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.
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:
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.