Rightmove, GEICO & ADAS, Vitec Software, AO, TI & Analog, MNDY, Evotec, Sunbelt / URI, Clarivate

Published Last Week

1. Rightmove, OnTheMarket, and EweMove: a Hybrid Agent Perspective

2. US Auto Insurance: ADAS Impact on Pricing

3. Vitec Software: History, Culture, & Operating Strategy

4. AO World, Amazon & UK Online White Goods Competition

5. Analog Devices vs Texas Instruments: Go-To-Market Strategies

6. monday.com: Product-Market Fit Challenges

7. Evotec: End-to-End Partner to Big Pharma

8. Sunbelt, United and Herc Rentals: Customer Perspective

9. Clarivate: Management, M&A, & the One Clarivate Strategy

Constellation Software: IP Learning Journey

Quick reminder that we continue to add IP Learning Journey's to our platform. IP Learning Journey's aim to curate our interviews and research on a specific company to help you learn and navigate our library more effectively. Our library focuses on surfacing insight, not information. We focus on helping you discover, understand, and build conviction to invest in quality companies.

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Here is the content index for our Constellation Software IP Learning Journey:

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Over the next 2 months, we aim to publish Learning Journey's on the following companies:

1. AppFolio

2. Ashtead & US Equipment Rental

3. Rightmove

4. Intuitive Surgical

5. Fever Tree

6. Danaher & Bioprocessing

Rightmove vs OnTheMarket: Agent Perspective

The second interview in our series on RMV's defence against CoStar's OnTheMarket explores how EweMove, a leading UK hybrid agent, markets its housing stock on property portals.

One of the most important first steps in the house purchase journey is the seller requesting a valuation of their property. Given its scale, Rightmove is a key source of valuation leads for agents. As a seller requests a valuation via RMV, it collects the seller details and sends the lead to a select number of agents:

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This user journey is critical as it's one of the most important lead generators for agents to win new stock which drives future fee income. However, as shown above, there are only 6 agent slots to receive valuation leads. Rightmove sells these slots in its Optimiser Package. If agents downgrade, they lose the spot on the valuation user journey and another agent steps in.

The Optimizer package is an interesting tool. Rightmove offers it to agents for around £1,300 to £1,400 per month, which can be used on various advertising tools. However, if a slot is already taken, you can't spend on it and have to divert your funds elsewhere. This could be on banner ads or a microsite within the Rightmove profile. - Former Branch Manager, EweMove

Just how much value RMV provides in this user journey is of question. RMV will notify each agent of the valuation request without much qualification of the lead. Agents are required to chase the user for the physical valuation in the hope of winning the stock. Exactly how this user journey works for both end sellers and the agent is critical in driving conversion and the agent's productivity.

This user journey is one area OnTheMarket aims to add more value to agents than RMV. OTM is qualifying valuation leads to improve conversion and overall productivity for agents. This interview explores in more detail how OTM is approaching such user journeys and where OTM can compete with RMV.

US Auto Insurance: ADAS Impact on Pricing

This interview is fascinating. A 38-year old claims veteran at GEICO walks through the history of auto technology on insurance underwriting and the potential impact of ADAS on total losses and severity. One reality that shines through in the interview is how long it takes for technology to fully penetrate a market. Gas-powered cars are going to be around for a very long time...this reminds us of Couche-Tard's slow and steady strategy of consolidating gas stations.

Even if all 15 million new vehicles sold each year in America were equipped with this technology, it wouldn't significantly impact the overall fleet because there are 240 million to 280 million vehicles that don't have it. As I mentioned in another presentation, it typically takes 30 to 40 years for newly introduced technology to reach 80% adoption...front crash prevention. This is a new technology. It was first introduced in the 2000 model year and by 2009, it became standard on 1% of new cars. As of 2022, it's standard on roughly 70% of new cars, but only 28% of the total fleet. - Former SVP at GEICO

The adoption of ADAS technology within vehicles is not only influencing underwriting, but repair shops now require calibration equipment to repair sensors and technology within the vehicle. This drives the cost of repairs which impacts loss and severity rates and thus insurance pricing.

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The interview shares fascinating studies of the impact of auto technology, repair rates of Teslas, and how insurers source parts for repairs.

Vitec Software: History, Culture, & Operating Strategy

A Former Director of Vitec Software, who worked closely with the two founders, shares insights into the company's philosophy and operating model post-acquisition:

There's no company-wide growth rate set for all the subsidiaries. When Patrik was the COO, he would meet with the management team of real estate agents and discuss growth strategies and reasonable levels. He would have a notion before the meeting, and then there would be a discussion. - Former Director at Vitec Software

No explicit growth targets are set for opcos:

The priority is to maintain sales at the same level, not to lose turnover. If they can achieve a 12% net profit on that, it's considered successful. - Former Director at Vitec Software

The interview goes on to explore how Vitec budgets for opcos, company culture, and challenges scaling the group operationally.

AO World, Amazon & UK Online White Goods Competition

AO World is a £600m UK-listed online white goods retailer. It’s the UK leader online but around a tenth of the scale of Curry’s, the omnichannel market leader. This interview with a Former Director at AO, who spent over 14 years building the company, shares the difficulty in building a sustainable competitive advantage in ecommerce:

It's less unique than it was. In the early days, we had a first-mover advantage. For instance, we were the first to offer next day delivery and had the widest range. Compared to Currys, which was Dixons back then, we had 4,000 products while they only had 500. We charged 4% less on average. We were the first to do next day delivery. We were also the first to launch services for home installation. Our success pre-IPO came from our scale. It's the Jeff Bezos model - availability at a good price, delivered really fast, with excellent service. That's what we offered. We were also very strong digitally, being the first to partner with Google for API integration and the first to put videos live on the website. However, everyone copies you eventually. - Former Managing Director at AO World

AMZN may potentially pose a risk to AO. As the screen below shows, OEMs are increasingly selling direct on AMZN which offers installation services through its 2-man delivery network:

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The same product is shipped and installed via AO as shown in the image below. However, unless customers are an AO member, the price is slightly more expensive on AO compared to AMZN.

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This interview goes on to explore how AO can compete with AMZN, the value of memberships in white goods retail, omnichannel vs pure-play online, and what drives differentiation in large and bulky white goods retail.

Analog Devices vs Texas Instruments: Go-To-Market Strategies

This interview shares insights into the sales and marketing philosophy of Texas Instruments and Analog Devices. One potential takeaways is that TXN is more commercially-focused, whereas ADI is product-led with more strict minimum product margins. This philosophical difference may be one of the reasons why Analog Devices is moving away from the general-purpose part of the market and towards more application-specific products.

Our biggest weakness was in comparison to TI, which is a commercially well-managed company with strong market presence and high operational efficiency. Consequently, their cost structure is lower. Their management is also adept at financial engineering. They acquired a 0.18 micron fab and depreciated it, enabling them to produce ICs at the lowest possible cost. ADI, on the other hand, was never into this game. ADI's strategy was always about producing the next best thing. If we missed a tape out, it wasn't a problem. We would do it six months later because if not this customer, then another one. We were always behind in the market and even aggressive pricing was strictly regulated. Anything below a 70% margin we wouldn't sell. ADI has this chip on its shoulder compared to TI, which was always hungry for market and revenues. - Former Marketing and Strategy Head at ADI

A Former Head of Marketing and Strategy at Analog Devices further sheds light on the differences in go-to-market approaches between the two companies.

monday.com: Product-Market Fit Challenges

A Former Customer Success Manager at a monday.com Partner sheds light on the challenges the company is facing when it comes to product-market fit.

to give you an idea, but not exact figures, previously, if a seat for the core work management product cost $50 and you were also using the sales CRM, you might have only been charged $60 for both products. It was just a bolt-on cost. Since February, with the pricing changeover, they are now charging them as completely separate products for the same seat. So, the same person might have both products or might have three products, say the marketing tool or the dev tool as well, and they would be charged separate pricing. So, $50 for the work management, $40 for CRM, and $40 for the marketing or dev tool. Previously, if you had access to work management and there was something happening with that particular item on another product, you'd be able to see and action that. Now, if your seat specifically doesn't have access to the other products, you won't be able to see anything beyond what your seat pays for. - Former Partner Success Manager at a MNDY Partner

Evotec: End-to-End Partner to Big Pharma

Evotec is a German CRO and CDMO with proprietary platforms to assist pharma and biotech companies from discovery to commercialization. In this interview, a former EVP of Chemistry for Evotec's drug discovery platform explores the importance of Evotec's proprietary patient data to improve speed and reduce the cost of drug discovery for its customers:

Evotec is now focusing on building proprietary molecular patient databases in certain disease areas. They are collecting high-quality clinical data from very homogeneous sets of patients over time, in a carefully curated way. For instance, in the kidney disease space, they have data from over 10,000 patients. These samples are then sequenced, producing a massive amount of data. - Former EVP at Evotec

The interview goes on to share insights into Evotec's business model and strategy to become an end-to-end partner to customers.

Sunbelt, United and Herc Rentals: Customer Perspective

Given the equipment fleet sold by rental companies is very similar, understanding the nature of competition as the industry consolidates is a key question of our research. This rental customer provides a customer perspective of Ashtead and United Rentals:

Honestly, they're all quite similar. The major players like Herc, United, and Sunbelt all have good portals. The problem is that if the rental market could consolidate into one portal for all equipment telematics, it would be much easier. I don't want to have to log into Sunbelt, United, Herc, Neff, and so on. - Current United Rentals Customer

The interview also explores how customers think about renting vs owning, limitations to rental penetration across fleet equipment types, and how to customers measure utilisation:

If the equipment we need was available for rent, we might consider it. However, we can't rely on rental companies for our core equipment. To me, rental equipment is a way to supplement your operations. If we were renting 600 pieces of equipment, that wouldn't be efficient, especially if we're running all those assets and putting hours on them. - Current United Rentals Customer

Clarivate: Management, M&A, & the One Clarivate Strategy

Last week, we published an interview about Clarivate's acquisition of CPA Global. This interview with a former Vice President of Clarivate's Life Sciences business shares reflections on mistakes within the company's M&A and One Clarivate strategy:

Initially, the plan was to operate under one Clarivate, selling all solutions across the board, but this was failing. It took me about 90 days to realize the extent of the problem and to understand where we were headed. After this period, I suggested that we needed to segment our offerings into separate life sciences, academia, and so on. I worked with other agencies, including McKinsey, to devise a go-to-market strategy.