Category: Investments
Greg Reinacker, the founder/CTO of NewsGator, has a post up titled Enterprise RSS – the State of the Industry that is a continuation of the discussion that’s recently ensued around Enterprise RSS (reference my post from the other day – Enterprise RSS at NewsGator is Alive and Well). Following is the setup.
First, let me get this out of the way – RSS use in the enterprise is definitely alive and well. But it’s not in the obvious places. No one is writing articles talking about how their desktop feed readers are revolutionizing the way they do business. No one is talking about how they’re retiring their Exchange servers because so much content is delivered via RSS instead of email (and in fact, email is alive and well). No one is saying “if I only had Google Reader behind my firewall, I could save millions of dollars.” Few companies even say their users are clamoring for some sort of enterprise RSS application.
So if not all of that, then what?
My team and I, collectively, have detailed conversations with at least 50 different large companies every week, talking about the real problems they do want to solve. Many of these include 10 or more people on their side, ranging from IT folks to business owners with line-of-business responsibility. And these conversations rarely start with any mention of enterprise RSS.
Take a look at Greg’s post Enterprise RSS – the State of the Industry for detailed examples on what these conversations include.
I love ReadWriteWeb. I respect Marshall Kirkpatrick. But I’m completely baffled by his article R.I.P. Enterprise RSS.
Marshall says “It’s with a heavy heart and a sense of bewilderment that we conclude that the market for enterprise-specific RSS readers appears to be dead.”
Huh? Marshall, are we living in parallel universes?
NewsGator has built its business on Enterprise RSS. It has two primary revenue generating products around Enterprise RSS: Social Sites Professional and Social Sites Enterprise. There are now over 120 companies using these products representing over 800,000 users. Per the press release NewsGator issued today, customers that bought these products in 2008 include:
- Two of the world’s top three banks
- Two of the three largest banks in the US
- The world’s largest private public relations firm
- The second-largest advertising agency in the US
- Two of the top three US manufacturers of network and communications equipment
- The world’s second-largest law firm
- Four of the top 15 US pharmaceutical companies
- Two of the top seven US aerospace and defense companies
- One of the top five investment banks in Canada
- The fourth-largest generator of electricity in the US
In addition, NewsGator had a spectacular Q4. They solidly beat the plan for Q4 that they had established at the beginning of 2008 (and met their 2008 overall plan on the top line and were ahead of plan on the bottom line.) NewsGator added around 30 new customers in Q4, including six in the financial services sector, one of the areas most impacted by the economic downtown.
How many enterprise software companies can say that?
Marshall goes on to say “Newsgator, one of those three companies, announced today that it has closed another round of funding. Years after the company launched, it appears to us that the funding is a life-support line for a company that has largely left enterprise RSS behind and has been humbled into selling advertising widgets.”
For starters, when we did the first round of financing of NewsGator in mid-2004, the company consisted of one person (Greg Reinacker). 4.5 years later it is 55 people and dominates the market it plays in. You can call it “Enterprise RSS” or “Social Computing for the Enterprise” – I don’t really care. What I do care is that the customers that have bought NewsGator’s products love them, are using them, and are realizing Marshall’s words “Any company that steps up to make serious strategic use of such software should be at an immediate advantage in terms of early and efficient access to information.”
The notion that NewsGator’s funding “is a life-support line” is totally absurd. One of my goals with all of my “more mature” (e.g. older than three years) portfolio companies is to make sure they are “fully funded through becoming cash flow positive.” This financing unambiguously gets NewsGator to that point with plenty of room to spare. NewsGator still had cash in the bank prior to this financing; the last time I checked an incremental $10m of financing is a meaningful amount for any company.
Marshall, I invite you out to Denver anytime (or we will come to you) to spend the day at NewsGator, really understand their products, and get a deep understanding of how NewsGator is spreading “Enterprise RSS” to the corporate masses. Seriously, come spend some time, do some real research, and help the industry understand the value of this stuff.
Yesterday, NewsGator announced the release of their AdBurner Online Advertising Program. AdBurner is a partnership between NewsGator, Technorati, AdMeld, Gigya, Medialets, and Tremor Media.
If you’ve been following NewsGator’s progress, you know that they have two major parts to their business – their (1) enterprise products and (2) media products. They had an excellent year in 2008 with significant growth on both sides of their business along with an especially strong Q4.
With over 100 active customers on the media side of their business, NewsGator kept hearing the following things:
- Can you be a single point of contact for our display media purchases for our digital properties?
- Can you deal with all of our remnant ad inventory – 50% of our traffic is remnant and we know we aren’t getting paid anything for it?
- Can you help us sell ads in all the widgets you are delivering for us?
- Can you put advertising in the iPhone app you are building for us?
- Can you help us with pre-roll video in the video widgets you are delivering for us?
Last fall a group of us started talking about how to accommodate our customers’ requests for these things. There’s a longer list of “can you …” but we decided to focus on these five issues as they came up regularly in our discussions with our customers. I suggested strongly that we should partner with other companies to deliver these services to our customers. The consistent message from our customers is “we love working with you guys – will you just take care of all of this stuff for us?”
AdBurner is the result. NewsGator has partnered with and integrated Technorati (#1), AdMeld (#2), Gigya (#3), Medialets (#4), and Tremor Media (#5) into a single offering. While Technorati and AdMeld are investments of ours, Gigya, Medialets, and Tremor are not so NewsGator chose from a portfolio of potential partners that were like minded, interested in using NewsGator as an indirect channel (to NewsGator’s existing customers), and recognized the value to the customer of delivering a portfolio of services through one company (in this case, NewsGator).
As I mentioned above, there are a lot more “can you questions” that our customers are asking us (#6 through #17) and now that NewsGator has released the initial version of AdBurner, they are starting to explore the next wave of partners for their media products. All of this is being customer driven and is in response to real customer needs, which I find to be particularly powerful.
I love to invest in plumbing. Not toilet plumbing, but Internet software plumbing. At Foundry Group we call it Glue and – among a variety of investments – have helped start up a conference with Eric Norlin (the creator of Defrag) called the Glue Conference.
One of our investments in our Glue theme is Gnip. I had a meeting yesterday with Jud Valeski (the CTO / co-founder) and a few other folks, including the two founders of a new seed investment (in the Glue theme) we are planning on closing in early January. We covered a bunch of stuff, including debating whether 99.95 is now “good enough” for cloud computing, and also talked about some of the architectural issues that Gnip has dealt with as they put together their service.
As part of our discussion, I encouraged Jud to toss a blog post up talking about the stack Gnip is using, the architecture, and the volume of data that is currently flowing through Gnip on a daily basis.
That post just went up – it’s titled Numbers + Architecture. Jud and the team he’s put together are some of the best cloud architects I’ve met to date (yes – they travel in packs.)
Gnip is less than 9 months old – it’s hard to believe I first blogged about it in July when I wrote Gnip is Ping Spelled Backwards given the progress they’ve made. We recently led a new $3.5m financing (that follows the seed round we did earlier this year) that funds Gnip through the end of 2010.
I’m excited about watching the daily traffic through Gnip increase by 10x over the new few months and expect them to be able to do it without missing a beat.
And don’t forget – everyone appreciates a courtesy flush when you are in a public bathroom.
Ian Rogers – the CEO of Topspin – just posted his entire keynote speech (with slides) from the GRAMMY Northwest MusicTech Summit 2008. The pivot slide of the presentation:
It’s been awesome to get to know and work with Ian, Shamal Ranasinghe, and Peter Gotcher – the founders of Topspin. These guys know their business – and the transformation it’s going through – better than anyone else I’ve ever met. My partners Ryan and Jason who spearheaded our investment in Topspin have been looking for their "music investment" since I met them. This is it – and it’s a monster.
If you make music for a living, go visit my friends at Topspin.
At Foundry Group, we’ve been talking about human computer interaction (HCI) as one of our key investment themes. Our premise behind HCI is that the way humans interact with computers is going to change radically over the next 20 years. If you roll forward to 2028 and look back to today, the idea of being tethered to a computer via a mouse and keyboard is going to be a "quaint" as using the punch card or a cassette tape as a primary data storage medium.
Rather than try to explain Oblong, take a look (it’ll take three minutes – it’s worth it, I promise.)
g-speak overview 1828121108 from john underkoffler on Vimeo.
We invested in Oblong a year ago although, as I wrote in my post on their site titled Science Fact, my interaction with the people involved in the company dates back to 1984. John Underkoffler, the original mind behind all of this, also writes about how Oblong came to be.
Oblong’s products are real and shipping today – take a look at the commercial overview and well as the description of the various layers of g-speak.
Now this is innovation with a capital I.
If you are a regular reader of this blog, you know I’ve been an investor in NewsGator since it was one person (Greg Reinacker – the founder). We had a board meeting yesterday (I’d guess it is my 25th or so NewsGator board meeting) and it was the best one yet. I’m incredibly proud of the NewsGator gang – they’ve really hit their stride and have created a real company that is an clear market leader.
One of the things that I love about NewsGator is their focus on building software that their customers actually want. While they have one of the highest quality software engineering teams that I’ve ever worked, we all know that isn’t enough to produce great software that humans actually use. The extended NewsGator team – including the product folks, sales folks, support, marketing, and executive team – are obsessed with their customers in a way that puts them far ahead of most other software companies.
Craig Cmehil (a technology / community evangelist at SAP) describes this better than I ever could in his blog post titled How I Got SAP to Open Their Doors and Start an Epidemic! In it, he walks through in detail how his relationship with NewsGator evolved from introduction to evaluation to negotiation to development to deployment. Craig – thanks for the shoutout, support, and enthusiasm – you are an example of the customer that every company dreams about working with.
Two years ago if you had told me that I’d be playing Texas Hold’em Poker with my Facebook friends on cell phone and enjoying it I would have snickered. Well – that’s what I’m doing right now (actually – I just took a break from this blog post to play a hand – of course I lost all my chips on a pair of aces.) And it is awesome.
Our portfolio company Zynga just released Live Poker on the iPhone. Live Poker is a beautiful implementation of Texas Hold’em poker on the iPhone. More importantly, it uses Facebook Connect to let me play Texas Holdem with all my Facebook friends (and anyone else on Facebook that happens to be playing.) Zynga currently has over 1.4 million people playing Texas Holdem each day the free virtual casino is now enormous.
My good friend and one of our co-investors in Zynga – Fred Wilson – has a great description of how Live Poker connects the iPhone to the social web. Mark Pincus – the CEO of Zynga – has an amazing vision of how casual games intersect with the social web and all kinds of different devices. Mark and the gang at Zynga are doing a superb job of implementing this vision.
If you’ve got an iPhone, go give Live Poker a try – it’s free. If you are a serious poker player and want more chips, grab the upgraded version for $9.99.
On the heals of a really awesome Defrag conference, many of the companies I’m an investor in are plowing ahead aggressively regardless of the rumors and innuendo about technology entrepreneurship. I’ve got a post in me titled "The Four Types of Companies" – look for that soon to help explain how I categorize venture-backed startups in the current environment and what I think they should be doing. Suffice it to say, the companies in this post are all in a happy place.
- Wonder what Gnip does? Read the post titled More examples of how companies are using Gnip by Gnip’s VP Product Shane Pearson. Or check out the video interview of Jud Valeski (Gnip’s CTO/co-founder) titled Zeroing the Latency With Gnip on YDN.
- Who dominates blog widgets? Lijit has a new version of their periodic widget report up in the post titled Widget Statistics Revival 2.0 which is data from the blogs of over 185,000 active publishers. The rankings and patterns are pretty interesting.
- Are you a content provider who wants an iPhone app with your content on it? Sign up for NewsGator’s free webinar titled Transform Your Content into a Profitable iPhone App. Look for the Feld Thoughts iPhone app soon to be available soon.
I think entrepreneurship is the fundamental "reinvigorator" of our economy. So does Mark Cuban in his post PE Obama’s 1st Big Mistake. Cuban voted for Obama even though all of his other votes went to Republicans, Libertarians, and Independents so his criticism definitely falls in the "constructive feedback" category.
Sramana Mitra also has a great article about this in Forbes titled President Obama: Listen to Entrepreneurs. In it, Mitra says "You want to create 5 million new green jobs–a great goal. To create 5 million jobs, you need at least 50,000 entrepreneurs–leaders–to step up to the plate." Mitra has some great stuff in this article.
On Wednesday, the conversation shifted immediately from "the past" to "the future". Time to get going.