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think3 Cuts USA Staff by 50%

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North American Sales Slow to Take Off

Roopinder Tara, Editor, TenLinks.com

SANTA CLARA, California, October 26, 2001 - In what appears to be a move to match revenue to expenses, MCAD vendor think3 has laid off 50% of its USA staff, going from approximately 100 employees in the USA to about 50. think3 has a total of 300 to 350 employees worldwide, mostly in Europe.

Citing slowness to penetrate the North American design software market, think3's CEO Joe Costello confirmed the cutback but downplayed its severity, saying what is happening at think3 is typical of many businesses in the post-Internet-boom economy. "I don't know of a single venture-backed enterprise that has not cut back its operations," said Costello.

Most of the cutbacks will be in sales and marketing. Gone are four marketing staff, including Kara Kerker, VP of Worldwide Marketing at think3, but most reductions will affect a direct sales telemarketing team housed in Pleasanton, California. "We've scaled back very selectively," says Costello. "All our top sales performers are still with us. In fact, we hope to announce some very big sales wins in the near future."

think3 expects to book $20 million in sales for the present fiscal year. After the cutback, think3 may break even in as little as one year, according to Costello.

Unlike its main competitors who use resellers, think3 sells directly through its own sales staff. think3 had poured much of the money invested in the company into a direct sales/telemarketing team, an effort Costello now calls "experimental."

think3 maintains a distributed worldwide presence. The company's original name was Cad.Lab, headquartered in Bologna, Italy. It moved its headquarters to Santa Clara, California and changed its name to think3 in 1998. Having achieved penetration in European markets, the move to the USA was intended to facilitate penetration into the lucrative North American markets. This proved to be a more difficult task than expected, with stiff competition encountered from Autodesk and SolidWorks, both already big and established players in the mid-range MCAD market.

Frustration must have been high at think3 as sales of its products, including its flagship thinkdesign, lagged despite certain technical advantages over its competition, notably in surface modeling.

"The other products are better branded," admits Costello, "and the conservative mechanical designer is unlikely to take risks with a new product." How can this be reversed, especially with a reduced marketing staff? Costello is counting on spectacular big wins mentioned earlier that will turn heads - even in the conservative North American market.

think3 maintains a skeletal staff in its Santa Clara headquarters, with a large contingent in Italy as well as other staff distributed around the globe in France, Germany and India. No offices are expected to close immediately as a result of the cutbacks.

Asked how this will affect think3's business plan, Costello did not think it would have much of an immediate impact. Costello has faith in a strong product and its development team - which has survived the cutbacks intact.

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