counter on godaddy
post

Evernote Celebrates Birthday by Joining the Billion Dollar Club (Really?)

Evernote has recently celebrated their third birthday. I also recently had my 21st birthday – it feels good to be able to legally grab a drink finallySmile.  (Hey, if Evernote can lie about their age, so can I…).   Joke apart, I have no idea why a company would pretend to be half as young as they really are – there are quite a few users, yours truly included who remember the early product, back from 2005-2006.

evernote scrollOK, so back then Evernote was really nothing more than a scrawny little note-taker, with a weird scrolling tape metaphor that was hard to get used to, but it already showed unusual flexibility of mixing typed and handwritten text with imaging. Still, the key benefit was price, compared to Microsoft Onenote.  It’s hard to compete with free.

I was truly surprised by the news of their first funding round. Here’s my offending post from 2006 (hm, before they even existed, if you believe the birthday news…):

EverNote – Love You and Hate You

EverNote is the last company I expected to raise venture funding: has a mature product, a mix of freeware and a $35 version, and I pretty much considered them a good candidate for safe, organic growth. GigaOM just reported it EverNote’s funding to the tune of $6M. Wow…

My Love & Hate relationship? The love part is easy to understand; it’s a handy, easy-to-use notetaker, which I prefer to the comparable Microsoft OneNote, and the $0 price is quite unbeatable. The hate part: it really does not fit into strategy of moving off the desktop into the Cloud.

In fact it’s the only application that breaks my sync efforts between two laptops using FolderShare:

post

Startup Lifecycle a’la ABBA (Are We in a Bubble?)

Wow, who would have thought 1970′s supergroup ABBA were such good predictors of the Startup Economy:-)

No kidding… it all started with a tweet by Box Lead Magician Aaaron Levie:

@levie
We must be in a tech bubble given how much ABBA I’m listening to.
24 minutes ago Favorite Retweet Reply

My first though was:

@ZoliErdos
@levie As long as it’s not only Money Money Money :-)
21 minutes ago Favorite Reply Delete

Then I had this crazy thought of trying to remember more ABBA titles… it took me about 3 minutes to see ABBA’s wisdom … LOL.. I mean to come up with a full startup lifecycle, purely based on ABBA titles:

post

How Software Can Be Resilient to Recession

Are we heading into Recession?  The “Big R” talk of early this year quickly subsided, economic growth returned, the markets appeared to vindicate the optimists.  US Presidential Candidate John McCain repeatedly said the economy was fundamentally strong… until just days ago, when he quickly switched to declaring a crisis.  The Wall Street Journal says we’re in the Worst Crisis Since ’30s, With No End Yet in Sight.

I don’t claim to be an expert economist, so whether the Big R is looming is not my call – but if you believe we’re in a strong economy, I have a bridge to sell you.  Let’s just focus this discussion on how Software businesses can survive in a financial crisis, which is undeniably here.

Not all will survive, and it’s probably healthy they won’t.  Tim O’Reilly, Father-of-all-things-Web-2.0, asked the question at the Web 2.0 Expo last week:

Global warming. The U.S. losing its edge in science and technology. A growing income gap. “And what are the best and the brightest working on?” O’Reilly asked, displaying a slide of the popular Facebook application SuperPoke, which invites you to, among other things, “throw sheep” at your friends.

“Do you see a problem here?” he posed, showing another slide of the popular iPhone app “iBeer,” which simulates chugging a pint. “You have to ask yourself, are we working on the right things?”

The poster-child of the Web 2.0 boom may very well become the symbol of what went wrong:

  • useless
  • consumer-only
  • ad-driven

Actually, the problem is not what they do, but how seriously they were taken.  Will Price, a very smart VC said long ago:

It may well be that Slide raising $55m from mutual fund companies at $500m+ pre-money will be the “what were we thinking” moment of the current cycle.

I’m glad they did not go public, at least not a lot of people will get hurt holding the bag.   But enough of what’s wrong, here’s what works:

  • go where the money is, and that’s businesses (“Enterprise” vs. consumer, even if it means small business)
  • deliver value – useful functionality that improves business
  • charge for it – companies actually prefer to pay for reliable, good service.

The last point brings up the price issue.  Credit will dry up. Whether we’ll officially declare Recession or not, the fear of the Big R is enough for corporate budget cuts, the disappearance of any CAPEX spending. Even worse, an entire sector almost disappeared as IT buyers.  Did you know that Lehman Brothers spent over $300M on IT in just the last quarter, right before declaring bankruptcy?   How do you sell in this environment?

The after-bubble nuclear period of “no IT spending at all” found me at a startup in 2001-2003. We did not exactly hit it big, but did not go under, either, and that’s because our model allowed us to get in the door way below the threshold that would have required higher authorization. Not classic SaaS, rather SES (Software Enabled Service), we were essentially data providers and often got into an “enterprise” account at $3k for the first month … eventually ramping up to annual $60-$100K.   Anyone familiar with Enterprise Sales knows the term Economic Buyer:  typically getting involved later at the sales cycle, approving or nuking the deal.  Well, we saw no Economic Buyer: being under the threshold, we sold to the User directly.

Of course my little business is not the only proof: Salesforce.com & WebEx thrived during the last recession. The secret is the business model: pay-as-you-go.  SaaS offers lower risk to enter, no initial cash layout, the subscription fees come out of OPEX vs. CAPEX, and is often approved by the User, not the mysterious Economic Buyer.  The barrier of entry is much lower: once you’re in, it’s up to you to grow.

In fact I suspect the looming downturn will accelerate the structural changes in the software industry: SaaS players will thrive,  traditional on-premise vendors will shrink, many will disappear.

That leaves a final point to discuss: financial solvency.  For startups, it will be increasingly hard to find investors.  For larger businesses the lack of late-stage investment, the credit crunch may be a serious impediment to expansion.   Discover the beauty of bootstrapping – you actually get to do what you believe is right for your business, not what your Board tells you.  Do less, take small steps.  Frugality is key to survival.  Small is beautiful will get a new meaning.

In summary, Software businesses that combine good old business sense: frugality, spending wisely, delivering value to businesses and getting paid for it, with a new business model, SaaS are likely winners in the downturn.  The rest are playing musical chairs. (Oh, and the bridge is still available)

(This post originally appeared on CloudAve.  Keep informed by grabbing our feed here.)

Reblog this post [with Zemanta]
post

Can the Software Sector be Resilient to Recession?

I was very lucky in the early 90’s being in an industry that was not only shielded from recession, in fact it was thriving.  Corporate America was taught to fight their way out of the slump by Business Process Reengineering, and what better way to execute it than by implementing new integrated business information systems.  The slump for the rest of the country was a major boom for SAP, and the entire ERP industry born in their footsteps.

Today we’re amidst another technology change, one that may just ensure relatively smooth sailing through a recession for the Software sector – at least those who are on the right side of the change.smile_wink  The belts will be tightened, says the New York Times, but technology will still grow, just at a slower rate:

Overall growth in technology spending may fall from 7 percent last year to 4 percent or less this year, according to estimates by IDC, a research firm.

But that won’t be nice 4% growth for the entire industry; I strongly believe pioneers of Software as a Service (SaaS) will be amongst coming out of a slow-down as winners, leaving others in the dust. 

TechCrunch is optimistic for the entire Web 2.0 business:

All of those Enterprise 2.0 startups out there, or even Amazon trying to sell Web-based computing infrastructure, are actually at an advantage. Customers are more likely to try cheap cloud computing when they can no longer afford the alternatives.

ZDNet’s Dan Farber disagrees:

Most of the Web/Enterprise 2.0 startups can’t get a hearing with CIOs and tech buyers at corporations. While consumer applications are influencing corporate applications and coming in through the back door, Enterprise 2.0 apps (blogs, wikis, predictions markets, social networking, mashups, collaborative cloud-based apps and technologies such as RSS and tags) are just beginning to reach the radar of larger corporations, and they are not considered mission critical, which is where the money is funneled first

I think they are both right – and wrong.  I don’t agree that the entire Web 2.0 sector is immune to a down-turn: the advertising market will shrink,  the “lets-grow-insanely-who-needs-a-business-model” types will suffer. As Software VC Will Price says:

It may well be that Slide raising $55m from mutual fund companies at $500m+ pre-money will be the “what were we thinking” moment of the current cycle.

I also agree with Will, that a movie we’ve all seen will be playing again:

The last downturn saw the valley swing violently away from consumers to the enterprise – bastions of value, hard ROI, tangible value propositions, enterprise pain points and budgets, etc became the mainstay of investment decisions and the consumer, I kid you not, was literally a bad word…
The valley became all enterprise, all the time.

It will not be all, and not only Enterprise, but Business Software, whether for the Enterprise or small businesses will come back with a classic, “old-fashioned” business model of actually charging for value (product or service) delivered.  Of course there is still the dilemma of selling business software – much better if you don’t have to, it is getting bought instead. smile_shades  Yes, Dan is right, “Web/Enterprise 2.0 startups can’t get a hearing with CIOs and tech buyers at corporations” and their  apps are not considered mission critical, but the whole point is that a lot of these Enterprise 2.0 tools are not sold at the CIO level.

The after-bubble nuclear period of “no IT spending at all” found me at a startup. We did not exactly hit it big, but did not go under, either, and that’s because our model allowed us to get in the door way below the threshold that would have required higher authorization. Not classic SaaS, rather SES (Software Enabled Service), we were essentially data providers and often got into an “enterprise” account at $3k for the first month … ramping up to $60-$100K annually.   Anyone familiar with Enterprise Sales knows the term Economic Buyer:  typically getting involved later at the sales cycle, approving or nuking the deal.  Well, we saw no Economic Buyer: being under the threshold, we sold to the User directly.

As Zoho CEO Sridhar Vembu adds to the discussion:

It is useful to remember that both Salesforce & WebEx thrived during the last recession – in fact they were relatively unknown during the last boom. Cost was a major part of the reason they thrived in the bust.

Indeed. Software as a Service and the typically associated pay-as-you-go model allows businesses – enterprise and SMB – to use software without the typical upfront investment the traditional model would require, therefore SaaS providers have a good chance of withering a Recession.  Another noteworthy idea in Sridhar’s response is that they really don’t have to have a “massive win”, a total move from the desktop to the cloud: a “marginal” business  is good enough.

Of course this “marginal business” is not as attractive to many startup entrepreneurs as fast forwarding to the IPO, preferably over $1.5B. In fact it’s really boring… building a business gradually; no IPO thrill; serving millions of customers, helping them actually conduct business.  Oh, and making millions of dollars of real revenue in the process – not bad, if you ask me.  And it’s quite bubble-proof. smile_wink

Related posts: Vinnie Mirchandani –  Why it will be very different this time, Fred Wilson- This Time Will Be Different.

Update (1/28): Forrester Research predicts gains for Enterprise Web 2.0 apps in 2008.   Also read: Between the Lines, ReadWriteWeb.

post

The Authentic Web 2.0 Validator

Forget checklists, playing the Web Bingo … go to the one-and-only automated Web 2.0 authentication tool (hat tip: Vinnie Mirchandani).

Here’s the verdict on just how compliant some blogs are:

  • techcrunch 8 out of 17
  • crunchnotes 2 out of 18
  • businessweek/the_thread/blogspotting/ 5 out of 18
  • battellemedia/ 2 out of 17
  • dealarchitect.typepad 14 out of 20
  • micropersuasion/ 7 out of 14
  • blog.softtechvc/ 8 out of 19
  • bubble20.blogspot 4 out of 19
  • ross.typepad/ 4 out of 16
  • sapventures.typepad 5 out of 16
  • horsepigcow/ 10 out of 14
  • Minding the Planet 6 out of 20
  • zoliblog 6 out of 15

Oh, well, the Web 2.0 workgroup must be 100%, let’s see:

  • web20workgroup/ 7 out of 18

How about some applications?

  • zimbra 3 out of 15
  • zvents 5 out of 18
  • writely 1 out of 20
  • sphere 3 out of 18
  • meebo 0 out of 14
  • loomia 6 out of 19
  • Goowy 2 out of 17
  • flock 4 out of 18
  • TailRank 5 out of 19
  • sqlfusion 2 out of 18
  • 24sevenoffice 1 out of 17

Search Engines? Wow, look at who has the lead:

  • google 1 out of 18
  • yahoo 3 out of 17
  • msn 4 out of 20

Surprising results from the “Old World“:

  • sap 4 out of 17
  • oracle 2 out of 19
  • ibm 3 out of 16
  • walmart 2 out of 18
  • ge 3 out of 19

All right, for all of you not happy with your own score … do you have a suspicion? Confirm or clear it here.

Then, perhaps, buy the T-shirt here. (Charlie, I’m expecting a fat commission check…)

Update (11/16) : The Great Web 2.0 Joke List