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New Frontiers in Business Intelligence

Nari Kannan

Who will be the winner in the Marketing Automation Sweepstakes?

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Lauren Carlson writes a very interesting blog and has a recent entry - Marketing Automation Venture Funding: Profitable or Profligate? that raises a number of interesting questions.

Are the Marketing Automation companies like Eloqua raising too much money for the revenues they generate?

Does the fact companies like Eloqua  use the Cloud, make that much of a difference in them commanding that much valuation and Venture Capital?

Is this good money after bad? Especially, when there are so many marketing automation companies around?

Having spent a decade in Silicon Valley in many a venture funded company raising Series B, C and D Rounds, I am somewhat familiar with how the venture world works.

One of the most common misconceptions people have about Venture Capital is that they are there to build companies. Used to be true! Not any more! When VCs invested in National Semiconductor and Intel and waited a decade or more for them to flower and bear fruit, that was the older definition of VC.

Unfortunately, a lot of other funding sources like University Endowments and Pension Funds got into funding Venture Capital and the funds swelled uncontrollably during the dot com boom. And they all expected IPOs and ten times their investments at least in one of twn companies a VC firm invested in. Making 100 to 200 times the money in one company made up for all the other 19 companies that were washouts, netting a return of about 20-30% for the money they put in.

So it's purely a case of returns these days. Everybody has a boss. Companies have customers/clients and VCs as bosses. VCs have their funders as bosses. So they are always looking for that ONE hit out of the ballpark.

And that ONE hit is always the leader of a pack of about 6 companies when one of them breaks out of the pack and becomes the leader and a second company is nipping at its heels!

Intel, AMD. Oracle, Microsoft. Microsoft, Apple. Apple iPhones, Android Phones. So there is room for one Big Winner and one or  two close seconds.

In Marketing Automation, it seems to be the same story. The question is which one of these companies will break out of the pack and make it big. And making it big means growing fast enough to fill up the market potential as much as possible in as short a time as possible.

Marketing automation is uniquely suited for the cloud since that function in a company need not be integrated with any of the other company's IS systems. Accounting, Sales Order Processing, Manufacturing, Warehousing systems all need to be integrated with each other and so the cloud is not a great place to attempt this.

Marketing automation is sufficiently isolated from everything else - may be integration with salesforce.com or your Outlook is about what may be needed at most! That's why the big big bets that cloud will be the best way to succeed there. And since the whole Cloud based Marketing Automation market is so new and virgin, the whole market is wide open to be taken by the first company that runs away from the pack! Growth can be in double digits since the market is saturated. Then growth will be in single digits and not candidates for VC money.

The net net seems to be that one of these companies is going to have a blockbuster exit either through an IPO (which looks very compelling now that LinkedIn IPO is expected to do well as did many IPOs this year!) or through a very attractive acquisition. Either way VCs see big exits and so healthy bets as investments!

The VC space is one of the most rational money making venues and it ebbs and flows with recent exits and how they did!

So Marketing Automation bets may not be as nutty as we think they are!

My hope is that they all win since they all add some significant innovation among them in automating marketing functions, epsecially when you do it using many media, including social ones!

Interesting topic!

In a mad world, only the mad are sane. - Akiro Kurosawa.

Nari Kannan's blog explores how new approaches to business intelligence can help organizations improve the performance of business processes--whether these processes are creative or operational, internally-focused or customer-facing, intra-departmental or across functions.

Nari Kannan

Nari Kannan started and serves as the CEO of appsparq, a Mobile Applications development company based in Louisville, KY with offices in Singapore and India. Nari has over two decades of experience in computer systems development, translating product and service strategy into meaningful technology solutions, and both people and product development. Prior to this, he has served as both Chief Technology Officer and Vice President- Engineering in six successful startups, two of which he co-founded. He has proven experience in building companies, engineering teams, and software solutions from scratch in the United States and India. Prior to this, Nari started Ajira Technologies, Inc., in Pleasanton, CA, where he served as Chief Executive Officer for more than six years. While at Ajira, Nari was instrumental in developing service process management solutions that modeled, monitored, and analyzed business processes, initially targeting the Business Process Outsourcing (BPO), Telecom, and Banking verticals in India, and Finance, Insurance, and Healthcare verticals in the United States. Prior to this, he served as VP-Engineering at Ensenda, an ASP for local delivery services. He also served variously as Chief Technology Officer or VP-Engineering at other Bay-Area venture funded startups such as Kadiri and Ensera. He began his career at Digital Equipment Corporation as a Senior Software Engineer. Nari has a long involvement with Customer Support and other customer facing processes. At Digital Equipment Corporation he was involved with their 1800 person customer support center in Colorado Springs, Colorado. He was tasked with coming up with innovative tools to help customer support people do their jobs better. He holds a U.S patent for a software invention that automatically redirected email requests for customer support to the right group by digesting the contents of the request and guessing at which software or hardware support group is best equipped to handle it. At Ensera, he led a 45 person team in developing an internet based ASP service for handling auto insurance claims, coordinating information flow between end-customers, Insurance companies, Repair shops and Parts suppliers. Ensera was acquired by Mitchell Corporation in San Diego. Nari holds a B.S. degree in Physics from Loyola College, and an M.B.A degree from the University of Madras in Madras, India. He graduated with a M.S. degree in Computer Science from the University of Massachusetts at Amherst in 1985. Contact Information: Nari Kannan. Email: nari@appsparq.com Mobile: 925 353 0197. Website: www.appsparq.com View more .

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