Space Data: A Business Strategy Term Paper

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Valuation

However, it should be noted that many of these companies offering similar services were large corporations to begin with, like at&T, and thus had more financial capital to draw upon for research and development of new technology, thus making it easier to offer expanded services and increase their value as a company than Space Data.

Determining how much money is needed

Unfortunately, the need for new money always seemed around the corner for the Space Data Corporation. When more funds were required for regional testing, most capital venture funds were wary. The financial needs of Space Data coalesced with a market downturn and "the market for paging and messaging firms had collapsed over the past year, with most having plunged by more than 90% from their peaks (MacCormack 2002:11). Investment banks were not interested, except for one, provided the company's plan met with FCC approval, including "patent protection, a formal contract with the weather service, and a contract with a carrier"(MacCormack 2002:11).

Deal structure

Space Data was thus forced to relinquish some of its hands-on control over its administration because the technology it was using was growing increasingly expensive to use and the market was growing softer, in terms of available capital. As it accepted more capital from outside the family and the business, more entities gained input into the endeavor.

Marketing strategy and tactics for a new venture

The problem with the technology the two entrepreneurs selected was that it was moving extremely fast. Their original plan was to start small and relatively cheap, after the initial period of testing, and then expand. However, because the testing and funding took longer than expected, technology had grown more expensive. Paging was obsolete and rapidly being discontinued. Observed Jerry: "The bankers are pushing us straight into voice, which sounds great but scares the hell out of the engineering team. And out of the blue we now have telemetry as a new opportunity, but it's certainly not the business that we dreamed about when we founded Space Data nearly five years ago. One thing is for certain - nothing will ever turn out quite the way you imagine when you're building a technology venture"(MacCormack 2002:12).

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Operations of the business

From a small venture, the company found itself required to offer increasingly more complex services to draw financial backers and justify its costs.

Technology issues within the venture

When soliciting funds, many backers and bankers had one central question: why "should we support your move into paging and messaging, when the real opportunity is clearly in mobile voice services? Not to mention the next wave - broadband data"(MacCormack 2002:12). In other words, would the demand be there in five years, and would the technology support new innovation?

Forms of organization

From a small, relatively vertical organization, Space Data evolved into a more horizontal organization, where legally and technically astute board members had more influence and control because of their expertise, as did financial backers.

Problems with growth strategies and harvesting

The original market segment was that of a small, rural population not currently participating in the wireless revolution. However, by the time the company secured enough capital and vetted the technology, these technologies were more widely accessible, or had become obsolete, like paging. The new technology the backers wished to promote, that of telemetry and/or broadband might not be of interest to the target population, who are not 'first movers' in the digital age.

Given this problem, moving into telemetry seems inevitable, to meet the desires to financial backers, and to ensure that the technology does not grow obsolete within several years. Demand for voice technology for people living in remote areas may be the market that Space Data must investigate and ultimately exploit, even though it will require more integration into large corporate structures and directed investment by financiers than was allowed for in Jerry and….....

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