legacy systems or cannot coexist within their tech ecosystems.

Unable to respond to critical audience actions, events and external triggers in real time, a brand may squander important opportunities for capturing additional audience insights and deepening relationships.

To overcome such challenges, brands need the right tools or processes for accurate identification and progressive profiling of every individual. Whenever and wherever someone interacts with a brand, that person’s digital presence carries a distinct set of attributes — email ID, device fingerprinting, social handle, and so forth — that the brand should pick up and match against other available data.

With the right automation capabilities in place, the attributes can be used to distinguish first-timers from returning visitors and long-time customers, enabling the brand either to add a new individual profile to its database or to enrich an existing customer’s profile with a new data.

The result is a 360-degree customer view that encompasses all the detailed, multidimensional audience insights required to power individualized engagement.

Mapping the Journey From Prospect to Customer to Brand Loyalists

Today’s digitally savvy customers have become adept at navigating their technology-enabled world of devices, channels and touchpoints. Having mastered the ability to literally be everywhere at once, audiences have become channel-agnostic, turning upside down the traditional concepts of the linear customer journey at every turn.

Roughly 85 percent of online shoppers begin transactions on one device and complete them on another, according to Google. For those agile moving targets, one thing stays constant — their demand for personalized experiences that delight at every turn, every time.

Brands have no choice but to keep up. One-off communications and fragmented journeys won’t cut it. To cement long-term loyalty across the entire customer life cycle, brands must map out and deliver contextual omnichannel experiences that reflect the individual’s current stage in the customer relationship and evolve with each customer without a glitch.

Brands that flood every user channel with a deluge of generalized messages overwhelm audiences, disengaging and annoying them, and diminishing the value of their marketing content. Compare that to the kind of engagement that breaks through the clutter, delivering individually tailored messages and personally relevant interactions through the channels the individuals prefer, and at the precise moment they’re most like to respond.

Done well, this kind of omnichannel connection creates a holistic user journey that reflects in context at each touch point the individual’s interests, habits, purchasing patterns, and more. Even more important to nurturing brand loyalty, those experiences must evolve with the individual, accounting not only for changes in personal preferences and propensities, but also with the stage of that person’s relationship with the brand.

Doing It in Real Time

As if creating an individually meaningful and seamless omnichannel experience isn’t challenging enough, brands must act swiftly. Empowered by the immediacy of their mobile devices and expecting instant gratification, consumers have no patience for delayed responses and slow deliveries.

The imperative to conduct business in real time is real. With advancing technology, the tolerable time for a brand to react or respond to a customer interaction has diminished from hours to minutes to seconds, and now to milliseconds. That said, marketers must remember that real time does not always equate with velocity.

Of course, instant responses — like post-purchase thank you messages or location-specific push notifications — should be part of the real-time mix. Distilled to its essence, real-time marketing means being in the moment with each individual and prepared to respond at every touchpoint.

Being in the moment shouldn’t translate into a ceaseless harangue of manic communications that kickstart every time the individual interacts with the brand. While consumers have come to expect instant exchanges on social media, chatbots or mobile phones, brands must weave all relevant channels into a seamless journey.

This underscores the importance of knowing what types of communications each customer prefers, when and where they’d be most inclined to receive them, and of course securing consent.

Marketers must walk the line carefully between communications and experiences that are individualized and those that customers could find invasive. While most audience members do value tailored interactions with brands, many would be alarmed to see what they might consider private information revealed in marketing communications.

Researching industry best practices and sustaining a productive dialog with its audience can heighten a brand’s sensitivity to the messages it sends.

When it comes to real-time relevance, every brand must live in its own time zone. The exact shape of its real-time marketing needs to align with its objectives and reflect the needs, preferences, inclinations and evolving journeys of diverse customers. Real-time marketing is therefore both complex and increasingly essential for all businesses.

Bringing the Pieces Together

Although marketers often must race to keep up with the breakneck speed of change in customer expectations, channels and technologies, the key to converting a prospect to a customer to a brand loyalist remains unchanged. It all comes down to building strong personal relationships.

Marketing automation offers solutions, technologies and tools for doing that at a scale much easier, faster and more efficiently. Technology alone never will replace the most critical determinant of customer loyalty: trust based on promises kept. That is something only the brand can do.

Redickaa Subrammanian is cofounder and CEO of Resulticks, which provides a real-time conversation marketing cloud solution. She has 25 years of global advertising, marketing and technology experience. Subrammanian holds an MBA from the State University of New York, Buffalo, and in 2016 was named to Axial’s Growth 100, a list of the most innovative, interesting CEOs in the mid-market.

Gojek founder and CEO Nadiem Makarim resigns to join Indonesian cabinet; Soelistyo and Aluwi to be new co-CEOs

Nadiem Makarim, founder and CEO of Gojek, said on Monday he has stepped down from his role at the ride-hailing startup to join Indonesia president Joko Widodo’s cabinet.

The announcement, which has taken many by surprise, comes a day after Widodo was sworn in for a second term. Widodo has previously said that he wants young business executives to join his cabinet.

In a statement, a Gojek spokesperson told TechCrunch that Andre Soelistyo, Gojek Group president, and Kevin Aluwi, Gojek co-founder, are taking over as co-CEOs of the startup.

“We are very proud that our founder will play such a significant role in moving Indonesia onto the global stage. It is unprecedented for a passionate local founder’s vision to be recognized as a model that can be up-scaled to help the development of an entire country,” the spokesperson said.

“We have planned for this possibility and there will be no disruption to our business. We will make an announcement on what this news means for Gojek within the next few days. We respect the process set out by the president and will not make a further comment until there is an official announcement from the palace,” the spokesperson added.

Makarim (pictured above) said he was honored that the president asked him to join his cabinet as a minister. He did not reveal which position he would hold, but an announcement from Widodo is expected later this week. “I am very happy to be here today as it shows we are ready for innovation and to move forward,” he told reporters.

Makarim, 35, founded Gojek in 2010 as a two-wheeler hailing service. The startup has since expanded to include a range of services, including mobile payments, food delivery, online shopping and, most recently, on-demand video streaming.

The startup has amassed more than 2 million driver partners and 400,000 merchants on its platform. Gojek was valued at almost $10 billion in its most recent financing round. The company, which operates in Singapore, Vietnam and Thailand, clocked gross transactions worth $9 billion last year.

Makarim comes from a prominent Indonesian family: His parents are anti-corruption activists, while his grandfather is an independence hero.

Facebook’s After-the-Fact Oversight

I wanted to like Kara Swisher’s piece in The New York Times about Facebook’s attempt to wrestle with its demons, but I can’t. It feels too much like self-delusion.

To cut to the chase, Facebook announced it was forming an oversight board that eventually will have about 40 members with responsibilities for policing its domain and reducing or even eliminating the fake news and propagandistic uses the service has been subjected to at least since the 2016 election cycle.

I am not impressed.

I am not swayed because it appears to me that the company can’t or won’t come to terms with a valid definition of the problem. Facebook has a quality control problem, and building structures that chase after bad actors and their content once they’ve had a chance to pollute social media doesn’t work.

If it was a manufacturer with defective products, we’d all quickly conclude that the way to improve product quality is to build it in and not to attempt to add it after the fact, which is what the oversight board would do.

Before and After

The auto industry of the 1970s provides all the case study information you need.

American car companies tried to improve the quality of their products after they were built, shunting aside cars that needed rework.

The Japanese, in contrast, broke down the assembly process and tried to improve every aspect of it to drive error out and build quality in.

During the 1970s and 1980s, Detroit lost roughly half its market share to foreign competition that just built better cars, and it has not recovered.

Hands Off and Hands Out

Social media is a bit different. Bad actors are building defects into social media so that any policing strategy or oversight board always will be a day late and a dollar short.

Social media, and Facebook in particular, need to face the fact that products once intended for private individuals to communicate with have been adopted by government and industry for other purposes, because they represent a commoditization of other modes of communication. They’re cheap and effective, and nothing attracts government and business like cheap and effective.

Right now you could call yourself Neil Armstrong and launch a page that said the moon landing was faked and you’d be off to the races.

Social media companies want to be able to wash their hands of responsibility for the misinformation, except that they also want to capture revenue from it. This is a two-tier business model masquerading as one: They are platform and apps.

Clean Out the Cesspool

Solving the social media problem requires a model that separates ownership and requires commercial and government users to demonstrate a fundamental understanding of the tools and resources, including their proper use. Penalties for misusing the services would be a big plus.

Lots of people will call this draconian and a violation of imagined rights, but it is the way we’ve regulated other businesses for a long time.

Every plumber, electrician, beautician, doctor, dentist, lawyer and many more professions have to sit for licensing exams before they’re allowed to practice on the public. This sets up a reasonable malpractice regimen too.

Social media use by commercial and government entities should face the same regulation.

Regulating at the user level would do a lot to reduce or even eliminate bad actors and misinformation. It effectively would add quality to an industry that once was a good idea but increasingly is becoming a cesspool with geopolitical ramifications.

So, I am not a fan of an oversight board for Facebook — and with due respect, Kara, you should know better.

Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can’t Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.