Rationale of the Campus Company

No, I've not yet got the 50 million Euro's required to set up business around some promising new technology solutions. But my blog received quite a lot of "nods" and suggestions. Two elements jumped out: The lack of innovation by the big IT-conglomerates after the consolidation wave (more on this in a next blog) and the rationale behind my idea of a campus company, also in response to Hans Lodder's blog on Building your own acquisition factory.

Behind any acquisition stands essentially a set of financial drivers. Probably also market "synergies" are mentioned in the press release, but (perceived) money rules it all. A campus company should of course also be driven by and managed through financial KPI's. On top of that there are other reasons to create this type of company.

First a simple definition: A campus company is a commercial organization where innovation, marketing and profit go hand in hand. The aim is not necessarily profit maximization (short term focus), but profit optimization (sustained profit over years). R&D budgets are not fixed nor a percentage of revenue, but a percentage of the profit: Making money to allow for making money in the future, and thus making R&D part of the daily operation, not just some hidden staff.

With the above in mind, let's revisit some of the elements that could make companies and technologies flourish in such a campus environment:

• Richness of ideas
  The solutions I've seen all have much too much functionality. Either because of the flexible nature or because incorporated ideas are just ahead of time and market. The campus company could help in two ways: Defining and delivering the solutions the market is waiting for, and rethinking/experimenting with the not yet sell-able functionality.
  Think back: How much room for the latter was available in your companies?
• The founders trap
  Sorry to say so: Founders and CEO's stay to long at the steering wheel. Yes, they are brilliant, entrepreneurial in their way and have made their company survive and successful during the first few years. But they are not that good in expanding, diversifying, delegation, and working with shareholders. The results are stagnation or no growth, lots of "mis-hires", a drain of talent, and losing control of your personal destiny. In a campus company these people can just do what they are best at: Generate new ideas, incubate new businesses, become a professor, and still share the success of their products being sold.
• Marketing and Sales
  A campus company could provide a "world class marketing & sales force", just because of critical mass and the potential number of success solutions at hand. Hardly any of the individual companies I see are able to spend enough money, attract the required quality people and manage the sales outcome. All have tried (more than once) to get this going, few have made it really work. Using generic structures and market tailored approaches will work much better.
• Labeling
  It is relatively hard for small companies to get at the table of potential customers. Preferred suppliers block outsiders, partners often cost more than they bring, support demands become a costly thing, and tender procedures are hell. The campus company could provide a more recognizable label to overcome some of these hurdles. First by presenting itself as it is: A front office for a conglomerate of technologies and solutions. Stable and large enough to be a serious counterpart and provider. Secondly by providing generic facilities for topics like support, SaaS-solutions and training. Sales-wise I see generic procedures and structures, and specialized tailor made approaches for solution/market combinations.

Acquisition will be an important element for a campus company. Looking for new talent, technology and solutions are as important as own R&D and fuel the growth. Will acquisition not drain the profit? Apart from a part the 50 million which is set aside for this and part of generated profit which can be used, the types of companies and CEO's I see as candidates are often "not yet ready". They are willing to become part of the campus company and are not necessarily only cash focused. Venture capitalists are welcome. Of course, they should underwrite the sustained profit objectives of the campus company.

Am I dreaming on? I still don't think so. And you? Let me know what you think. Looked under your mattress for a part of the 50 million for me? Let's talk.

hans.van.nes@results2match.com