und Internet Capital hält 27% an der neuen Starcite:
Starcite's President/CEO and its chairman speak to MeetingNews about the OnVantage merger and its effect on meetings technology
September 12, 2006
Why this merger of StarCite and OnVantage now, and what role did market conditions of the meetings business play?
MICHAEL BOULT, PRES/CEO: OnVantage closed a round of financing that was reported earlier in the year. That activity brought in a new series of investors, predominantly Texas Pacific Group Ventures and Norwest. VCs are always looking to maximize their return and always having conversations about how they can do that. This was an opportunity for them to chat about how this combination might indeed benefit themselves, the employees, and the marketplace.
So from that casual conversation became less casual conversation about, “Let's take a look at some numbers. Let's test the waters.” And as we went along, we saw that OnVantage would win one; then StarCite would win one. Both companies were growing because the demand had increased. There wasn't a sense of either company failing, or of either company needing to do it. It was actually the opposite. Both companies were doing very well.
But both companies were about to do some very important things: investments in small meetings, investments in international growth, investments in their platforms. Both companies were funded to do that and could have done that, but at the end of the day decided that it makes sense for us to do that together.
What is the strategy of the new StarCite going forward and how is it different if at all than that of the two companies separately? Is your strategy coming from the notion that you are the big dog in this niche now?
MB: It isn't very different. Our paths were almost identical. We're focused on executing across that common vision. It's a larger company with a tremendous foundation of customers and suppliers.
But we're only three percent of the combined market--if you agree with the estimate that it's a $300 billion market, then we're at three percent of that market. So there's a tremendous upside, a tremendous way to go. By no means is this a monopoly as some people have alluded to, by no stretch of the imagination it is that. It focuses on growth, on expansion, on innovation, and all the things that we've always done.
Expansion and innovation in what areas?
JOHN CHANG, CHAIRMAN: There's a number of different ways that we can expand. Now we can take our combined resources and continue to build out capabilities that will really benefit our customers. For example, if we look at the hotel side, they are receiving RFPs from StarCite and from OnVantage--two different systems. Ultimately, as we go through the integration process, they will be able to respond to all these incoming leads through one method. If look on the corporate side, the easier it is for them to contact hotels the better it will be for them to procure meeting space and hotel space.
We've also got the small meetings initiative that requires build out. That will continue. We also have expansion plans for international. We already have a footprint that goes across Europe and Asia, and we intend to put resources into that.
MB: We think we can be faster to market. We think we can accomplish more together than we did separately. All those concepts are driven towards usability, simplicity, characteristics that we want to bring to the market.
What is your target market?
MB: From a headline perspective, the “Global 5,000.” We're already managing many customers in that profile. But our products are also being used by very small companies, very small third parties. Our target market is the Global 5,000 but we have got a very broad customer reach. We have associations using our products, we have dozens and dozens of third parties.
What are you offering or plan to offer the vast majority planners: the occasional, or ad hoc, planner; and the independent planner? How does this merger benefit them if at all?
MB: We have those people today as customers. We have come a long way and we have invested millions of dollars in creating what we think is the best capability, the best platform in this space. But we know that there's more work to do in usability and simplicity. Our view is to continue to invest millions of dollars to improve our products. to make customers as productive as they can possibly be.
Have companies been slow to adopt meetings technology in regard to their comprehensive meetings management?
MB: You can speak to anyone trying to provide technology in any marketplace to solve customers' problems, to create efficiencies and savings, and they'll always tell you they are frustrated with the present lack of adoption. As optimistic entrepreneurs, we of course believe in what we do. We believe everyone should be using this today. You're never patient enough.
In the last four years there's been a tremendous amount of interest, and that interest gathers pace. So in four years both companies have come a tremendous way. If you look at GetThere, it's taken them 10 or 11 years to get to the position they're in. In travel, things take time, but generally, as in Moore's law, they tend to accelerate as well. We seeing that acceleration, absolutely. It takes time for the market to understand and accept. It has a time of its own, it's about change management, it's take time. It's very hard to do that. Companies have lots of people this impacts, and it hasn't been a core issue for companies. If you see the wave of procurement through corporate America, you're getting to this second or third layer of spend. It's not that they don't want to do it; they've been preoccupied with the strategic purchasing. Now they're into this huge indirect spend. They're addressing it now.
Where do you think meetings technology headed?
MB: It's an evolution. The usability issue, for sure, is top of mind, especially with occasional users. There's more to be done from a global perspective. From the more consumer-oriented technologies, we can learn a lot of lessons from how people interact. It's a complicated issue and business proposition that we're trying to solve. Simplicity and usability are things we know we need to invest in. Originally, when you went to a travel booking site, it probably took you 25 clicks to make a reservation. Today, it takes you three. That's the kind of path we're talking about.
JC: If you look at the corporate side, the biggest challenge is adoption. We've got to make the technology easier and more obvious so that people to adopt it and use it.
The StarCite technology will migrate to the OnVantage technology. Why is that?
MB: StarCite was in the process of finishing the GMS platform and releasing the modules. But when we were going through this merger. We would have to move a whole bunch of customers to a new technology only potentially to move them to another technology. When doing our due diligence, we found that the current OnVantage platform had the vast majority of features that we would release in the GMS platform, and had features we didn't plan to release in GMS. Rather than bring both sets of customers to a new technology, GMS, it makes sense for us to take only half the customers, being the StarCite customers, over to a platform that is already proven and is already in the market.
JC: It's not as big an upheaval where you have to rip it out from customers’ systems and start all over again. We are an on-demand company, so our customers access it via a web browser. That means it's possible to make platform transitions where a lot of users won't even notice the difference.
Now that the two leading meetings technology providers have merged, do you see any other providers of meetings technology as competitors? And if not, then might not both suppliers and buyers eventually pay more for your products and services?
MB: In terms of pricing, we represent three percent of the market. So pricing power is generally determined by the size of your market share. With three percent of market share, we don't have any illusions that we have pricing power in the market. In terms of competition, there are lots of companies out there, lots of large third-party organizations with their own technology, lots of smaller companies offering point solutions in the marketplace.
JC: There are plenty of (potential) customers who are not using us. Either they're using a homegrown system or they're still apathetic. So to get that other 97 percent we're going to have to continue innovating and helping them adopt the technology and be successful with it. The focus on pricing is premature.
How many corporate customers does each company have?
MB: The new combined company client roster is close to 500, and out of that 500 we service 135 multi-national corporations--global 5,000, third parties, associations, smaller corporations.
Why the name StarCite, why StarCite and not OnVantage or some new name?
MB: New names are expensive and confusing. OnVantage is very well known in the space but doesn't have the same heritage and longevity as the StarCite name. We think the StarCite brand is very well known, is appreciated; it's a good vehicle.
How many board members from each side, or each company?
MB: It's a seven-member board.
JC: Three from each side, plus Michael as the CEO.
How many employees are there in the new company? Are you planning to add or reduce employees?
MB: We have about 20 job openings. We are growing very quickly. There are some losses and some overlap as a result of bringing the two companies together but it's pretty small. The story is about expansion. To answer your question, with associates and consultants, about 425 today.
Is $5 billion in sales leads represent the two companies separately so far this year and combined with the new, merged company for the rest of the year?
MB: That's correct.
Up 50 percent from what the two companies did in 2005?
MB: Yes.
Same thing for the attendee registrations?
MB: That's correct.
The database is 93,000 hotel properties and meeting suppliers without overlap?
JC: Right
MB: That's right--exclusive, unique.
How many of those 93,000 are hotel properties?
JC: It's between 55,000 and 60,000.
So, nearly 60,000 hotels and the rest are other kinds of suppliers?
JC: Right.
When are you going to have a single database?
JC: It's less about one database and more about different audiences. StarCite and OnVantage each had complimentary and sometimes overlapping types of meeting planners. As we go forward, our plan is to stratify that a bit and allow the hotels to more easily reach the type of buyers that they want. We're going to focus more on the audience that hotels want to reach and them help them reach that kind of audience. The content and the database really should support that effort.
It's going to matter on which buyer doing the search. Even though we may have a technically true unified database, if the buyer searches and that buyer doesn't fit the criteria of the supplier, that buyer is not going to see those suppliers.
When do you expect to have this unified dataset?
JC: We're still going through the planning for that. We don't have a definitive timeframe.
MB: It's one of our priorities.
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