Why No
Even as I believe Netcore should create its own progency, it is important to consider the counter. What are the reasons why Netcore should not do it? Doing this exercise will help the leadership team make a reasoned choice.
There are three objections to Netcore Progency that I can think of.
First, Netcore’s DNA is not services; progency is all about a service-first model even though it is built on a software stack. There are good reasons why there are no precedents of companies with a hybrid model succeeding. While software companies can have small services and consulting teams, their scale is small compared to the overall business.
Second, the progency could divert resources from existing teams. In fact, it would take away some of the best talent at a time when they are most needed – to build the Profipoly Stack and help with the transition to Netcore 2. This could also lead to a dilution of focus away from the core SaaS platform.
Third, there is a possibility that in the short-run, the progency model could cannibalise revenues from existing business. The uncertainty of how much a progency can generate would impact the certainty of revenues today. A future upside at the cost of today’s cash flow would not be an acceptable outcome.
What would the response to each of these criticisms be?
To the DNA point, I would say that this is definitely a new, untested idea. Can a software company build an equally large service business? History says No. Successful IT service companies do not have their own products, and most large product companies tend to stay away from building in-house servicing teams. But if we look beyond the IT and enterprise software sector, vertical integration is quite common. Who would have thought that one day not only would companies like Apple, Google, and Microsoft be making their own hardware but also their own chips! Industries evolve. The martech industry is caught in a low-equilibrium because it is not possible for martech service firms to scale because the service dollars are not large enough and they do not have the tech expertise to make a play for the AdWaste upside. Martech needs a reboot, and progency is the answer.
The second and third points about people and revenues are problems which are internal to Netcore. This is a call entrepreneurs and CEOs must make – they have to think not just about today but also about tomorrow. Taking bold bets open new doors which otherwise would never have been opened. There is no zero-risk decision. In fact, maintaining the status quo may be the biggest risk of them all.
To summarise: yes, there are risks and possible downsides. But as I see it, the upside potential is far greater. Since Netcore is a proficorn and has no external investors, decision-making is much easier. Netcore is one of the few martech companies which can make the progency bet without batting an eyelid. Entrepreneurs must fall in love with the problem first, and there is no bigger problem in the marketing world than the $200 billion AdWaste.
