This weekend, the Chief Commercial Officer from POOL4TOOL, Roger Blumberg, reached out to me through LinkedIn to ask if I was familiar with his company.
In what turned out to be an impromptu electronic dialogue, it is amazing what you can learn with a few short keystrokes and the right questions.
Rather than focusing on the tired features, functions and benefits analysis that have traditionally limited our true understanding of service provider capability, the exchange with Blumberg was both frank and interesting. Particularly given that POOL4TOOL seems to share similar organizational values to that of Zycus regarding company ownership.
It is no small irony that they also face similar challenges in terms of market presence and expansion. Check out my January 26th post Referring to themselves as the last of the great independents, Zycus call was unexpected and interesting, to see what I mean regarding the parallels between the two companies.
In the meantime, here is the exchange:
Roger Blumberg: Jon, I hope you are doing well.
I am now the Chief Commercial Officer at POOL4TOOL. I am curious if you have ever been given a briefing on POOL4TOOL or are even familiar with them. At some point I would like to make sure you know who we are and what we do.
JWH: I will check out pool4tool.com. By the way, do you know Kelly Barner from Buyers Meeting Point?
Roger Blumberg: Yes, I know Kelly.
JWH: Is she familiar with POOL4TOOL? I am sure that she would be very interested as well.
I am checking out the site right now . . . as Kelly once stated, you can’t go wrong with most any true cloud-based vendor solution these days re you can use COUPA as easily as you could use cloudBuy or POOL4TOOL – and from what little I have read it looks like you have a solid solution.
So how do you differentiate yourself from the pack?
Also, I just noted that the company has been around since 2000 . . . so you clearly have a solid footprint yet, I had never real heard about the company other than in passing. I find that interesting.
Roger Blumberg: Till just a few years ago they were almost primarily focused on Europe. We are now making a big push in North America.
Our biggest differentiator is our breath of offering. We Span purchase to pay, strategic sourcing, supplier performance management, supply chain management, and crm
Air integration capabilities, especially Sap are World class.
JWH: Can you provide company financials? Is the company self-funded, publicly traded, VC invested?
Roger Blumberg: Almost 90% self funded, private company.
JWH: What is the company’s annual revenue and current churn rate? Also, what are your primary markets?
Roger Blumberg: We are private but we dont disclose our revenue but we are not tiny. We are about 150 employees in size. Our churn rate is almost zero. Early on our product was delivered in a model where 75% was off the shelf and 25% was custom work. That is what made these customers super sticky. We are now moving to 95% off the shelf with just some minor customization. Historically we focused on just manufacturing companies with a more specific focus within automotive. With our P2P product, supplier management and strategic sourcing module applying to all types of spend I’m pushing the company to be more open to selling into new markets outside of just manufacturing. I hope that helps.
JWH: That really does and the off-the-shelf/customization ratio is interesting in relation to a 2000 SIIA study – which referenced both off-the-shelf and enterprise applications. In terms of the zero churn rate, is this attributable to the fact that your organization appears to be highly specialized within a specific industry (automotive)? Is there any concern that in expanding to other markets – in essence attempting to achieve a ubiquitous scalability in areas in which you are not as specialized – will move you out of your core strength and therefore potentially increase the rate of implementation failure?
Roger Blumberg: The lack of churn in my opinion was due to a combination of the auto focus, the customization and excellent customer support. The blueprint exercise done in advance of an implementation is exceptional compared to my previous companies (Ariba, Coupa). I am not worried about the churn when we move into the new areas because those sales will always be off the shelf only. Yes, there will probably be churn when we move to these new industries but nothing above the average. Hopefully below average.
JWH: So, will there ever be a plan to issue an IPO or, based upon broader market penetration, seek VC investment? Or is maintaining a closely held POOL4TOOL ownership strategy the only plan in the foreseeable future?
Roger Blumberg: John, I don’t see any IPO anytime soon. We have enough cash to afford the growth we are seeing. We do have some investment by the Austrian government but it is small. We are employee owned and loving it. If we can replicate what we have done in just a few countries in Europe we will be a force to be reckoned with. We just need to create awareness. If someone like yourself does not know us we have a problem.
JWH: Not surprisingly Roger, POOL4TOOL is not alone. When I interviewed two senior execs from Zycus, they indicated that their company is virtually unknown in the European market, which is something that they want to change. They too are a closely held company – in fact they just repurchased the interest previously held by VCs so that they are beholding to no one but themselves. I think that this is a strong selling point re companies like yours and Zycus are not vulnerable to outside influences, and can therefore stay the course in terms of delivering the best value to the end customer.
Roger Blumberg: I hope a year from now the name is better known. Besides Kelly, who else do you suggest I reach out to?
Once again, I will leave it to others to deep dive into the “specifics” of the POOL4TOOL technology. As I said before, and echoing the sentiments expressed by my writing partner for Procurement At A Crossroads, Kelly Barner, technological functionality is not the only factor you have to consider in terms of service provider capability.
It is the company itself, and the values and motives of the people behind the company, that ultimately determine your success or failure with their solution. Or to put it another way, are they playing to Wall Street and/or VC interests or, are you their number one priority?
I know, I know, at this point insert the tired old when you succeed they succeed perfunctory platitude that is often bandied around when questions regarding provider motives are introduced into the equation. But the fact is, there are many companies who are financial powerhouses that have had as many failures as they have had successes. Your company’s initiative should have better odds than a coin toss.
This is why I asked the above questions. This is also why you need to note the answers to said questions, as they are a good indicator of your likelihood for success.