Due Diligence on Pacel, Part 2 of 3: Visual Writer marketing strategy
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Hopefully, part 1 of this report clearly established Visual Writer as a superstar tool. I used to teach software classes, I have experience researching and evaluating software, my current job is to develop software. I am here to tell you that Visual Writer is slick, clean, compact, well thought out and one dynamite piece of code. It's also expensive (around $1500 per copy) but you will pay gladly if you have committed to making your office become a paperless workflow environment. Who would want that? Here we have arrived at the first point I wish to make about the marketing strategy: Visual Writer is a tool primarily marketed to regulations-related business sectors. For example, sectors such as: Energy, Medical, Space, FAA, Customs and so on. Calkins mentioned that an upcoming sector (which is apparently becoming more and more regulations-specific) is the Pharmaceutical industry.
Unfortunately for me, I have never worked in any of these sectors, so I really don't know what it's like to go in to work and have all kinds of regulations to deal with. I have, however, had some experience with government agencies in general. Their reputation of being slow moving behemoths with incredibly deep pockets and little interest in taking an “adventure” is well-earned. When money is spent (especially large amounts of money) on a software tool, there are many eyes that see the paperwork and sign off on it. Do you want to be the one who puts in the paperwork for this crazy new thing called the “Visual Writer”? Oh, and if it doesn't work out, you will be remembered for it. Happy career-planning!
In spite of this incredibly daunting task that a Pacel marketer will face, there is one very, very special characteristic to the government procurement process that we can all take heart in: If the other guy is doing it, we better do it! You may think I'm joking, but if word gets around that such-and-such agency is having success with a software tool, and it's the kind of success that makes them more automated and “modern” then you better get on-board too. Otherwise your reputation will be that of a foot-dragger or dinosaur-coddler. My Father (a programmer for 20 years before retiring) recently told me the story of what happened to the spreadsheet VisiCalc when it first came out. It was wildly successful as people looked at it and said, “Hey, we do that stuff all the time!” and so they wanted it. In fact, since VisiCalc was only available on the Mac at first, companies were buying Macintoshes just to get to VisiCalc.
What I'm getting at is that Visual Writer, with no direct competition (just like VisiCalc), is like a bomb. If the bomb goes off (hopefully for the same reasons VisiCalc became a hit: “Hey, we do that stuff all the time”) PLRP will absolutely roar past $1/share.
Regulatory agencies may choose to solve their automation needs by hiring a programmer and a database expert and, in short, have them build a custom system. I'm sure this kind of decision will be a real concern for Pacel as agencies will probably surmise, “Yes, I'm paying more for my Oracle/PowerBuilder solution, however, those are proven and known tools, whereas Visual Writer is not.”
Pacel will only be able to reply: “If you trust us, if you take a chance, we will deliver.” After seeing the product, I believe that Visual Writer will indeed deliver, but again we are left with the question, will the Pacel salesperson be able to overcome those initial concerns? I believe the answer is yes. In fact, one of the reasons I bought shares in Pacel is because I was so impressed that Calkins could sell 3,000-or-so copies of Visual Writer without any public relations campaign! In our meeting, I asked Mr. Calkins if the 3,000 copies represented true sales, or if some of the 3,000 were “comps” or complimentary sales. He answered that of the 3,000 none were comps. Hey, this guy knows how to sell! Whether or not he and his staff can keep the sales going so that this bomb-analogy kicks in, only time will tell. Obviously, I'm a believer that the odds are pretty good in that regard.
Continuing on: What specifically is Pacel doing to market the product? Let's look at that now.
As you may know, Pacel was invited to speak at a symposium with Lotus and Adobe (10/21/98 press release). I asked Mr. Calkins how that symposium went. He said that it went very well. People came up to him afterwards and thanked him for the presentation, others congratulated him. Emails have come to him as well. Overall, a big hit. There were no specifics for me on contracts that resulted from this symposium, but I think it was too soon for those kind of results anyway.
Also, we all know about the John deBeers connection, right? (If not, see the 9/22/98 press release). Obviously, there's an example of what Calkins is doing to market and sell Visual Writer. According to that news release, deBeers should sell 35,000 copies of Visual Writer within a year. Remember, Calkins sold 3,000 to 4,000 without a distribution deal over a four year period, so you can see the exponential growth here (well, potential exponential growth).
Anyway, deBeers & and Associates has the job to market Visual Writer in Europe and South Africa. I asked Mr. Calkins when he would hear news of how that partnering worked out (i.e., how many Visual Writer copies did deBeers actually sell?). Calkins did not have a specific answer for me on that, but he did share that he was supposed to have heard news two-weeks ago on the potential contract with 41 hospitals in South Africa. Calkins was going to follow up with deBeers on that some time after our meeting. It appears that the finance committee for the hospitals had a delay in their decision-making process. Pacel didn't do anything wrong--that contract is still very much a possibility.
As we all know, radio spots are also going to be a marketing tool, but I regret that I didn't ask any questions to Mr. Calkins about the radio marketing angle. Today, however, I sent him an email asking for specifics on the radio spot for this Sunday in the Washington D.C. area. So, no specifics to share for the time being.
Here's something new though: Mr. Calkins told me that he has retained the services of a consultant named Jeffrey Abrahms to serve as a business consultant (and I think marketing consultant) to Pacel. The more detail I heard about Mr. Abrahms, the more I liked. Mr. Abrahms (spelling may be incorrect) was the founder of a company that my notes tell me was called “Softools” or perhaps “Software Tools”. I'm sorry I don't have the specific name as I write, but what's important is that the company grew under Mr. Abrahms' care to a $150-million corporation. Very impressive! A good man for Calkins to keep company with, yes?
Sometimes due diligence involves blind luck and that may be a good explanation for what happened when an unexpected visitor from Sentel corporation stopped by to speak with Mr. Calkins. As they talked out in the hall, I had an opportunity to listen to Mr. Calkins in his Talk-To-The-Customer mode.
Have you ever noticed how a person can act differently when a special person walks in the room, say an old friend or a parent? Mr. Calkins, with me, was polite, but not particularly personable. In some ways he may not have known where I was coming from (this investor who comes to see a demo) so he played me about a neutrally as possible. I wasn't a good guy, I wasn't a bad guy, I wasn't special, I wasn't unspecial. When the Sentel visitor stopped by, basically playing the role of “Customer,” Calkins was absolutely fantastic! I was so fortunate to have had a chance to see that side of him. He was warm and friendly with this man in an almost subdued gentlemanly way. It was quite real, there was nothing phony about it. Calkins was almost transformed before my eyes (or ears, since I could only hear the conversation). He was conversational, professional, business-like, respectful and understanding--very understanding--of what the other party wanted. In short, I immediately assessed Calkins as someone I could buy from or, worded differently, he was someone that could sell. I doubt I would have been able to form such a strong impression of him as a salesman if the visitor hadn't shown up.
To wrap up that story, the Sentel visitor wanted to see if Pacel would be willing to team with his company to present a complete business solution to the client. It was great! As tough as marketing can be, here was a company marketing to Pacel! Naturally, Calkins was very amenable to the teaming idea. In a matter of minutes, the conversation was over and Mr. Calkins returned to the conference room I was in.
Final tidbits of news regarding Pacel's upcoming growth: Pacel recently had six employees, but now with the merger completed (10/22/98 press release) the count is up to 23. Mr. Calkins' prediction for the count by the end of 1999: “Minimum 50, but I think closer to a hundred.”
After I said my good-bye, I drove to the site of the new office building that Pacel will move in to. It's a two-story red-brick office building with a decidedly modern design. The entrance has these gray-white concrete stairs that go up to glass front-doors and there's this U-shaped glass-tile decoration that's about seven-feet high, four-feet wide at the entrance. Pacel will be on the top floor of that building and, possibly, will have the entire top floor. This new office is a night-and-day difference from the relatively humble office space Pacel currently has (a 40-foot wide, two-story townhouse-style office building in a small office park of roughly 6-or-so offices).
Final thought: When I think about the marketing of Visual Writer, I sometimes find myself thinking of the marketing that goes into a pop singer who is young and unknown. Somehow, some way, he or she is noticed at a talent show or perhaps strumming a guitar in a bar. Almost everyone can see that that person has talent, but how far that talent will go is almost impossible to predict. Obviously the singer's agent and the marketing push to follow will be big factors in the singer's commercial success. Even so, will our aspiring star fall in with the wrong crowd, find he can't handle the stress of the big-time, or develop a rare throat infection days before he was supposed to cut that first album? The specter of Would've, Could've, Should've can haunt just about any story.
My point is that it's inappropriate for anyone to say, “I'm 100% sure Visual Writer will be a hit.” Well, wait a minute--you can say it if you want--but even with all I know about the product I'm not going to say it. Marketing will be a huge, huge factor. If the ball gets rolling--and we have to wait and see if it does--you can start putting Pacel in the legend-lore of penny stocks that put a jet pack on and flew to a NASDAQ listing. |
