Forum Archive Index - May 2000

["Lincoln Watson" <lincoln_watson@hotmail.com>]

Ben,

Thanks for your report.  I have listened in for a while and thought i should 
throw in two cents on something i know about.

Telemedia are a great company no doubt.  They are picking the eyes out of a 
big and growing global market.

Chris Jones is inspirational. However they are hugely marketing focussed, 
but a little thin on the ground.  Less than two years to get on the Nasdaq 
has been bandied around???? This has got to be crazy.

The Company cannot continue to deliver at the rate it is currently.  Dont be 
too suprised if they run into some problems with deliveries.  If this gets 
out into the press they will have some problems, potentially costing them 
money.

As I say I am new to a lot of this so I wont predict share prices but 
thought i could contribute......

disclosure: I would consider buying their shares soon - just cautious at the 
moment.

Lincoln


>From: "Ben Dutton" <bendutton@sharechat.co.nz>
>Reply-To: sharechat@sharechat.co.nz
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>Subject: [sharechat] IT Investment Forum Report
>Date: Tue, 9 May 2000 10:19:40 +1200
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>Hi All,
>
>I attended the IT Investment Forum in Auckland last night.  For those that
>are interested, here are some musings on the event and speakers.
>
>**
>It started with five presentations - four from tech/software companies and
>one from Unitech, the polytech-university up in Auckland that wants to
>kickstart an incubator/venture capital/entrepreneurship program.
>
>All the companies were there with one aim - to try and persuade the 
>numerous
>investors/venture capitalists in the audience to invest in their company.
>Risk Management Systems, one of the companies, produces software called
>"Hasieman", a solution that is used for risk and compliance management
>across a wide range of business operations.
>
>The Hasieman system looked like great stuff and they already have an
>impressive client base (Contact Energy, TransAlta, Affco etc).  From 
>memory,
>they were requiring $2.5 million.  The company has strong cashflow and
>sales.
>
>The question that immediately sprang to my mind though was "why are they
>here?"  All the presenting companies were asking for sums around 1-3 
>million
>dollars.  The answer (obviously!) is that they were there to try and entice
>venture capitalists to invest in their company.  But, I thought, why do 
>they
>not go straight for the equity markets and have a public offering?  Surely
>if they would follow this path they could raise a far greater amount of
>money for the expansion of their business.
>
>Of course, sometimes there are many reasons why companies choose not to go
>public - some want to stay private because they don't want to go through 
>the
>issues of public accountability, others want to draw on the experience and
>management structures VC's can provide etc.
>
>However, the ideal exit strategy and return on their investment for any VC
>is through an IPO - thus, ultimately, if the company wants to remain 
>private
>for ever getting a VC on board is probably not a great idea...
>
>I believe that there is a classic New Zealand attitude towards the markets.
>For whatever reasons, some New Zealand companies seem to be scared of using
>the equity markets to raise capital.  I think that it would be better for
>our sharemarket, and country as a whole, if the markets were a more 
>accepted
>vehicle for the expansion of New Zealand businesses.
>
>Nevertheless, the companies on display showed some of the incredible Kiwi
>ingenuity we have in this country and it was exciting to see.
>
>**
>Following a light buffet, the focus changed to the main speakers of the
>night - Steve Outtrim from Sausage Software, Roger Allen from Allen &
>Buckeridge, Chris Jones from Telemedia and Susan Glazebrook from law firm
>Simpson Grierson.
>
>**
>Steve Outtrim was up first, and what an engaging speaker he was.  Funny,
>articulate and somewhat blunt, Mr Outtrim told of how Sausage Software all
>came about.  I'm sure his story resonated with many entrepreneurs in the
>audience (like the week that he launched his first product, Hotdog, only
>having $18 in the bank!).
>
>As far as his involvement with Sausage goes today, he only sits on the
>board, and does not seem to take part in the day to day running of the
>company.
>
>One really did get the feeling that Steve is the classic entrepreneur -
>thriving on the thrill and buzz of forming a startup, but not having the
>corporate governance skills to follow through when the company becomes too
>big.  Full credit to him for stepping back and letting others now run
>Sausage day to day.  It will be interesting to see what Steve does in the
>future.
>
>
>Roger Allan followed Steve and gave statistics on the Australasian Venture
>Capital Industry and also his own company.  One interesting point that he
>made was that in Australia, superannuation funds have played a large part 
>in
>providing the funding for many VC pools.  He guessed that this trend could
>happen in New Zealand as well.
>
>
>Chris Jones, founder and CEO of Telemedia was next.  His presentation was
>more like that given to an investor conference but boy was it interesting.
>
>I can say that if I had the available funds, I would be investing in 
>Telemed
>ia today!
>
>Compared to the boisterous nature of Steve Outtrim, Mr Jones was calm, cool
>and collected.  I really got the feeling of his passion and drive for his
>company.  It's unusual to have an entrepreneur follow through as CEO with
>such success.  As I mentioned before, many entrepreneurs feed off the 
>thrill
>of a startup and, once established, move on elsewhere.
>
>However, perhaps it's still possible to categorise Telemedia as a
>"start-up", at least among its competitors (Lucent and Nortel being two of
>the big ones).  And maybe it's for this reason that Mr Jones has been able
>to continue so successfully as CEO.
>
>It was ironic that, at an IT Investor Forum, Mr Jones advised against 
>giving
>too much of your company away to investors or selling out too early.
>Indeed, he still owns 74% of Telemedia - a sum that has made him (on paper
>at least) a very wealthy man.
>
>He also warned against making constant acquisitions to improve revenue.  To
>him, cashflow is king, and unless he treads very carefully, his larger
>competitors (like Lucent, a company that has billions of dollars at its
>disposal) will swallow him up.  He obviously doesn't want this - and this
>strong conviction has to be a plus for any investor in Telemedia.
>
>Over and over again he stressed that Telemedia, unlike so many other young
>companies (Telemedia is only four years old) is making a profit.
>Impressive?  You bet.  Mr Jones left the impression that he is more than
>capable of overseeing Telemedia's future growth.  I have a feeling that 
>this
>company will go very far.
>
>
>After Mr Jones, Susan Glazebrook from law firm Simpson Grierson gave a 
>brief
>presentation on structuring your company for an IPO.  Her advice in a
>nutshell?  Keep it tidy and simple -  whether it be your shareholders,
>company records, employees, intellectual property etc.
>
>
>Thus, to conclude, the forum was a very interesting night.  Mr Jones from
>Telemedia was definitely the most impressive of the lot.
>
>Hope you've enjoyed reading my somewhat random musings on the evening, I'm
>off on a plane back to Christchurch now.
>
>Best Regards,
>
>Benjamin Dutton
>
>
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