INSIGHTS

From Startup to Scale Up

July 26, 2019 | Chris Tucker | Post

How MBX guides ambitious tech innovators and their hardware programs through growth and expansion, leading to funding and acquisition

By Chris Tucker

Recently I had the opportunity to talk with the host of Technori podcast, and the conversation piqued the interest of several growing software companies hearing about MBX’s hardware relationship with tech innovators who successfully traveled a strategic path from early-stage growth to investor funding to acquisition or IPO. 

In this journey with our customers, MBX’s role has been to design a solution for deploying their technology on hardware and to support them in a consultative way as they progress with product development and market expansion – plus help them over hurdles along the way. As they grow through the aspirational milestones like rounds of investment, acquisition, and/or IPO, we work side-by-side with our customers and continue to support their needs, especially as the demands of scaling up manufacturing and logistics intensify to meet their growth.

Acquisition success stories 

We’ve supported many customers during the early stages when they began attracting serious VC funding, quite a few of whom continued on the path to acquisition. Our knowledge in this area sounds unusual compared to the traditional services of hardware manufacturers. But the experience we’ve amassed clearly works for our customers based on the list of industry heavyweights who’ve acquired them over the years, such as IBM, Dell, AT&T, Oracle, Broadcom, Kaseya, Mitel, Booz Allen Hamilton, and FireEye. 

ForkRoad

We’ve also learned tough lessons after hopeful customers failed to thrive. What we observed from their struggles has become wisdom we pass along to help emerging companies avoid similar pitfalls. It isn’t every customer’s end goal to become acquired – some happily remain independent software companies, and some take on their own acquisitions, but they can often still benefit from our guidance.  

We’ve also learned tough lessons after hopeful customers failed to thrive. What we observed from their struggles has become wisdom we pass along to help emerging companies avoid similar pitfalls. It isn’t every customer’s end goal to become acquired – some happily remain independent software companies, and some take on their own acquisitions, but they can often still benefit from our guidance.  

Of course, credit for the acquisition success stories belongs to the companies that develop great software. Without that, they couldn’t attract customers and investors in the first place. Add to that the blood, sweat, and tears required to design a commercialized product, take it to market and then scale up for demand, and it’s obvious why not every smart idea becomes a viable product. With the realization that they don’t want to be in the hardware business, that’s typically an inflection point that leads these companies to MBX.

Inflection points 

On their journey, there are several inflection points where a hardware partner is able to provide valuable guidance and helpful programs to take them to the next level. Here is where I can get more granular than the podcast about expectations along the journey and ways companies leverage their hardware program to appeal to investors. 

Early Stage Start-Up: Growth and Momentum.

When a company’s product begins to experience traction and revenue growth, they start looking to build their brand presence, gain a steady revenue stream, and pursue the next round of funding. They may also feel hardware is consuming a disproportionate amount of effort and start considering outsourcing hardware responsibilities, but may not know where to start. 

Companies that reach out to us at this stage are looking for ways to build their competitiveness and open more doors. They are typically in a challenger position and will offer a more variable or broad product line than their established competitors but don’t have the tools to manage this, which can drain resources and make it difficult to scale. They also see value in making products visually appealing but have a limited branding budget. 

Relationships established with customers at this stage are very consultative, showing how we scale production to meet their demand while providing the tools to manage variable product lines. Our engineers will guide them toward the right component choices for their software, such as different processors or memory options that can be configured on an order-by-order basis. We may also recommend partially assembling and stocking base units to go through a final assembly process to quickly add a specific software image and harvest certain data prior to deployment. To increase the product’s visual appeal and stretch their dollar, our graphic design team will identify impactful but economical branding techniques, such as bezel appliques, chassis labeling, and custom bumper stickers affixed to standard shipping cartons.   

Later Stage Start-Up: Marked Increase in Demand.

Investor funding begins to pay off as software advancements and compounding market demand fuels their growth trajectory. Often teetering on unfamiliar ground, scaling up takes many forms, especially operationally, where additional resources and infrastructure are needed to handle front-end order and data management and backend product support. 

Here, MBX work in a high-touch capacity so customers aren’t feeling like they’re drinking from a firehose. We help them migrate to a broader, more programmatic approach to their hardware deployments so they can gain more productivity from existing resources rather than pouring excessive capital into operations, thereby constraining profits. A significant portion of their new capital is typically earmarked for growing the business which can mean expanding beyond domestic markets. We often talk about the type of customer they are targeting, for example, whether they’re focusing on SMBs or enterprise customers because it’s important to understand their plan to reach the next level. 

Easy Button

Why is their expansion strategy important? On the one hand, when their focus is on SMBs, it’s more likely that their sales teams will focus on specific geographic regions, and we can make sure we acquire the relevant product certifications for importation ahead of their sales push. On the other hand, if their focus is on enterprise customers, it’s harder to pinpoint geographic regions because their sales team most likely will close deals with corporate procurement teams and products will be deployed to branches across a distributed geography. We have different product or certification recommendations for this. In both cases, we’ll advise them about the documentation and other import requirements that our Global Team can manage on their behalf to avoid delays. Tier 1 server platforms can be a good option at this point because the hardware comes pre-certified globally. 

The more educated the customer is entering this growth stage, the more seamless the process appears to their end-users. Or as one customer told us, “it’s like pressing an easy button – like we’ve been doing it all along.”  

Major Milestones: Acquisition or IPO.  

Running their hardware program as lean as possible puts a strong focus on the hardware supply chain. Doing more work in less time and with fewer resources frees up these tech companies’ resources to spend more time on developing and selling their product. The hardware supply chain is complex – simultaneously dealing with component lifecycles, software compatibility with new hardware, supply constraints, tariff restrictions – and, that’s just the tip of the iceberg. 

Manufacturing and logistics may switch from a build-to-stock to build-to-forecast model, as well as stocking inventory in other regions of the world to put products closer to end customers. For example, by building products to forecast, customers take advantage of our managed inventory program where MBX shoulders the cost of the hardware until products ship to their end-users. This keeps financials looking strong because it removes the requirement for customers to tie up cash for buying inventory, which sits waiting for an order.  

We basically relieve customers of the responsibilities of managing their hardware supply chain and provide a software toolset for them to oversee the process and all its moving pieces. A couple of years ago we built up our own internal team of software developers to design this radically advanced technology to manage the hardware supply chain, and we call that product Hatch™. Hatch lets customers operate a lean hardware program because it aggregates all their data intelligence to run reports, make strategic decisions about products and inventory, and analyze global data to know everywhere in the world their products can be exported to while investigating potential new markets to fuel growth.

Cresting the mountain

Requirements over the life of a company and its technology changes at each inflection point along the journey. The duration, valuation, and interdependencies at each stage aren’t perfectly predictable. But their hardware partner can help shepherd them over the mountain and reach their goals with the fewest obstacles, whether their ambition is to achieve funding, become acquired, or simply improve their return on investment to keep their business healthy and growing.