A bad economy is good for open source, goes the increasingly conventional wisdom. However, while it's undoubtedly a good time to be in the market with a low-cost, high-value alternative to proprietary software, there are tell-tale signs that the recession isn't blessing all open-source companies equally.
Ross Mayfield, co-founder of Socialtext
For example, at the Enterprise 2.0 conference on Tuesday Socialtext founder Ross Mayfield declared, in the words of a conference attendee via Twitter, that Socialtext's first quarter "sucked" and that its "pipeline collapsed." Socialtext, once described as a highflier in a "sizzling market," has apparently come down to earth.
Or has it? Is this a one-time blip for Socialtext? While Socialtext CEO Eugene Lee announced layoffs in April as the company looked to cut expenses, Mayfield on Tuesday declared that the company's second quarter looks strong. Even the best companies can slip in a brutal market.
Or perhaps Sociatext is fighting a weakness in enterprise collaboration ROI (return on investment) and demand, rather than open source?
If that were true, one would expect all companies in Socialtext's space to be hit equally, but this hasn't been the case. During this same first quarter, Socialtext competitor MindTouch experienced double-digit growth, while Microsoft's proprietary SharePoint product also continued to boom. (Disclosure: I am an adviser to MindTouch.)
I suspect Socialtext experienced a road bump, not a barricade. The difference is that, in true open-source style, Mayfield was candid about the slip up.
Open source remains alive and well. It's important to remember, however, that this doesn't mean every open-source company will do well.
Open source is not magic pixie dust that makes bad companies good. It's not a cure for the common recession. Companies still need to execute well, regardless of their licensing strategy. And, importantly, the wrong open-source licensing model can handicap a company, making it harder to profit from a project's popularity.
The recession, in short, will sift good companies from bad, whether open source or proprietary. As for Socialtext, its fate will not be decided by a single quarter. It's in a good market with a good model. It should do fine.
Follow me on Twitter @mjasay.
A person close to Vignette and OpenText management told me two interesting tidbits today:
- Vignette has been going through a round of layoffs recently, packaging itself up for sale, and
- OpenText just retained Goldman Sachs to help it with some M&A work.
Will we be seeing "OpenVignette" soon? I suspect the answer is "Yes." OpenText needs strength outside its core records management business, and Vignette needs someone to shepherd it back to health (Its last quarter was less-than-stellar). With a roughly $300 million market capitalization, Vignette is dirt cheap.
The problem isn't the market: Interwoven continues to deliver impressive results. It's also not the people. My own experience with Vignette people is that they are high integrity and super well-qualified. (At Alfresco we've hired quite a few.)
No, the problem seems to be in execution. Perhaps OpenText can remedy this.
In the meantime, for all you open-source applications vendors, Vignette is still full of high-quality people. If you need some Java-savvy developers, sales engineers, etc., now would be the time to go calling.
Over the past six months, I've discovered a great way to interact with my customers. It has been around for a long time, but it has only been recently that I've put it to good use. In fact, several of Alfresco's biggest deals have been closed using this technology.
Which technology? The lowly text message.
SMS doesn't have the buzz of Twitter nor, at only 160 characters per text, the length of an email. But SMS/text messaging has become my preferred tool to interact with prospects and customers (when not talking to them on the phone, of course).
Why?
Because texting is personal, direct, and virtually guaranteed to reach the intended recipient. It's also somewhat secure, since most people can't (or don't know how to) forward SMS messages.
... Read MoreWe've reached an inflection point. I'm not sure what it means, but something has changed.
I was in my home office today and got a text message from my wife asking when I was going on this and that trip. This is significant for two reasons:
- My wife isn't big into technology but has embraced texting (especially with her iPhone) and
- She was sitting 20 feet away from me.
My wife loves me. (Really.) And yet text-based communication has become easier than voice communication in many instances.
The big question is, now that all of this communication is textual, why aren't we indexing, searching, and repurposing it?
A friend of mine related something very interesting to me the other day. We were discussing the relative value of social networking (Facebook, specifically) over email or "more traditional" ways to connect, given Slashdot's post that "email is for old people."
That struck me as wrong since the 12-18-year olds that I know (and I actually know quite a few since I'm involved in several neighborhood youth groups) may not spend most of their communication in email, but they certainly don't spend it in Facebook or MySpace, either. They take a blended approach, just as I do, and communicate with friends according to how close they are:
... Read More
Open-source wiki company SocialText just pulled down a Series C round of funding ($9.5 million from Draper Fisher Jurveston, Omidyar Network, SAP Ventures, Intel Capital, plus a few angel investors). It also got a new CEO, Eugene Lee.
Congratulations to Ross Mayfield and the SocialText team. My one question in this is why no new investors joined in the round. If I remember right, the investors above are the same who invested in the last round. This either means that the Series C round was so hot that the existing investors didn't want to share it, or that SocialText was having difficulty finding new investors.
I hope it's the former, as the wiki/collaboration world keeps heating up and SocialText has been one of the leaders.
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