Further letter to Tesserent - 20 June 2017

Here is a further letter I emailed to Keith at Tesserent yesterday (2o June 2017) - with Kurt Hansen gone, who is going to be doing channel partnership deals?  Looks is thought Keith is the (only) man that can do such deals now.  Karen Negus is a killer but I doubt she has the experience and connections in IT to being doing channel partnership deals.





Mr Keith Glennan
Managing Director
Tesserent Pty Ltd
Level 5/990 Whitehorse Rd
Box Hill VIC 3128




20 June 2017



Dear Mr Glennan,

Re: Tesserent Pty Ltd

I am a minority shareholder in Tesserent.

I wish to raise the issue of revenue growth over the last 17 months.  I think it is reasonable to suggest that organic revenue growth has not been as significant as expected.  This is supported by several departures in the sales team, including Mr Kurt Hansen, whose resume and experience in IT was impressive.  

It also seems clear that Tesserent is not pursuing an acquisition growth strategy at this time.  I support that strategy.  The share price is severely depressed and a capital raising at 8c (being today’s share price) would be a disaster for all shareholders.

That leaves two options for growth – organic sales and channel partnerships.

I am in possession of a research report from Gordon Capital – no doubt commissioned by, or on behalf of Tesserent – which suggests that longer term, channel partnerships will be the biggest source of revenue for Tesserent.

I have previously written to you and Karen Negus about the difficulties I see in growing sales and winning new business organically.  I stand by those comments.  

That leaves channel partnerships as the greatest option for revenue growth.

My question is this – are the majority of Tesserent’s resources being directed to building new channel partnerships?  Or are they being directed at winning new business organically? (which I believe will be difficult, unless it is on the back of a channel partnership with say a telco).  

I note that Tesserent has recently advertised for two sales executives.  Their role appears to be to sell Tesserent’s (expanding) product suite to small and medium businesses (ie to win business organically).  Reading between the lines, a shareholder could speculate that a channel partnership with a telco is not too far away – hence the need for additional resources in the sales team.  However, presumably, the new sales executives will not be trying to reach channel partnership deals.  Karen Negus, whom I have met briefly and appears to be a killer – will presumably not be in a position to win channel partnership deals.  If anyone apart from yourself had the experience to win those deals it was Kurt Hansen.  

That leaves yourself, as the likely source of any future channel partnership deals.  Mr Russell Yardley, someone with significant experience in IT and with a brain the size of Britain – appears to be taking a more hands off role (given his extensive commitments outside of Tesserent).

I query if Tesserent is directing the majority of its resources to winning channel partnership deals, as opposed to winning business organically.  Those sort of deals seem to be the best option for growing the Tesserent business.  

I believe it should be spelled out to shareholders, in future correspondence, which strategy is being focused on for future growth (acquisition, organic or channel partnerships) and who will be responsible for that strategy (ie, is the sales team trying to win channel partnership deals or are they focusing on winning new business organically?).  If not the sales team lead by Karen Negus, who is responsible for winning channel partnership deals?  Is that solely yourself?  Are members of the board involved?  I accept that Tesserent will of course be trying to win new business organically – but is that the focus?  If so, should it be?

I am acutely aware of Tesserent’s continuous disclosure obligations and do not seek any direct response to this letter.  Rather, I look forward to future updates via the ASX.


Regards,