December 13, 2004   |   Palo Alto  

TWST: Would you begin with a brief historical sketch of Metreo and then describe some of the principal things the company is doing at the present time?
Ms. Smith: Metreo was founded four and a half years ago. The company is based in Palo Alto, California. We work in the pricing optimization space, and we believe we're the leader in providing to businesses a comprehensive Pricing Intelligence™, execution and enforcement solution. The real focus of that work is helping businesses demystify and discipline all of the pricing and negotiation processes in which they're involved so that they can drive more dollars to the bottom line. The origin of the company was really looking at the inherent tension that we saw between financial reporting, where the emphasis is strongly on margin, and the sales force, which is generally motivated by revenue. So salespeople will do a deal to be able to get as much of a commission as they can and drive a lot of revenue, but that doesn't always result in the best deal for a company. Especially as we look at the whole business cycle we've been in over the last year, we see companies now getting to the point where they're saying, "I don't know if we can continue to try to cut our way to profitability; we'll really have to put in place some mixture of driving cuts along with revenue gain." Basically, the three questions that we answer for our clients are: are you winning enough deals, are they the right ones and are you making enough money off each of the deals at year end?

TWST: The company seems unique. From what you've said, it seems that no other company does it quite this way.
Ms. Smith: We like to think that. I think one reason pricing is such an interesting space is that the art of it hasn't necessarily been turned into science yet because there's a lot of knowledge that goes into it - and a lot of what some people may perceive as black box, but which we really perceive as best practices. So our real challenge is finding out how we can take our huge base of knowledge that exists around how to do pricing right and turn it into ones and zeros that become code. How do you get this to a point where you can take what we call a "swivel-chair operation," meaning, basically, I turn around my chair and ask somebody behind me, "What do you think," or hold my finger in the air and take a best guess, about something that's a lot more rigorous. That's a big challenge. What makes it especially hard is that there are a lot of different places where, like the Dutch boy with his finger in the dike, you have to plug in holes in the process. Some people just want to get a better handle on, "Oh my gosh, what are my problems." They don't even have the ability to see or to visualize what those problems are, and they don't have an idea of how great in magnitude they are. We'll provide those people with a visibility tool and give them a good way to understand where a good starting point would be, by using a combination of the tools we have, the experience we have, and the services that we offer. Other people have a very clear idea of where they're leaking - or even bleeding - and for them it could be a question of, "Well, what do I fix first? Is it that the prices I'm charging aren't the right prices in the market, that they're too high or too low, or could they be out of whack for certain segments of my market? Or is it that I'm not getting those prices through my channels communicated and followed and complied with very well?" Any piece of that spectrum is a piece that we touch. And we do believe it's pretty unique in the marketplace today to be able to understand how to touch all of those pieces and to have this unique combination of technologies, best practices, approach, deployment methodologies and people that are going to help solve that problem.

Read the entire interview here.