Hi everyone, I’m a long time listener (reader of these threads), first time caller (poster).
I bought LVT shares (2000 units) in Jan 2018 (56c) and sold last year for a loss (0.26c). Since then I have kept an interest in LVT as I still “hope” it’s a success story.
I originally came across LVT in 2017 when Peter NB posted content on LinkedIn that someone in my network liked. I work in IT/Tech and have worked for professional services/tech companies that are also Microsoft partners. Perhaps I can offer my 2c on the company and their value proposition, given that I’m in a similar industry and have worked for companies I consider to be similar to LVT.
Back in 2017 I could see huge potential in LVT as their core offering of intranets/portals was something that I was hugely excited by, and given that I was working for an MS partner who was trying to develop the same solution (out of the box intranet solutions) I could see how far along they’d come with their product and could see market potential. So my journey began as an employee in tech working for a different firm, secretly admiring LVT on the sidelines, and then dived into investing in them.
Since then however, and specifically in 2021, I have become very confused by what they ACTUALLY offer from a technical product perspective. Their marketing and branding continues to change, their promotional language has become quite vague, and their product lineup has constantly evolved. Ultimately they have shifted focus on what they want to promote, which to me has been the reason for the decline in momentum. It’s gone from “enterprise apps should be in one place, just like on your iPhone” which had huge upside potential to “we focus on employee experience” which is vague.
So instead of having a clear, single product that they could continue to promote and scale, they have introduced products like Reach, and now LiveSmiles, which is admirable from a company “values” perspective but hasn’t gained traction for me because it’s confusing and isn’t really a product to purchase.
The new focus areas have also probably meant that customers using the old, original product are feeling unloved, and for all we know have been requesting product upgrades and new features but are not getting them, so they leave. This could be a reason why customer numbers are falling. Tech products aren’t “set and forget” - if you aren’t releasing new features, getting rid of bugs and continually enhancing the product, you’ll go stale. The other challenge (which was always there) was that their core product could be replicated by building a nice SharePoint intranet internally. Any company with a decent IT team could build an intranet/portal and have a workable solution without the ongoing monthly fee. It might not be as pretty as LiveTiles but it would be functional, and not burn into operational budgets. To a non-Technical executive (or finance officer) they would most likely say why would they spend more money on IT when they could do it themselves? This could also explain the plateau and then decline in customer numbers.
I also had a former colleague (non IT background) attend the virtual Simon Sinek session and whilst they said it was great, they walked away having learned nothing about what LVT actually does. To them, they appeared to be an event hosting/facilitation company! Although this is one small example, to me this is a major problem with how they market themselves, it’s just not clear enough to a non-technical audience. And as I’m trying to say in this post, even to a technical audience it’s no longer crystal clear.
The acquisitions they’ve made along the way seemed exciting on paper (at first) but in reality have broken the company (in my opinion!) Having also experienced M&A’s (the company I worked for acquired numerous other tech companies - either to grow their footprint, buy their way into a new market location, or take out a competitor) - I’ve seen that they can cause huge amounts of tension between owners; create brand confusion when marketing teams try to integrate disparate brands, and even culturally things can change (the “old” software team merging with the “new” team). It may have all been smooth sailing internally, but acquisitions are way more complex below the surface, and merging teams from Europe, Australia and the US would be interesting from an organisational culture perspective. So I think building the global footprint without first having solidified the product offerings has meant there are tensions around which direction/product/market to focus on. You can’t grow organically all over the world without having clear strategies, dedicated teams in each market/region, and clear and unified products. Especially given that selling to European clients is very different to American clients etc.
Overall I think the views on HotCopper around the management team (particularly all the discussions around Peter and Karl) are possibly a bit harsh, but it’s difficult to fully assess. I don’t think they are out to destroy the company and deliberately swindle people’s money - they are just trying to survive, grow the pipeline enough to move to the next level of growth, and then subsequently see that growth reflected in the share price. Having said that, I don’t think they have done a good job in the past 12-18 months to realise their full potential, and there have been numerous mis-steps along the way. The market updates have constantly shifted goalposts, and there is a lot of spin and repetition of key points in each quarterly update. They are perhaps now struggling with the pressure of growing, and are now second guessing themselves trying to come up with announcements or initiatives that move the needle on the share price. The problem with that though is that management thinking shifts to short term thinking and focuses more on what looks good on paper than what is actually best for sustainable growth. Now they are dealing with shareholders who’ve lost faith and/or patience, and it’s currently leading to a downward spiral.
However, management issues aside, I think the main issue with future growth prospects has been solely driven by the evolution of Microsoft’s products. This is happening frequently with Microsoft Azure and office 365/teams products, so the landscape is constantly evolving and shifting for many partners and even for Microsoft employees themselves, who are constantly needing to keep up with changes.
Regarding the Microsoft partnership, I don’t think it means much to Microsoft themselves, but would ultimately depend on their priorities and how many clients they feel LiveTiles could either service or introduce to Microsoft. They are fickle in many ways - as harsh as it sounds, they will use partners until they have no more use for them. They will work together on business development (occasionally fund proof of concepts, assist with presales activities if required, and refer clients to partners), but only until the next best thing comes along. They’ll focus on other partners if someone better comes along, and you also have to remember that their internal sales team are constantly changing directions too. If the Microsoft dev teams in the USA announce a new product (which happens all the time), the Microsoft sales and partnership teams all around the world will shift their focus to promote that instead, so if an existing partner is selling an existing product, Microsoft will try and push the new product instead, and unless the partner shifts focus too their priorities won’t align. Additionally, you’d have to wonder if LVT would actually bring a new client to Microsoft altogether - their customer base are likely already using Microsoft products and buying LVT as an add-on, not the other way around. So I don’t think they have a particularly unique, or special relationship with Microsoft (from a sales and marketing perspective), other than their entire business model is dependent on them.
Which brings me to Microsoft Teams - which in my view is the product that has single-handedly thwarted the growth of LiveTiles. Even though they say it’s complementary, in reality I think it has diverted potential sales away to a “free” product. Microsoft will continue to develop new products for Office 365, which will continue to disrupt companies that base their entire model of them. If the evolution of one of their products kills off or reduces the value proposition of a “partner” then that’s the cost of progress in their view. Microsoft will prioritise keeping customers in their own ecosystem over the viability of a partner. They will of course try to balance the two, but in this case I think it will continue to undermine the value proposition of LVT.
Teams has enabled collaboration, but also importantly its enabled integration with other Microsoft and enterprise apps/systems, and also acts as a communication tool (so companies can “Reach” their employees, if you like). If you’re running a business, and you’re already paying for office 365 (outlook, productivity suite like word, PowerPoint etc), and you get Teams and even SharePoint included - why pay for another product like LiveTiles when it does everything you need? It’s all in the configuration of these tools. If your company is well organised, and can manage its files and systems in a coherent way, then all you need is Microsoft 365 and Teams. If you’re disorganised and chaotic, LiveTiles won’t fix that. It’s just a Band-Aid on a gaping wound. Which is why cracking into enterprise companies can be hard - in large organisations it can be hard to manage information, files, systems in a neat and organised way.
Teams is also even reshaping how companies organise themselves digitally, as it’s disrupted the use of emails, reduced the use of Yammer, and even shifted some companies away from having an intranet. If a staff member can belong to multiple teams, receive updates and announcements via teams channels, and chat to anyone whenever they like - all in one app - what else do they need to use? Adding more apps or systems or “web pages” to this adds more clutter.
Sorry for the long post, I hope what I have to say is somewhat useful. I may be way off track, but having observed things for a few years now, I thought it was about time I popped in for a chat.
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