Thinks 1172

Bloomberg: “A momentous shift is under way in global markets as investors pull billions of dollars from China’s sputtering economy, two decades after betting on the country as the world’s biggest growth story. Much of that cash is now heading for India, with Wall Street giants like Goldman Sachs Group Inc. and Morgan Stanley endorsing the South Asian nation as the prime investment destination for the next decade…History shows that India’s economic growth and the value of its stock market are closely linked. If the nation continues to expand at 7%, the market size can be expected to grow on average by at least that rate. Over the past two decades, gross domestic product and market capitalization rose in tandem from $500 billion to $3.5 trillion.” [via NDTV]

Ben Toll: “By the time a student is filling out their application, most of the materials will have already been solidified. The applicants can’t change their grades. They can’t go back in time and change the activities they’ve been involved in. But the essay is the one place they remain in control until the minute they press submit on the application. I want students to understand how much we value getting to know them through their writing and how tools like generative AI end up stripping their voice from their admission application.”

Raghu Raman: “Companies often look towards marquee corporations and case studies for inspiration and learning. But perhaps an equally valuable skill is the ability to glean knowledge from any well-run and ethical business operation. The support staff of many corporates have similar side-gigs going. While they may not be performing acrobatics, they hold multiple jobs or run skunkwork projects for income augmentation. Corporates in search of talent should also value such competence beyond the academic records of job candidates. Because skills honed engaging harsh audiences on hard cobblestones will always beat those picked up in air-conditioned classrooms.”

FT on how India gave the US a generation of business school deans: “Indians’ increased presence among the leaders of US business schools brings some distinctive cultural characteristics and demonstrates both the social mobility afforded by US universities and the weaknesses of India’s own higher education system. Many of those in top positions share a similar profile: they were raised in India, studied in prestigious technology and management colleges in the country and then came to the US for postgraduate work. A large number stayed on and worked their way up to the top of university administrations.”

Wanted: A Constellation Software for Martech (Part 2)

Constellation Software – 1

Here is how Constellation Software describes itself: “Constellation Software is a leading provider of software and services to a select group of public and private sector markets. We acquire, manage and build industry specific software businesses which provide specialized, mission-critical software solutions that address the particular needs of our customers.”

It defines two types of businesses it acquires: Exceptional and Good.

Exceptional Businesses criteria:

  • A mid- to large-sized vertical market software company (a minimum of $1-million earnings before interest and tax)
  • Consistent earnings and growth — generally EBITDA/revenue + revenue growth of 20 percent or more per year
  • Experienced and committed management
  • An offering price that has been determined

Good Businesses criteria:

  • Number 1 or Number 2 market-share holder in a niche vertical market
  • Revenues of at least $5-million
  • Hundreds or thousands (not dozens) of customers
  • Unimposing competitors
  • An offering price that has been determined

Constellation Software has created six groupings of the companies it has acquired through the years.

As of late January, the company was valued at $77 billion Canadian dollars (about $57 billion US dollars). Its revenue is about US $8 billion.

A few months ago, The Economist wrote about Constellation Software:

Whether by fluke or design, Constellation’s dealmaking success is based on principles that look strikingly similar to those of the world’s heavyweight acquirer, Berkshire Hathaway. Like Warren Buffett, Berkshire’s boss, and his right-hand man, Charlie Munger (who died on November 28th), the founder and president of Constellation, Mark Leonard, seeks out businesses with a lasting competitive edge. In Constellation’s universe, such a “moat” is enjoyed by software firms that specialise in building digital wares for unsexy industries from car dealerships and builders to spas. Tech giants shun these relatively piddling markets and smaller rivals lack the requisite know-how. The result is rich profits for the incumbents.

After a deal is done Constellation, much like Berkshire, runs the business with benevolent neglect. It does not integrate newly acquired companies or parachute in fresh managers. It is content to leave day-to-day operations to the existing leadership. It does not desperately try to squeeze out inefficiencies by centralising common business functions. Constellation believes that splitting a business weakens its bond with customers, notes Paul Treiber of RBC. Cash from the subsidiaries flows to the parent company, which uses it to buy new businesses. These in turn generate more cash, and so on.

… Like Berkshire but in contrast to private-equity or VC funds, Constellation has no exit clock ticking. It can thus be patient with investment decisions. Mr Leonard’s annual letters to investors echo Mr Buffett’s in describing the company as a “good perpetual owner”. This marathon mentality shapes employee pay. Bonuses are tied to returns on invested capital rather than just revenue growth. Executives must invest three-quarters of their bonus in company stock, which they cannot sell for four years. This aligns management’s incentives with those of shareholders.

The chart below shows the scale and size of the acquisitions made by Constellation Software over the years:

Thinks 1171

Andy Kessler says No to a global government: “I prefer limited government. Spend enough on defense to keep us safe and secure, help the truly downtrodden, do some basic research and then, as Grover Norquist so eloquently suggested, get government “down to the size where we can drown it in the bathtub.” For the economy, the government should set the rules of the sandbox, then get out of the way and let markets and competition do their magic. Progress comes from loosely connected, self-interested participants communicating via price signals. This beats centralized control every time.”

Frank Chodorov: “It is in the free market that self-interest finds its finest expression; that is a cardinal point in individualism. If the market is regularly raided, by robbers or the government, and the safety of property is impaired, the individual loses interest in production, and the abundance of things men live by shrinks. Hence, it is for the good of society that self-interest in the economic sphere be allowed to operate without hindrance. But self-interest is not selfishness. Self-interest will impel the manufacturer to improve upon his output so as to attract trade, while selfishness will prompt him to seek the special privileges and state favor that in the end destroy the very system of economic freedom on which he depends. The worker who tries to improve his lot by rendering better service could hardly be called selfish; the description rather fits the worker who demands that he be paid for not working. The subsidy seeker is selfish, and so is every citizen who uses the law to enrich himself at the expense of other citizens.” [via CafeHayek]

Fortune: “The world of startups is well-accustomed to failure: Approximately nine in 10 shut down. But those failures rarely attract the attention of the broader public. They tend to happen early in a startup’s life—when the people who run it are still in trial-and-error mode. As a company gets bigger and achieves enticing revenue growth, it gets more love from some of the thousands of thick-pocketed venture capital firms that write checks so companies can scale quickly. As those investors pour in more and more capital, failures become less frequent. Or at least they used to. Since the first quarter of 2022, everything has changed. Macroeconomic forces have refashioned every link in the chain of the startup ecosystem. Those changes are now rippling through private markets in what has turned into a reckoning for startups—and especially for unicorns, the privately funded companies valued at more than $1 billion that are Silicon Valley’s most elite and prized darlings. “It’s one thing to fail when you’re a small company and you fail to get product-market fit,” says Geoff Love, head of venture capital at Wellcome Trust, which has invested in several venture funds, including those at Accel and Venrock. “It’s quite something else to fail when you are at a valuation in the many billions and have raised hundreds of millions of capital. That’s awful.”” A founder whose startup faces failure: “It’s been like panning for gold in a turbulent river: Sometimes the prize feels closer, other times farther away. Still other times it feels like we are drowning in aimlessness and exasperation. An identity crisis looms for any high achiever flirting with failure, and a calculation begins on the conflicting forces of sunk costs and lost time on the one hand, and reputational harm on the other. As entrepreneurs, we struggle to separate our egos from the prospects of our startups. We conflate the fate of the enterprise with our value as human beings.”

WaPo: “In the print era, publishers created “articles,” printed them on paper and distributed that paper to their readers. The web changed everything about the distribution and the literal paper, while the articles remained mostly untouched. But in the future, publishers will have to think less about those articles and more about conversations with users. The users will interact less and less with the actual articles and instead talk about the articles with what the tech industry used to call “intelligent agents.””

Wanted: A Constellation Software for Martech (Part 1)

The Opportunity

I first heard about Constellation Software from a friend a few years ago. He mentioned about a company headquartered in Canada which acquired software companies with a templated process. I had then studied them and was very impressed with their model of efficiency and scalability. Since then, my friend, Ambarish Gupta, went on to start Basis Vectors to replicate this model for SaaS. (I am an early investor in the fund.)

In the past few months, I have got multiple incoming requests from investment bankers and VCs to look at acquisitions of martech companies in their portfolio. I have turned all of them down primarily because Netcore has limited cash of its own to pull off these deals, and in a slow martech market it is also not easy to raise capital at the right valuation – even for a proficorn!

Martech has thousands of companies. Scott Brinker’s 2023 Martech Map lists over 11,000 companies. From the commentary by Scott:

It’s the same dualistic story we’ve seen for the past 12 years in martech. Yes, there is consolidation and churn. Even significant consolidation and churn. But the rate at which new startups have launched has consistently outpaced the exit rate of those who leave the arena, whether victorious or dead.

While competition grows and economic pressure rises — both forces that should lead to greater compression of the landscape — barriers to entry for software products continue to fall and the size of the underpenetrated portion of the market for many of these capabilities remains tantalizingly large.

Of course, this can’t go on forever. We can safely say the upper limit on martech solutions is well below the population of the planet. (“You get a martech company! And you get a martech company!”) The rate of growth has already slowed by an order of magnitude, from 100% year-over-year to just a hair over 10%. Equilibrium seems near.

With the proliferation of companies and the slowing investments, many unprofitable companies face two clear choices: either cut costs to get to profitability, or lower valuation to raise new capital. Both are not easy decisions. The former can make a company a pale shadow of itself consigning it to the “living dead”, while the latter can be hard on founders and their equity/ownership of the business.

In this complex and challenging environment, the untapped potential of the $250 billion of waste in digital marketing spending presents a unique opportunity. By broadening the definition of martech to encompass AdWaste, we can craft a path for a super-aggregator to not only survive but thrive, transforming the competitive zero-sum game into a landscape ripe with mutually beneficial outcomes for all stakeholders.

So, I started thinking about whether the Constellation Software model of strategic aggregation and innovation could be applied to martech. In this series, I will explore a theoretical construct of how this could be done and the potential benefits for founders, investors, and customers.

Thinks 1170

NYTimes: “Our memories form the bedrock of who we are. Those recollections, in turn, are built on one very simple assumption: This happened. But things are not quite so simple. “We update our memories through the act of remembering,” says Charan Ranganath, a professor of psychology and neuroscience at the University of California, Davis, and the author of the illuminating new book “Why We Remember.” “So it creates all these weird biases and infiltrates our decision making. It affects our sense of who we are.” Rather than being photo-accurate repositories of past experience, Ranganath argues, our memories function more like active interpreters, working to help us navigate the present and future. The implication is that who we are, and the memories we draw on to determine that, are far less fixed than you might think. “Our identities,” Ranganath says, “are built on shifting sand.””

FT: “Jon Steinberg, chief executive of Future, a rival FTSE 250 publisher, said that the “elimination of third-party cookies is one of the biggest changes to the advertising market in the digital age”. He added that “advertisers and agencies will be looking to publishers that have high quality editorial, scale, and rich first party data”, and predicted that “advertisers, agencies, and quality publishers [will work] even more closely together to reach audiences that drive outcomes for brands”. Sir Martin Sorrell, chief executive of advertising form S4 Capital, said that some clients that did not have access to first party data on their customers were “panicking”. He said that there would be “more focus” on getting customers to sign up to websites with their information as companies attempted to boost their stores of “consented data”.”

WaPo: “[Applied logic is this] branch of philosophy grows from the same mental tree as algebra and geometry but lacks the distracting foliage of numbers and formulas. Call it the art of thinking clearly. We need this urgently in this era of disinformation, in which politicians and media personalities play on our emotions and fears. Logic teaches us how to trace a claim back to its underlying premises and to test each link in a chain of thought for unsupported assumptions or fallacies. People trained in logic are better able to spot the deceptions and misdirection that politicians so often employ. They also have a better appreciation for different points of view because they understand the thought processes that produce multiple legitimate conclusions concerning the same set of facts. They are comfortable with spirited dialogue about what’s best for our society.”

Jaspreet Bindra: “While it is ChatGPT and Generative AI that are making waves and dominating the discourse, I believe that the promised miracles of AI are happening elsewhere—using existing technologies like deep learning and neural networks. And, at the forefront of these life-changing discoveries is DeepMind, the company started by Demis Hassabis in London and now owned by Google…While GenAI and its chatbots are extremely powerful and promising language-based technologies, it is still ‘good old AI’ that has been churning out some astounding new products, led by DeepMind. Humans are still far ahead in general intelligence, but in these narrow niches, deep learning has achieved astonishing results.”

Nucore: A Thought Experiment (Part 8)

Critique

ChatGPT

Viability Analysis

  1. Market Relevance:
  • Strength: The focus on enhancing Customer Lifetime Value (CLV) and reducing Customer Acquisition Cost (CAC) aligns well with current market needs.
  • Concern: The assumption of an untapped market in email advertising (Email 2.0) and the Progency model requires further validation.
  1. Innovation in Approach:
  • Strength: Combining advanced email marketing strategies with a performance-based business model presents a fresh approach.
  • Concern: The complexity of integrating multiple advanced features (like Email 2.0, Progency) might challenge execution and user adoption.
  1. Financial Model:
  • Strength: The performance-based pricing model is attractive and reduces the barrier to adoption.
  • Concern: Reliance on this model may face challenges in proving direct causality between Nucore’s services and increased client profits.

Reasons for Success

  • Alignment with Digital Marketing Trends: Utilizing AI, data analytics, and innovative ad formats keeps Nucore at the forefront of digital marketing evolution.
  • Addressing Market Inefficiencies: Targeting AdWaste and funnel inefficiencies directly addresses a major pain point for many companies.
  • Comprehensive Strategy: A holistic approach to customer engagement, conversion, and retention could provide Nucore a competitive edge.

Risks and Potential Failure Points

  • Market Adoption and Behavior: The success of Nucore depends heavily on market adoption. If the perceived benefits do not align with client needs or if the market is slow to adapt, Nucore could face difficulties.
  • Technological Execution: The implementation of complex technologies and strategies like Email 2.0 and Progency requires not only technical proficiency but also needs to be user-friendly and seamlessly integrated.
  • Competition and Industry Dynamics: The digital marketing space is highly competitive. Nucore needs to constantly innovate and stay ahead of emerging trends and potential competitors.
  • Regulatory Compliance and Privacy Concerns: Email marketing and digital advertising are subject to various regulations and privacy concerns. Navigating these while innovating will be critical.
  • Scalability and Operational Efficiency: As Nucore grows, scaling its services while maintaining quality and effectiveness will be a significant challenge.

Conclusion

Nucore’s proposal is ambitious and if successfully implemented, could indeed disrupt the martech industry. Its focus on addressing specific market inefficiencies with innovative solutions is a strong strategy. However, its success will hinge on effective market adoption, technological execution, and the ability to continuously innovate and adapt in a highly competitive landscape. The venture will also need to navigate regulatory challenges and prove its value proposition in a tangible and measurable way to its clients.

Claude

Why Nucore can succeed:

  1. It identifies a clear market gap and opportunity – the vast pool of adtech overspending presents a blue ocean worth over $200 billion that Nucore can tap into with its martech innovations.
  2. The Profipoly, Email 2.0, and Progency concepts are differentiated and disruptive ideas in a crowded space. They address key brand challenges around profitability, engagement, and growth.
  3. Blending products and services with performance pricing aligns incentives correctly between Nucore and its customers for growth. This progency model is hard for competitors to replicate.
  4. Nucore builds on Netcore’s core strengths in martech, AI/ML, and customer engagement while expanding the vision ambitiously into adjacent spaces. Leveraging existing capabilities mitigates execution risk.
  5. The billion-dollar revenue projections are backed by reasonable assumptions around market size and Nucore’s potential share of opportunities like Action Ads and Progency commissions.

How Nucore can fail:

  1. Incumbents could emulate Nucore’s ideas faster with their resources and distribution networks. Smaller startups could also out-innovate Nucore. Maintaining differentiation over time is crucial.
  2. The projections banks significantly on email innovations taking off. If adoption of Email 2.0 is slow, it impacts the foundation of the model. Contingency plans must be in place.
  3. Blending products and services is operationally complex, especially at scale. Flaws in managing this progency model could undermine quality and reputation.
  4. Driving enterprise-wide transformation for customers requires strong account management and industry expertise. Building this capability could take time and upfront investment.
  5. Incentive alignment with customers cuts both ways – low commissions during early growth or market downturns directly hits Nucore’s revenues. Plans must address variability.

In conclusion, Nucore has a compelling strategy and market opportunity that can fuel billion-dollar ambition. But meticulous execution across technology, products, operations and talent is vital for this vision to be realised in the face of competition and adoption uncertainties. The approach balances ambition with pragmatism to plot a bold yet viable growth path.

Thinks 1169

G. Patrick Lynch: “Milei’s ideas are a consistent set of interlocking principles based on an unqualified commitment to free markets in a classical liberal political economy. He, along with millions of Argentines, have experienced for years how significant government intervention severely damages an economy. After his victory on a platform of reversing that thievery and mismanagement, Milei must now confront the entrenched interests that have benefited from this vast web of crony capitalism. Milei will be lucky if he can simply stop the bleeding and redirect Argentina in a different direction.”

Economist: “In its more than 40 years the internet as a whole has never completely stopped working. Parts of it break all the time, but resilience was built into the internet from day one. It is a decentralised, distributed network of billions of computers and billions of routers, connected to each other by perhaps billions of kilometres of cables. The network works seamlessly for end-users because of layers of software above this hardware that manage how the computers communicate, building in multiple redundancies and leaving no single point of failure. This power of abstraction—the ability to create, transmit and consume digital artefacts without needing to think about the physical realities behind them—is the secret sauce of the internet. And, indeed, of all computer science….The internet relies on these cables, but not on any single cable; it relies on data centres, but not any single one. Its distributed nature and its abstractions make the internet difficult to pin down. But not so for the tech giants. They are vertically integrating the internet: laying cables, building data centres, providing cloud services and AI. As the internet becomes more powerful, it is becoming crucial to grasp both its physical and corporate composition. Only by peeling back the layers of abstraction can one lay bare the internet’s foundations and understand its future.”

NYTimes: “India, as part of a national manufacturing drive, is chipping away at that dominance, when many companies are looking to spread their work to countries other than China. An estimated 13 percent of the world’s iPhones were assembled in India last year, and about three-quarters of those were made in Tamil Nadu. By next year, the volume produced in India is expected to double…Tamil Nadu might point the way forward. The state of 72 million people is now succeeding in ways that have eluded India as a whole…Mr. Rajaa and other boosters of Tamil Nadu are proud of the human capital their state has built up, and especially of its women. Many of them work in formal jobs, while few women in other states do: 43 percent of all Indian female factory employees work in Tamil Nadu, which is home to 5 percent of the national population.”

Investcorp executive chairman Mohammed Alardhi: “In the culture of the fighter squadrons, leadership is shared. One day, it’s the squadron commander who leads the formation. The next day, it’s the young, new pilot who leads. Everyone learns from everyone. An exception would be in urgent or threatening situations, where, obviously, the most experienced leader needs to be out front. It’s the same here, in our world of asset management and investment. Once you really set the vision—show the strategy—it’s important that you let people get on with it. It’s important that they feel that they own it. It’s important that they feel that they are supported to do things themselves. Like I say in the book, it’s not always easy. It’s not always very efficient, because it takes time; it takes patience. You really need to have the attitude as a leader that you want others to succeed, and you want others to also be leaders. We spend a lot of time teaching and training people in particular areas of expertise. But leadership often gets left until the day you want people to lead. That’s too late, in my mind.”

Nucore: A Thought Experiment (Part 7)

Billion-dollar Pathway

The global eCommerce industry generates trillions of dollars in revenue. Email is one of the key enablers for customer engagement, conversion, and retention. Yet, its size is in single-digit billion dollars. Add all the other engagement channels and martech solutions, and the figure will go to maybe $50 billion. Compare that with adtech, which powers new customer acquisition. Global spending on digital advertising platforms is expected to be $500 billion. In other words, even as the adtech industry makes 10 cents of every dollar of revenue that ecommerce generates, the CPaaS and martech industry generates just 1 cent. In this incongruity lies the opportunity for Nucore.

Let’s begin with email. Today, most brands pay between 10-30 cents CPM (cost per thousand) for emails. The question to ask: can Action Ads provide better outcomes? Typical digital advertising CPMs are upwards of $5. Given the innovations in Action Ads (PII, push, in-place actions, payments), these ads should be enable to garner an equivalent if not a higher price. So, a billion Email 2.0 messages with Action Ads could generate $5 million in revenue.

Global B2C email volume is probably upwards of a trillion emails a month. 1% of those emails with ads (10 billion) could generate $50 million a month, leading to an annual revenue of $600 million. My belief is that Email 2.0 will herald a new era in digital advertising – opening a powerful new channel with many advantages absent in existing digital advertising platforms.

Next, let’s look at the opportunity for Progency. Let’s assume that Progency is paid 5% of the incremental revenue that it generates for a brand. For it to generate $50 million a month in revenue, it will need to deliver $1 billion in revenues for brands. If Progency can position itself as a “digital franchisee” for offline brands wanting to go online or struggling D2C brands, it could get an even higher percentage of revenue with a commensurate increase in risk. The point to note is that shifting $10 billion in annual revenues on a base of trillions is doable given the competitive eCommerce landscape and the unique positioning of Progency. A 5% commission (can be thought of as a franchisee fee or affiliate commission) on $10 billion comes to $500 million.

Taken together, Email 2.0 and Progency can thus tap into large market inefficiencies which can create the foundation for a billion-dollar business in the next few years for Nucore.

**

To summarise: if Netcore had to disrupt itself and the industry, it should think of building Nucore around the three themes of Profipoly, Email 2.0, and Progency. Marketing AdWaste and funnel frictions offer the inefficiencies for building a new startup to transform the martech industry. Nucore is not just an idea; it’s an idea whose time has come!

Thinks 1168

Economist: “Today almost all Indian children go to school. The trouble is, they don’t appear to be learning much. According to data from Pratham, an NGO, only 43% of grade five students (ages ten to 11) in rural areas can read a text aimed at grade two (ages seven to eight). In 2005 the share was 53%. The rates did not improve much in Mr Singh’s term; the rate dropped more significantly under Mr Modi. The covid-induced lockdowns play a big part in this. But much of the problem lies in pedagogy and poor governance. Teachers often do not show up to class. Those who do are administering a rigid syllabus unsuitable for many children (especially first-generation learners).”

WSJ: “In our postpandemic world, replete with remote work, hybrid communication, far-flung team members, artificial intelligence and global disruption, introverts are particularly well-equipped to lead. That may be hard to believe because of two persistent myths. First is the widely held stereotype that effective leaders are gregarious, alpha and comfortable in the spotlight, even craving that attention. In reality, the social skills that extroverts display aren’t necessarily predictive of capable leadership. Second is the belief that quieter people lack leadership skills. They are seen as less social, unassertive, sad and disconnected. Indeed, in a recent study in which people in different groups were instructed to “act like an extrovert” or “act like an introvert” regardless of their actual personalities, those who acted extroverted were disproportionately selected for leadership. And, interestingly, those who pretended to be introverted in that study reported feeling sad.”

Vitalik Buterin: “Many people over the years have asked me a similar question: what are the intersections between crypto and AI that I consider to be the most fruitful? It’s a reasonable question: crypto and AI are the two main deep (software) technology trends of the past decade, and it just feels like there must be some kind of connection between the two. It’s easy to come up with synergies at a superficial vibe level: crypto decentralization can balance out AI centralization, AI is opaque and crypto brings transparency, AI needs data and blockchains are good for storing and tracking data. But over the years, when people would ask me to dig a level deeper and talk about specific applications, my response has been a disappointing one: “yeah there’s a few things but not that much”. In the last three years, with the rise of much more powerful AI in the form of modern LLMs, and the rise of much more powerful crypto in the form of not just blockchain scaling solutions but also ZKPs, FHE, (two-party and N-party) MPC, I am starting to see this change. There are indeed some promising applications of AI inside of blockchain ecosystems, or AI together with cryptography, though it is important to be careful about how the AI is applied. A particular challenge is: in cryptography, open source is the only way to make something truly secure, but in AI, a model (or even its training data) being open greatly increases its vulnerability to adversarial machine learning attacks. This post will go through a classification of different ways that crypto + AI could intersect, and the prospects and challenges of each category.”

Bibek Debroy: “Employment is a more complicated issue. Part of it is related to lack of skills; part of it is a geographical mismatch. Demand for job is in one place and supply of labour being in a different place. Part of it is the fact that one has ‘invested’ in education and because of that expects a higher salary. The market has challenges in meeting that expectation because the correlation between education and skills has broken down. Therefore, particularly among the young, there is a voluntary dropping out of the work force.”

Sadanand Dhume: “Outbound migration from China and India by itself may not be enough to alter the countries’ trajectories. But the fact that so many Chinese and Indians vote with their feet to leave these putative superpowers should raise questions about how inevitable their rise really is.”

Nucore: A Thought Experiment (Part 6)

Business Plan

A customer promise is a vital cornerstone in brand building, as highlighted in a recent article in the Harvard Business Review, “The Right Way to Build Your Brand.” This concept revolves around the commitment a brand makes to its customers, offering a clear, specific, and verifiable pledge that enhances the relationship between the brand and its consumers. When a brand successfully delivers on this promise, it cultivates trust and loyalty, fostering a robust and enduring connection. The most effective customer promises are those that are memorable, provide tangible value, and can be reliably delivered. These promises are more than just marketing slogans; they represent a strategic commitment that guides a company’s entire operation, aligning product development, marketing, sales, and customer experience towards a unified objective. Such a well-crafted customer promise not only drives immediate sales but also lays the foundation for long-term brand strength and customer loyalty.

In this context, what can be Nucore’s customer promise? My answer: “Nucore helps increase profit margins by 1000 basis points, giving you the foundation and resources to build a profipoly.” Simply put, “Elevate Profits; Build your Profipoly with Nucore.”

Nucore will do this with a multi-pronged approach:

  • Revolutionising Customer Attention: Nucore tackles the attention recession by establishing dynamic two-way communication channels with existing customers. Leveraging Email 2.0, Nucore introduces a new era of inbox commerce, enhancing customer engagement directly within their email.
  • Enhancing Customer Lifetime Value (CLV): By integrating Netcore’s Unichannel and Unistack products, Nucore crafts seamless customer journeys, reducing friction and elevating the overall experience. This approach not only retains customers but also maximizes their lifetime value.
  • Optimising Customer Acquisition Cost (CAC): Nucore’s strategy significantly lowers CAC and minimises AdWaste. By focusing on retaining and engaging current customers, it reduces the necessity for costly reacquisition campaigns, ensuring more efficient marketing spend.
  • Risk-Free Engagement Model: Nucore introduces a unique financial model where brands invest without upfront costs. Payments to Nucore are contingent on the tangible business upside experienced by the brand, thus ensuring complete alignment of objectives.

There is another hidden promise to the buyer, the marketer. It is: “Nucore can fast-track your path to becoming CEO by making you the profits champion.”

Nucore offers an implicit yet compelling proposition to the marketer, the primary buyer: “Fast-track your journey to the top. With Nucore, elevate your role from marketer to CEO by becoming the architect of exponential profit growth.”

The Profipoly Flywheel Effect is the core of Nucore’s strategy, involving:

  • Email 2.0 Integration: Transforming reacquisition strategies by shifting focus from ad tech platforms to brand-owned channels for reactivation.
  • Money-spinning Email Program: Incorporating Atomic Rewards and Dynamic Engaging Footers with Action Ads to make email programs lucrative.
  • Inbox Commerce Tools: Utilising features like Magic Carts, Search, Recommendations, and Payments within Email 2.0 to drive rapid revenue growth.
  • Progency Model Application: Tailoring experiences for Best and Rest customers, enhancing interactions and personalisation on websites and apps, and refining product management across marketplaces.
  • Data Utilisation: Leveraging zero- and first-party data to improve customer acquisition, moving towards the goal of near-zero CAC.
  • Fostering Product Innovation: The profits generated by the brand can be reinvested in new product development, enhancing customer loyalty and satisfaction, thus powering more growth.

Nucore is about bringing to life the Profipoly formula: (Lo CAC + Hi CLV)n. As it brings this new world to life, it can create a billion-dollar blue ocean opportunity for itself – one which ensures a monopoly and moat, powering Nucore’s Profipoly quest.