The problem with hype is that it spreads panic in the early players, irrational enthusiasm in the startups, and chaos with customers. Keeping a rationale calm approach in the midst of all news and newcomers is hard to accomplish.
Abry Partners, whose capital investment in KORE Telematics started in 2014, has achieved that. Abry’s investment strategy is matched well with KORE’s acquisitions. KORE’s recent acquisition of Wyless follows its integration of past purchases of Jazz Communications and Raco Wireless. In talking with Alex Brisbourne, the CEO of KORE, the parallel between Abry’s vision and the acquisitions becomes apparent.
Abry lists its investment strategy as having three components.
High barriers to competitive entry;
Predictable recurring revenues; and
High operating leverage.
KORE, as James Brehm has put it, has become the IoT MVNO big dog. KORE has relationships with most of the world and with the acquisition of Wyless improves in Brazil and northern Europe (including the U.K. and the Netherlands).
Abry Partners points to the need for predictable, recurring revenues. The acquisition of Wyless includes a subscriber base of nearly 1.3 million subscribers.
As for operating leverage, the role of the MVNO is to treat the carriers as suppliers and meet the demand of enterprises. As Brisbourne pointed out, these days every enterprise has an international component. Either you are selling beyond your borders, or being supplied internationally; it’s rare that an enterprise does need services that reach around the world.
KORE’s offices and contracts give it feet on the street where business needs help.
In the case of Wyless and the previous acquisition of Raco Wireless, the focus has been on tools that make data more available.
Brisbourne also pointed out that customers want to maintain ownership of the data and to have tools that allow them to manage it. Enterprises understand that their implementations and the data collected today will probably expand tomorrow so the goal needs to be agile adaptability.
As the largest MVNO, KORE has a diversity of device partners. The choice of sensors, modules, and devices is essential given the diversity of applications in the market, so the MVNO has to honor those requirements.
Now in the case of Abry and KORE, the strategy has been one of maintaining a lead in the market. Like I said: a rationale approach.
Elsewhere we have irrational enthusiasm in startups that think they are unicorns. As unicorns go, Uber has become a noun and adjective for like-minded and usage-based services. Uber expands its services to include delivery and appointment management, while at the same time its business model has several me-too companies that claim geographic or demographic differences. However, the key benefits of Uber’s disintermediation needs to be examined to understand if the unicorn is unique or if every horse in the stable can glue on a horn.
Adapting and adopting the technology becomes a critical point to understand.
As IoT technology goes it’s amazing that Uber, the most ubiquitous IoT application, only uses a smart phone app and back-end systems to deliver solutions.
Uber does have a convenience value that gives it an advantage over taxis – for today.
Taxis have a disadvantage in the fact that the fare is based on recovering the government licensing for today.
The questions that should guide your participation in the eventual IPO are:
When do taxis adopt equally convenient software?
When does the government equalize the relationship between medallion owners and Uber drivers?
In one case we have an investment strategy that manages hype and another that rides the tide of the hype.
Everything suggests that we have a moment of time with windows of opportunity. For me the soundness of the Abry/KORE strategy is that the companies have propped open the window for as long as they can.
Edited by Ken Briodagh