Maistro – A Second Chance For Procurement Services Platform?

You may remember the rags to riches - and then back to rags – story of blur Group, the procurement services marketplace that according to its founder, Philip Letts, was going to be the “eBay of services”. “We are the world leader in what we do”, Letts said.

Letts appears to have been personally charismatic but incompetent, always a dangerous combination for business leaders (and investors). He helped to talk up the share price to a ridiculous company valuation of £400 million at one point in 2014, despite only a couple of £M of spend annually ever going through the platform. Once the bubble burst, the shares crashed to next to nothing, leading to an emergency cash raise last September and eventually the departure of Letts from the firm.

Along with that welcome change, the name was changed too, a very sensible move, and we are now talking about Maistro, still with a quote on the AIM market in London, a more reasonable current market valuation around the £7 million level, and a new-ish CEO in Laurence Cook. He only joined in late 2016 as Commercial Director, so is relatively untainted by the shenanigans of what we might call the “bull***t period” of blur Group (remember their deal with the “Welsh National Cycling team” anybody?)

Anyway, we met Cook for a brief coffee the other day and first impressions were positive. He seems a pretty straightforward and capable character, with a mix of blue chip firms such as Siemens and SopraSteria on his cv along with some more entrepreneurial assignments. He doesn’t deny the mistakes of the past but, as he says, “the problem was never the platform itself”.

There may be some truth in that. The concept and the technology was never as unique as the previous leadership made out, but there is nothing fundamentally wrong with the idea of a technology-enabled platform to help link up buyers and sellers of complex services such as marketing and consulting. That is particularly true if you look at it as a tool which could primarily help manage the lower-value high-volume “tail spend” aspects of those spend categories.

So a large organisation might have hundreds or even thousands of small marketing projects, from a few hundred to maybe £/€/$50K in size, and finding the right suppliers to deliver those successfully (and then managing the transaction) can be time-consuming. And such work is probably not where the knowledgeable category manager wants to spend his/her time either. So using some external mechanism, whether that is outsourcing or a technology option, may well be a good option here.

Maistro also seems to be pursuing a sensible sales strategy, looking to sign up large corporates as buyers with a very low-cost licence arrangement, then making most of their profit via the 20% fee which in effect comes from the supplier. That still looks high to us for larger contracts, but whether it proves to be viable will depend very much on the value Maistro can show it is adding to both sides of the transaction.

The other interesting point will be how well the firm’s AI-type matching technology works. Even with the margin, Maistro can’t afford to provide too much human intervention for low-value projects and contracts, so how well the procurement task of finding the “best” suppliers for that assignment can be automated is key.

Anyway, we’re not going to plunge our life savings into Maistro just yet, but we’re more positive than before we met Cook for sure, and we hope to take a more detailed look at the product and perhaps talk to users at some stage too. You never know, this might just turn out to be a rags to riches to rags and back to riches story after all.




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