Thought Leadership for Expansion Stage Companies (Case Study 2)

 

Thought leadership is an incredibly powerful tool that every expansion stage software company should harness. It’s relatively inexpensive and, if done right, can brand your company as a market or industry expert. Scott Maxwell

 

In the previous post I described the origin of thought leadership, the basic principles for developing and executing a successful thought-leadership strategy, and a case study for an innovative software security product. The first case study described how thought leadership contributed to a classic turnaround and successful exit of a startup that initially failed to gain traction. This case study examines how an established public corporation used thought leadership to position itself as a leader in an emerging high-growth market, facilitate a major change in its business model and execute a successful merger.

 

An Enterprise Electronic Laboratory Notebook 

Initial Situation

Founded in 1994, Symyx Technologies (NASDAQ: SMMX) was a pioneer in high-throughput screening (HTS). Its proprietary technologies—including unique instruments, software and methods—provided a platform to reduce the time and costs of new materials discovery. Its revenue model was based, in large part, on technology agreements with corporate partners, especially Dow and ExxonMobil, which provided funding for research and discovery efforts, commercialized materials, and paid royalties on commercial sales. This model helped Symyx grow revenue at a compounded annual growth rate (CAGR) of nearly 25% between 2003 and 2006.

Symyx acquired several companies (Intellichem, Synthematix and MDL) between 2004 and 2008 to build its presence in scientific software, especially in the emerging electronic laboratory notebook (ELN) market. The ELN began in the 1990s as a discipline specific software tool for synthetic chemistry, analytical chemistry, process chemistry, discovery biology, pharmacology, or other biology and chemistry disciplines. In the mid-2000s several companies, including Symyx, began developing an enterprise ELN that would work effectively across all biology and chemistry disciplines. In 2008, Symyx introduced its enterprise ELN, Symyx Notebook 6.0.

At the end of 2008, the Symyx share price stood at $5.95. It had fallen over 50% (from $12.58) since September 2008, and it would continue to fall to an all time low of $2.39 in March 2009. While the global financial crisis was taking a toll on most companies, the Symyx situation was exacerbated by the impending expiration of its research contracts with Dow and ExxonMobil in 2009.

As Symyx ended 2008, its most significant growth opportunity was in the ELN software market. ELN total available market (TAM) was estimated to be over $1.5B. Although the served available market (SAM) was relatively small (about $100M), it was growing at a compounded annual rate between 20% and 30%. However, the Symyx ELN market share was only about 10%, and trailed the market leader’s 25%. At 22%, the brand awareness of Symyx Notebook was less than half of the market leader’s 49%. And its brand confidence stood at 32%, compared to 52% for the market leader.

In January 2009, Symyx launched a thought leadership strategy for Symyx Notebook, its enterprise ELN, as part of an integrated marketing program, to build its brand, drive revenue growth and increase Symyx enterprise value.

 

Analyst Relations

The analyst relations strategy was divided into two segments:

First, we concentrated on positioning Symyx Notebook with Atrium Research and Consulting, the only research firm closely following the ELN market and publishing an authoritative annual report. We consistently briefed Michael Elliott, Atrium CEO and chief analyst, on our enterprise ELN strategy and demonstrated our new product capabilities as they were introduced. The 2009 ELN research report included Symyx in the “Leader” segment of its ELN performance matrix.

 

ELN matrix from Atrium Research 2009 report (company names omitted).

 

 

Second, we briefed larger analyst firms, including Gartner and IDC, although not with the same focus and frequency as with Atrium. In both cases we positioned ourselves as a niche company in product lifecycle management (PLM) for process manufacturing. This allowed us to move beyond the R&D informatics category and be recognized by IDC Health Insights as one of the Top 10 Life Science Software Vendors, along with leading enterprise software companies (we ranked number 4 behind Oracle, SAP and SAS, respectively). The report stated the following:

"The top 10 life science software vendor list includes enterprise and specialty vendors. The inclusion of specialty vendors in the enterprise life science software top 10 list reflects significant growth trends impacting the industry. The conversion from paper-based efforts to electronic systems to improve information collection, analysis, and accessibility is driving vendor growth across the pharmaceutical value chain, including rapid growth in electronic notebooks..."

Download IDC Health Insights Top 10 Life Science Software Vendors

 

Media Relations

The media relations’ strategy was to establish Symyx as a thought leader in the emerging enterprise ELN market, and the goal was to author or appear in 12 feature articles in publications reaching lab scientists in chemistry and biology domains. Between January and December of 2009, Symyx authored or appeared prominently in 16 feature articles in 10 target publications: 

• Bio-IT World (Jan/Feb)
• Scientific Computing World (Mar/Apr)
• Bioscience Technology (May)
• Next Generation Pharmaceuticals (Jun)
• Scientific Computing (Jul)
• Scientific Computing World (Jul /Aug)
• Drug Discovery & Development (Jul/Aug)
• Lab Manager (Jul)
• Pharmaceutical Manufacturing (Aug)
• Lab Manager (Aug)
• Pharmaceutical Manufacturing (Oct)
• Next Generation Pharmaceuticals (Nov)
• Bioscience Technology (Nov)
• Outsourcing Pharma (Nov)
• Bio-IT World (Nov/Dec)
• Innovations in Pharmaceutical Technology (Dec)

 

Download Bioscience Technology Enterprise ELN Article

Download Innovations in Pharmaceutical Technology Enterprise ELN Article

Download Scientific Computing Enterprise ELN Article

Download Scientific Computing World Enterprise ELN Article

Semi-Annual R&D Journal

Scientists are a special class of B2B technology customer. They are very skeptical of advertising and publicity, which they consider to be largely “hype and spin.” On the other hand, scientists live to publish. One way to take advantage of this inclination is to publish a high-quality periodical. At Symyx we produced Molecular Connection, a semi-annual scientific R&D publication, as a primary thought leadership vehicle. It included state of industry commentaries, by industry analysts and experts, technology reviews, and customer case studies from scientists, laboratory managers, and information technology professionals at biopharmaceutical leaders AstraZeneca, Bristol Myers Squibb, Elan, Eli Lilly, Johnson & Johnson, Pfizer and Millennium. 

Download Molecular Connection – Spring 2009

 

Social Media

The 2009 Atrium Research report showed that despite a decade of market exposure 47% of prospective users knew “very little” to “nothing” about ELNs. A multi-channel branded social media program included active participation in ELN communities and forums on LinkedIn, posting of presentations on SlideShare and videos on YouTube, and engaging scientists in dialogue through the Symyx Blog, "Life in the Electronic Lab," and Twitter. One very effective social media tool was a video that provided a noncommercial explanation of what an ELN is and the benefits it provides to scientists.

 

 

Investor Relations

In late 2009, Symyx decided to restructure, become a pure-play software company, and position itself for an acquisition or merger. An important part of the strategy was CEO presentations at the JP Morgan Healthcare Conference, Jefferies Global Healthcare Services Conference and other leading investment bank healthcare conferences to emphasize actual and potential ELN growth.

Download Symyx Investor Presentation

 

Results

Essential to a successful acquisition or merger was demonstrating market share growth of Symyx Notebook beyond the 20% to 30% ELN served available market (SAM) growth rate. Successful execution of the thought leadership strategy helped achieve the following key performance metrics:

• Symyx Notebook revenue increased by over 90%, from $9.5M to $18.3M, and market share increased from about 10% ($9.5M of an estimated $98M served available market) to about 15% ($18.3M of an estimated $122M served available market).

• Symyx Notebook brand awareness increased from 22% to 45%, and the gap between the market leader and Symyx decreased from 27 percentage points (49% to 22%) to 18 percentage points (63% to 45%).

• Symyx Notebook brand confidence increased from 32% to 54%, and the gap between the market leader and Symyx decreased from 26 percentage points (58% to 32%) to 11 percentage points (65% to 54%).

On April 5, 2010, Symyx announced that it would merge with Accelrys. The merger valued the shares of Symyx stock at $5.75 per share, 140% higher than its $2.39 share price just over a year earlier. On July 1, 2010, the merger was completed.

Comments

[D Mark Durrett]

Hi Bruce,

This is a great story - thanks for sharing.

In this example, you state:

"Symyx Notebook brand awareness increased from 22% to 45%, and the gap between the market leader and Symyx decreased from 27 percentage points (49% to 22%) to 18 percentage points (63% to 45%)."

I'm curious, how did you use to measure brand awareness?

Thanks,

Mark

[Bruce Pharr]

Mark,

The short answer is that we had a third-party conduct an initial benchmark study to a random sample of our market in late 2008 (just before we launched the program) and repeat the study a year later. I'll send you more detail directly.

Cheers,
Bruce