Tellef's War Story: The real Mamut
In December 1998 Northzone invested in a Norwegian ERP software company named Guru Software. Guru's mission was to simplify the way small organisations do their business by delivering software, services and knowledge. At the time of investing, the company had a pure Norwegian focus and some 12 employees. In 1998 ERP was regarded as a rather dull area. Investors focused on dot.com businesses and scalable ideas conquering new territories at the Internet. Despite the "unsexy" business idea, Mamut attracted our interest because of its team; there was a young, dynamic and extremely motivated team led by the founder Eilert Hanoa. By investing in Mamut we actually invested primarily in a team and less in a business opportunity.
Investing in a great team proved to work out. Guru changed its name to Mamut Software, and it embarked upon a strong international expansion which has been kept up ever since. Based on a single source code Mamut has developed a complete, module based business suite for SMEs. As of December 2008, Mamut is listed on the Oslo Stock Exchange, has about 500 employees, more than 400,000 customers in 16 countries and annual revenues in excess of €60m. Mamut has produced double digit revenue growth during 54 consecutive quarters.
However, despite the impressive achievements there were several road blocks along the way. The Northzone-fund which invested in Mamut was small, and our ability to follow up was limited. Being a lead investor with limited resources is a risky business in itself . Luckily we convinced the major LPs in the Fund to co-invest, and they provided the company with important funding through several critical junctures. When the financial markets collapsed in 2001 the company struggled to secure its funding needs. Whereas tech companies previously had been expected to be maximizing growth, expanding market shares and conquer new territories, the new mantra among investors was: "profit before everything". And there we were, with Mamut showing a negative EBIT of NOK 38m in 2000, and NOK 32m in 2001. Profitability was not attained until the second half of 2002. Bridging this gapby maintaining growth and reducing costs at the same time proved to be quite challenging.
The second road block and major opportunity came in 2006 with the acquisition of Active24. Mamut had traditionally grown organically, with no more than a few, small acquisitions along the way. The potential acquisition of Active24 represented a major breach of this strategy. Active24 was a large company with 270,000 customers, 200 employees and activities in several countries. The main product - hosting to SME's - was indeed a strategic fit, a complementary offering to that of Mamut.
But although Active24 was acquired at an attractive valuation the acquisition was to be funded with a major leverage. Another challenge, as the intergration of the new group - as intergration processes tend to - demanded more time and energy than expected. Nevertheless, the acquisition gave a major impetus to Mamut: it provided a bridgehead into several new markets and Mamut took a big step from being a Nordic player to become truly pan-European.
Northzone's contribution to Mamut has been as an active and demanding owner. I have served on the board and during the later years as Chairman, but large parts of the team has been helpful in securing funding on several critical junctures, and hence in keeping the company afloat. The team has been self-propelled and committed all along. The founding team has also managed to grow its skills with the company and accordingly, myself and my colleagues at Northzone have never had to play the role of Grim Reaper in Mamut, but rather acted as sparring-partners, coaches and strategy advisors.
