Telezoo (a): Feast or Famine?

Abstract

The A case describes the start of a new business, Telezoo, and the challenges facing a start-up as it attempts to develop a unique place for itself in the marketplace.

Excerpt

UVA-M-0651

TELEZOO (A): FEAST OR FAMINE?

Introduction: July 4, 2000

Marie-Louise Murville heard a series of loud noises outside her offices on the Northern Virginia side of the Potomac River. As she peered out her office window, she saw fireworks erupting in a myriad of colors over the Washington and Jefferson monuments. Murville, the newly appointed vice president of marketing and business development at Telezoo, realized that she had forgotten Independence Day because she had been completely immersed in the preparation of her presentation for the upcoming board meeting. She sat and enjoyed the celebration's grand finale while pondering the fate of her own company. Would telezoo.com (Telezoo) fade into obscurity as another dot-com casualty or would it make an indelible impression on the procurement decision-making process in telecommunications?

The company had recently burned through a significant amount of capital with a limited positive return on investment. In addition, as recently as April 2000, the capital markets had come to reject the hype initially given to Internet stocks. Although the founding team had accomplished a great deal, they and the board understood from the beginning that to maximize the company's potential, seasoned general management, marketing, sales, and finance executives would need to join the company. Ideally, a CEO would be hired first to build the team, but as the market exuberance faded, and the sources of fresh investment capital dried up, Telezoo faced a dilemma. A seasoned CEO would only join a startup that had plenty of cash in the bank; yet, new investors would only be interested in companies with full management teams already in place. Murville had been working closely with the management team and the board for six months as a venture capitalist. Despite the increasingly critical cash/market changes, she decided to join the risky startup, a choice that provided the necessary executive skills and gave reassurance to both a prospective CEO and investors that Telezoo was a wise investment. Once on board, Murville immediately began assessing the situation. She was intent on developing new product and marketing strategies that would allow Telezoo to better allocate its limited resources and realize its dream.

Murville first envisioned the use of the Internet for B2B e-commerce in researching and writing her 1994 London Business School master's thesis on electronic catalog sites and services. The thesis was developed around the time Mosaic was introduced and before Netscape was conceived. Six years later, she now had an opportunity to implement her original vision. Although she was certain about the fundamental business model, she was not at all sure how to turn the compelling value proposition into revenue and profits.

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Keywords: telecommunications, b2b, business-to-business, market planning, e-commerce, development