Wax Digital and their “Facebook for suppliers” – can we wait 18 months?

We've featured two very good client case studies from Wax Digital over the last year - Weetabix and Durham Hospitals.  The founders of Wax come from a marketing background, and we commented on how that has influenced their philosophy and made them very focused on user experience, easy adoption, and collaboration. There is definitely a similarity of approach to Coupa there, although Wax are based in Manchester, not California!

They were covered by the Daily Telegraph the other day - quite a coup for a mid-sized UK procurement software firm. The article highlighted their receipt of a government grant to develop a “Facebook for suppliers”, a buyer / supplier network with collaborative and social media-type features. They've got a grant of £600K from the government (the Technology Strategy Board) to develop this, in conjunction with Lancaster University.

Wax hopes to use the network, which should be ready in 18 months, as a marketing tool for their full software as well as charge on a pay-per use basis for features such as setting up a competitive tendering process in the market.

Well done to them for the coverage and the grant – but here's the rub. 18 months in these markets is a lifetime, and the “Facebook for business” idea is not unique. I’ve heard a number of firms recently talking about how they want to develop the supplier network concept further, allowing suppliers and buyers to communicate and collaborate rather than simply pass documents and data back and forth. The style and functionality of Facebook, LinkedIn or Amazon are used as models rather than traditional B2B software.

I'm certainly not doubting that Wax can develop something good here - but where will Ariba be by mid 2013? Or SAP / Hubwoo, Basware and the other challengers to the Ariba Supplier Network?  Will Coupa (perhaps the leaders in bringing "consumer" thinking to B2B) have achieved world domination by then? Will Tradeshift have moved beyond e-invoicing and become a platform for wider buyer / seller interaction?

Without knocking the Wax initiative, I can’t help thinking that the timeframe is too extended, and their approach says something about the UK way of doing things as opposed to the US or even perhaps Nordic countries.

"You’ve got to learn to generate your own revenues and profits, otherwise all you’re doing is waiting for the next funding round,” says Paul Ellis, one of the Wax founders / owners in the Telegraph article.

Maybe this is the sensible northern approach - and I'm a cautious northerner too where money is concerned, so I understand it well. But when you’re in a market as volatile and fast moving as social media and, yes, even procurement solutions, I'm not sure you have that luxury of time. If you really think you have something special, perhaps you have to gamble a bit and get some funding. That's certainly the approach Tradeshift, for instance, have taken, with their recent 17M Euros injection.

We don’t tend to see UK firms thinking on that sort of scale somehow – even the successful ones, and we believe Wax falls into that category, work in a steady, measured way. Perhaps it is the Tortoise and the Hare, but we can’t help feeling that if this new idea is so great, Wax should be getting it out there now rather than spending 18 months building it in a government-grant compliant manner.

I put some of this to the firm, and Daniel Ball, the other founder, has responded (and made some very pertinent points as well)!

"...as a UK company the culture of funding is very different compared to the US but that is the market we operate in, and it’s one that favours solid performers over shooting stars. While they captivate us for a while the vast majority of those stars end up (spectacularly) burning through their investor and client cash".

We're inviting Ellis and Ball to write a piece for Spend Matters in the New Year, and give them a chance to explain more about the new initiative, and to persuade us that the UK route really is better than the US "crash and burn" approach!

 

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