Mobile data specialist Mako Analysis is approaching its second birthday.
Mako is a great example of the ‘Analyst Firm Cycle’: the process through which analyst firms are formed and accumulates that is similar to the natural ‘Water Cycle‘. Mako was precipitated in 2003, when co-founder Tom Byrd departed the super-caffeinated Mobile Lifestreams boutique.
Today, the firm is a leader in researching the opportunities for Europe’s mobile network operators. Tom and two other principals are generating healthy revenue from this modest niche. The firm’s key activity is the research and sale of just three or four major reports each year focusing on the key tasks facing mobile operators. The reports are also of interest to investment banks, and the firm also conducts a small amount of bespoke research for some handset vendors.
Because the bulk of the firm’s revenues are generated from work with network operators, the firm feels more comfortable in speaking about both the strengths and weaknesses of the handset manufacturers, as is reflected in its recent comments about new handsets from Nokia.
As with most analyst firms, its strength is also its weakness. Analysts following a market in which both buyers and sellers are concentrated will always find it easier to gain a comprehensive outlook on the market, and have fewer potential clients to develop. The mobile handset market is especially fast-paced and paranoid, meaning that projects focused on that niche have interested customers. However, these also imply the weaknesses: Mako’s focus on European networks means that consumer trends in other regions can be passed by. The fast pace of change means that operators need research that is two or three months old, at most; but that short shelf-life means that one bad report can hit the firm’s cash flow hard.
Similarly, the firm’s small size means that it can be overlooked. Of course, to have three analysts focused on European mobile operators means that Mako can go head to head, in its expertise, with the largest firms. However, many people just don’t know it. I know of one operator about which Mako made a negative comment: the operator’s first reaction was to attempt to discredit Mako because it was not heard of; only later did it contact the firm and attempt to understand that it is a respected and deeply credible analyst firm in its niche.
So what can a firm like Mako do? Considering the modest size of its niche, the key imperative is to be well run: to turn a larger number of one-off clients into a smaller number of subscribing clients; to generate enough profit to allow the firm to re-invest into the business; to defend its particular advantage (in this case, being a nimble ueber-specialist that can respond fast to topical developments); and to raise its profile. In Mako’s case, there’s good progress – especially in raising its profile: the thousands-strong circulation of the firm’s free Industry Journal is more than healthy.
The ‘Analyst Firm Cycle’ suggests that Precipitation is followed by Collection: the firm will gain more scale both informally and formally. Informally, the firm can add adjunct consultants to its core team, who work with the firm as an when needed. It can partners with other firms to share core research, to broaden the portfolio of research it can sell and resell. It can share sales infrastructure through providers like Valley View Ventures. However, the general tendency is towards merger with similar firms focusing on other niches or other regions, as we have seen in the US roll-up of Baroudi, Bloor and Hurwitz.
