NETTING IT OUT
This is our fourth semi-annual update of companies and products in the online
community and social networking space. New to this coverage are INgage Networks
and Ramius Corporation. They join 10 previously covered companies: Demand Media
(formerly covered as Pluck), Ingeniux, Jive Software, Lithium Technologies,
LiveWorld, Mzinga, Powered, RightNow Technologies (formerly covered as HiveLive),
Small World Labs, and Telligent Systems. For these organizations, we look at
how they fared during the first half of 2010 with regard to customer acquisition,
product lines, service offerings, pricing, business and technology partnerships,
financial performance, and organizational structure.
Results for the first half of 2010 were solid across the board. Many companies
saw steady, if not increased, customer acquisition. A few target markets shifted
and expanded. There were two rounds of capital investment (both Series C),
five acquisitions, two headquarter relocations, and a whopping 50 new partnerships,
signifying the importance of these relationships as sales channels and technology
developers and integrators. Hiring was very strong, including at the executive
level (which we haven’t seen before to this degree), and remains promising,
with over 100 open positions across the 12 companies.
Product development continued at a rapid pace, with new releases from every
company. While new features and functionality were wide ranging, there was
a focus on crowdsourcing and mobile applications. Integration with the social
Web (Facebook, Flickr, Twitter, and so on) continued strongly, as did development
of analytics offerings.
ONLINE COMMUNITY PLATFORMS: FIRST HALF CALENDAR YEAR 2010
Watch List
It remains no easy task to decide which companies and products to include
and which not to. The admittedly informal considerations we look for are companies
and products that (1) do—or can—support large-scale online customer
communities, and (2) have a track record of doing so.
Even with their similarities, the companies we cover here are not a homogeneous
group. For sure, there is some overlap in their target markets, growth strategies,
partner collaboration, R&D philosophy, pricing models, service offerings,
and so on. But differences abound in each of these areas as well, as we discuss
below.
The same is true of the platforms themselves. While they all provide more
or less similar core components for enabling customer communities and social
networks (e.g., forums, blogs, search, profile management, administrative tools,
widgets and APIs, etc.), their technology architectures and feature sets vary,
as do the built-in workflows (e.g., for moderation) and the degrees of access
and control they give clients (e.g., for customization). Most are provided
on-demand, while others are designed for on-premise use. And some integrate
out of the box with third-party applications, while others require custom integration.
In a less rigorous way, we do look at many other vendors and platforms that
support online communities and social networks that are not covered in this
report. These include wikis (e.g., Atlassian, Socialtext, and Wetpaint), collaboration-based
applications (e.g., IBM Lotus Connections, Igloo Software, and Microsoft SharePoint),
social networking systems (e.g., Groupsites and Ning), and others. We may include
some of these companies and products in future updates, and we look to your
perspective on which of these—or other—companies are of interest.
New to the watch list are Florida-based INgage Networks and Ottawa-based Ramius
Corporation. Awareness, Bayspire, and Leverage Software, which were included
in previous reports, are not participating this time. Passenger and Spigit
will be covered in our upcoming report on crowdsourcing vendors. Pluck, which
was a subsidiary of Demand Media, is now more formally part of the company.
And HiveLive was acquired by RightNow Technologies, so we’re now following
that company (which is also being covered by Patricia Seybold Group senior
analyst Mitch Kramer, for their customer service products).
This report covers the following 12 companies:
• Demand Media (www.demandmedia.com) – formerly Pluck
• Ingeniux (www.ingeniux.com)
• INgage Networks (www.ingagenetworks.com) – formerly Neighborhood
America
• Jive Software (www.jivesoftware.com)
• Lithium Technologies (www.lithium.com)
• LiveWorld (www.liveworld.com)
• Mzinga (www.mzinga.com)
• Powered (www.powered.com)
• Ramius Corporation (www.ramius.net)
• RightNow Technologies (www.rightnow.com) – formerly HiveLive
• Small World Labs (www.smallworldlabs.com)
• Telligent Systems (www.telligent.com)
Observations and Trends
We have noted a few trends within the industry and across the companies covered
in this report.
1. CUSTOMER ACQUISITION. The 12 companies in this report acquired more than
500 new clients in the first half of 2010. (Some, such as Demand Media and
RightNow Technologies, have product lines that extend beyond their community
platforms; only new customers of social media and community products are included
in the number above.) How many more than 500 is uncertain, as not all the companies
provide these numbers.
In terms of raw numbers (though not necessarily revenue), new client accounts
were led by Jive Software and Telligent Systems. Apples-to-apples comparisons
aren’t particular fruitful, however, as some companies, such as LiveWorld
and Powered, intentionally land fewer, high-value accounts. From the information
we have been able to gather, there’s a pretty large spectrum of average
deal sizes among these companies, ranging from $40,000 to $250,000 per year.
2. MARKET FOCUS. An increased degree of market specificity is emerging in
the industry, as companies seek to differentiate themselves and strengthen
their presence in the sectors where they’ve found success. For example:
• INgage Networks and Ingeniux have a foothold in the higher learning
and government sectors.
• Jive Software, Mzinga, and Telligent Systems have well developed offerings
for internal/employee communities as well as for external/customer communities.
• The sweet spots for Lithium Technologies and RightNow Technologies
are in the peer-to-peer support and social CRM space.
• Demand Media has had a lot of traction with media and publishing companies.
• Ramius Corporation and Small World Labs have platforms well suited
to associations and member networks.
• LiveWorld and Powered—which are more like social marketing agencies
with complementary community platforms than technology vendors with social
know-how—are focused on major consumer brands.
The lines drawn above are not rigid; all the companies we cover span multiple
markets and industry segments, and are successful in many of them. But market
differentiation continues, since previous years would have seen even larger
overlap.
3. STRATEGIC, FINANCIAL, AND ORGANIZATIONAL CHANGES.
• Name Changes and Acquisitions. Neighborhood America is now INgage
Networks. Pluck is now Demand Media (and Demand Media is currently going through
an IPO process). HiveLive was acquired by RightNow Technologies (albeit in
2H-2009).
• Acquiring Others. Two companies acquired social media monitoring vendors:
Jive Software (acquired Filtrbox) and Lithium (acquired Scout Labs). Powered
acquired three marketing agencies: crayon, Drillteam Marketing, and StepChange
Group.
• Location, Location, Location. Most companies stayed close to home
in 1H 2010. Mzinga and Jive Software relocated their headquarters (Mzinga moved
its HQ a few miles down the highway; Jive’s shift was from Portland to
San Francisco). Lithium opened a new office, also in San Francisco, not too
far from its central office in Emeryville.
• Partners. The 12 companies announced partnerships with nearly 50 organizations.
The distribution here is much more even than it was for new customer accounts;
only two companies didn’t report any new partners, and most added between
two and six. This is a substantial increase over that of previous periods,
emphasizing the importance of partner networks in (1) go-to-market and distribution
strategies (using partners as an important sales channel), and (2) complementing
and enhancing product and service offerings.
• Investment. Only two companies raised investment capital during the
first half of 2010, Jive Software and Lithium Technologies. Interestingly,
both were Series C rounds and were for roughly the same amount ($30 million
for Jive, $27.25 million for Lithium).
• Leadership. The number of promotions and new hires at the executive
level were pretty much unprecedented. INgage Networks hired two new VPs and
promoted another two to that level. Jive Software brought on board a new CEO,
hired an SVP, and added two new Board Directors. Putting its Series C to work,
Lithium hired a new CMO, two SVPs, seven VPs (!), and promoted two employees
to VP and one to COO. Mzinga, whose CEO is currently on a leave of absence
for health-related reasons, hired a new CFO and filled one SVP and three VP
slots. Telligent Systems hired a new SVP and four VPs.
• Hiring. Not only were there no reductions in force during the first
half of the year, there were over 160 new hires during this period (including
the executive-level positions mentioned above). And there are currently over
100 open positions across these companies, a very good sign for the industry.