Pattern Finder

Bo Peabody's "Elements of [Entrepreneurial] Style"

I just finished Bo Peabody's book, Lucky or Smart?: Secrets to an Entrepreneurial Life, and I highly recommend it. For those not old enough to remember -- or who don't live in the Berkshire hills of Massachusetts -- Bo Peabody started Tripod.com, a site for college students that eventually offered Homepage Builder, a precursor to today's wikis. Even though Tripod was based in the non-Silicon Valley location of Williamstown, MA, it had the right karma, and Bo sold the company in 1998 to Lycos for $58 million. The book talks about lessons he learned during his Tripod days, as well as the days since when he's been a VC.

It's not your typical business book -- it's sort of like Strunk and White's Elements of Style for entrepreneurs. The book is short (62 pages, I finished it in half an hour) but full of pithy points. The chapter headings should give you a feel for it. They include:

• Lucky or Smart?
• Entrepreneurs are B-Students. Managers are A-Students.
• Great Is the Enemy of Good
• Start-ups Attract Sociopaths
• The Best Defense is a Gracious Offense
• Don't Believe Your Own Press. In Fact, Don't Read.

Some quotes:

CrownPeak Receives $4.2 Million in VC Funding

On March 29th, CrownPeak Technology announced that it had received $4.2 million in funding from Sigma Partners and Altos Ventures. CrownPeak started off as a Web content management Software as a Service (SaaS) provider, but as it notes in the press release, it now also offers enterprise search, digital asset management (DAM), CRM (via Salesforce.com), and Web analytics (via WebTrends).

This announcement is indicative of two trends. First, alternatives to licensed Web content management will continue to grow, whether SaaS solutions or open source. In addition, vendors are increasingly offering a suite of solutions to help companies manage their Web site properties. WebSideStory, which offers Web content management, search, Web analytics, and integration with Salesforce.com is another example.

Now that it has received funding, perhaps CrownPeak will finally notice that the year has changed. As I've noted in my blog, for some reason CrownPeak still thinks that it's 2005....

Unica Buys Sane Solutions

On Thursday, Unica announced that it had completed the acquisition of Sane Solutions, a Web analytics company out of North Kingstown, RI. Jim Rose, the CEO of Sane, has been trying to sell the company for quite awhile, so it's nice to see it finally found a home.

Unica has certainly morphed itself over the years. I remember having a briefing with Yuchun Lee, the CEO, back in early 1999, when the company was trying to hawk a data mining toolkit. Over time, they realized only geeks used toolkits, not business people, and so started moving up the stack, using the term "analytical CRM" and eventually talking about marketing automation.

You can follow the company's progression on the Wayback Machine:

• August 2000 -- Tagline in the browser header is "Marketing Automation, Data Mining, Campaign Management & Personalization Solutions"
• November 2002 -- Tagline is "enterprise marketing management"
• Today -- Tagline [on March 25, 2006] is "Enterprise Marketing Management from Unica - Powering Marketing Success Worldwide - Marketing Automation Software"

While some data mining companies have struggled (e.g., Quadstone, acquired by Portrait Software in December 2005), Unica has done well, now offering a whole range of products, from a marketing dashboard to data mining to campaign management to lead generation to Web analytics. Unica is an example of what's becoming  more and more prevalent: watching the enterprise/customer conversation for hints as a way to discern the optimal time to pitch a product or ask if the customer needs help.

IBM Buys LAS

IBM announced today that it had purchased Language Analysis Systems (LAS) of Herndon, VA. LAS will stay in its current location, near Dulles Airport, but receive greater funding and a larger reach than it was able to achieve on its own.

LAS creates software that offers "multicultural name recognition." In other words, different languages and cultures treat names differently. Things such as name order, multiple titles (Herr Professor in German, for example), and multiple name variants (e.g., Jorg, Juergen) make it difficult to figure out if this name is the same as that somewhat similar name. This capability is crucial in applications such as fraud detection, employee screening, and "know your customer" processes.

This is the capability that IBM has purchased, making it a part of IBM's Information on Demand and Master Data Management initiatives. Coming a little over a year after IBM's purchase of SRD, the acquisition of LAS means that IBM is not bashful about purchasing and leveraging powerful entity analysis technology.

In fact, one of the most interesting parts about the briefing call was a throwaway line during the Q&A at the end. It was made by John Slitz, formerly of SRD, now an IBM employee. He noted that since IBM had purchased SRD, the company had grown from 56 to 120, with only two of the original complement of SRD employees leaving. With that kind of investment and growth, IBM is going after this portion of the market with a vengence.

Autonomy Buys Verity

This morning, Verity announced that it was being bought by Autonomy for approximately $500 million in cash.  The combined entity will be called Autonomy -- at least they didn't go for Verity Autonomy (VA) or Autonomy Verity (AV) -- and Mike Lynch (Autonomy) will be head of it.  Anthony Bettaencourt (Verity) will become head of the company's U.S. unit.

The management musical chairs makes sense -- Autonomy's U.S. division was always a bit of an afterthought -- and making Verity the U.S. headquarters is a move that has logic to it.

Within the market, this is two oldsters getting together.  Autonomy burst on the scene five years ago and made a lot of headlines (back in the days when Red Herring and Fast Company were the dot.com bibles), but had some product teething troubles and isn't the darling it once was.  Verity did enterprise search before anyone, but its toolkit was incredibly complicated (I remember trying to use it nine years ago, and it was a bear) and it's been challenged in recent years by folks such as Endeca, FAST, and Inxight.  For example, FAST is claiming that a quarter of its sales in the past year have come from dissatisfied Autonomy and Verity customers and partners.

So while I'm sure the acquisition will help Autonomy increase its revenue figures, I'm not convinced that it will cause search magic to happen.

Konfabulator => Yahoo!

On Monday Konfabulator was purchased by Yahoo!  As I noted in my June 16th post, Konfabulator is a pretty neat widget thing that brings information (weather forecasts, Web cam views, TV schedules, time...) and controls (battery usage indicator, CPU usage indicator, volume...) to the desktop.

From an industry analyst point-of-view, the significance of the announcement is that Yahoo! gets it.  For a long time, both consumers and the industry have thought of content as paper-based.  (After all, we do call it a Web "page.")  Reading a book has long been treated as a separate activity from working at a desk.  Put another way, we have a long history of thinking that searching for and reading information is a separate activity from thinking and acting.

However, because systems can watch what we're doing, they can understand the context of the activity and supply the necessary information.  This is the paradigm shift from information as a static page to information as a dynamic service.

Konfabulator will help Yahoo! distribute snippets of its content to people where and when they need it.  It will make the consumption of Yahoo! content more pervasive, especially among those people who can't be bothered to go to the Yahoo! portal.  In short, (1) Yahoo! gets it, and (2) they were smart enought to snap up Konfabulator before Google or Microsoft.

Omniture Raises Money -- Again

Omniture announced today that it had raised its third round of financing, led by BA Venture Partners.  It received $40 million, an eyebrow-raising chunk of change even in the dot.com days.

This has clearly been in the works for some time -- first, because it takes a lot of dancing for VCs to disgorge that amount of money, and two, I've been getting calls from VCs about Omniture for quite a while.  Not surprisingly, VCs -- who are spreadsheet jockeys more than they are market analysts -- pick the brains of industry analysts when they're thinking of investing in a sector.

Although they're coy when they call, the dialog always follows a specific pattern.  First, they want a general overview of the sector -- e.g., its history, who the major players are, where the market forces will take things in the next several years.  After that, they want a SWOT analysis of the vendor they're thinking of funding.  They wouldn't be caught dead either (1) asking for a SWOT analysis or (2) mentioning the supplier, so they make sure they (1) don't use the terms Strengths, Weaknesses, Opportunities, or Threats and (2) ask about other companies, but if you're paying attention it's always clear.  For example, they'll ask, "So what makes Company X dominant?" or "In what areas are they susceptible?" -- sounds like a Strength and Weakness question to me.  When talking to VCs I keep a special log on the number of questions and how long we talked about a specific supplier.  For example, I looked back over my notes and I talked to a VC on March 14 about Web analytics.  Three people on the line asked 11 questions about Omniture -- the number they asked about other vendors combined.  And we spent 20 minutes discusssing Omniture while competitors got about 5 minutes each.  So while I'm sure that the VCs were convinced they didn't give away a thing, the discussion had "Omniture funding" written all over it to me.

Omniture is going to use the money to "accelerate customer training initiatives, invest in technological development and increase marketing and distribution efforts."  The latter two are typical VC funding boilerplate, while the first initiative is a bit different.  Not that I think it's wrong.  I told Omniture 18 months ago at a briefing in Boston that they needed to emphasize training/best practices, and it's nice to see the company following through.

The Musical Chairs Acquisition Party

It's been a busy week in terms of M&A.  Between June 14th and June 21st, six companies announced acquisitions:

1. Watchfire acquired COAST Software
2. Aprimo bought DoubleClick's Enterprise Marketing Business Solutions Unit
3. I/PRO announced it had purchased Accrue's technology
4. Oracle bought TripleHop Technologies
5. Stellent acquired e-Onehundred Group
6. Hummingbird agreed to buy RedDot Solutions

So what does all this mean?  It splits into three categories.  The first category is called, "one man's trash is another man's treasure."  Transactions two and three fall into that group.  DoubleClick wants to get back to online marketing, so it sold SmartPath and Ensemble to Aprimo, a company in the MRM (Marketing Resource Management) space.  Accrue (eventually named Datanautics) was a Web analytics powerhouse in 2000, but the dot.bomb debacle decimated its installed base.  Left with only its technology, Accrue sold that to I/PRO, which plans to use it to help media buyers optimize their buys.

The second category is called, "working your way upstream in the ecosystem."  Oracle has decided to get into the Enterprise Content Management space, and so bought TripleHop, a search supplier.  Stellent, seeing the big boys such as Oracle and IBM horn in on its content management space, is going more vertical -- the e-Onehundred Group offers compliance solutions.  Meanwhile, Watchfire also got into the compliance act by purchasing COAST Software.  To recap, with the infrastructure providers going after horizontal platforms, the platform companies are scrambling to offer applications.

The third and remaining category is, "solidifying your position."  Hummingbird, a content vendor in the broadest sense -- it offers ETL for structured data and has the PC DOCS technology for managing documents -- acquired RedDot Solutions, a content management provider that had been a partner for some time.

So, different strokes for different folks.  But more activity than has been seen for a long time. 

 

Oracle Acquires TripleHop

Oracle announced today that it had acquired the assets of TripleHop Technologies, an enterprise search vendor.

It will be interesting to see how the technology surfaces within Oracle's efforts to attack the content management market.  In the BI space, the history has been that Oracle snaps up great or good technology and then it drops out of sight.  Let's hope there's a TripleHop champion at Oracle that will keep it from vanishing beneath the waves.

It's Official: I/PRO Bought Datanautics

Two weeks after I noted that I/PRO had purchased Datanautics, the two companies finally made it official in a press release.

The press release is interesting in several ways.  First, it's entitled, "I/PRO Corporation Acquires Accrue Software Technology" -- it refers to the company's initial name (Accrue), not the name it has used for the past 20 months (Datanautics).  Admittedly, probably not a bad idea, as folks in the know have heard of Accrue, while the Datanautics name never caught on.  (I've been asked a lot over the past several years, "What ever happened to Accrue?".) 

Second, proofreading is apparently not I/PRO's strong suit.  The major link to the press release (on the home page under "Recent News") incorrectly points to a July 6, 2004 press release.  And if you are able to discover the I/PRO press release (go in via "News" at the top), the following paragraph occurs twice (at least through 5:00 PM ET on June 15).

The Accrue technology takes its place among I/PRO's other recent innovations in Internet audience measurement which include the Audience Profile and Business Demographic reports delivered in partnership with MRI, the Behavioral Audit delivered in partnership with 24/7 Real Media, and the I/PRO Agencies for Interactive Audits program.

Finally, the press release names Macys.com as a customer, but Macy's is running Coremetrics code (per the HTML source).  While Macy's can certainly run both (Accrue uses a network sniffer to collect Web traffic data, rather than browser tags), most companies can't afford the luxury of paying for two clickstream analysis solutions -- except for a several month overlap period when they're migrating.  (Lands' End exhibited the same dual-mode behavior when it migrated from Accrue to Coremetrics.)

Accrue being a shadow of its former self and being acquired for a second time saddens me a bit, as I've been a fan of the Accrue technology for a long time.  Back when NetGenesis was growing its business by marketing, Accrue was growing its revenue by doing heavy technological lifting.  It looks as if the Accrue technology will be absorbed into I/PRO's holistic vision; it will not be front and center any more.  Still, I suppose there are worse fates in the quickly moving technological world.

Datanautics (Accrue) Bought by I/PRO

It's interesting how you figure things out in the absence of press releases.  I recently noticed that Datanautics had completely replaced its top-level management team, probably within the past month.  Christopher Butler replaced P.K. Karnik as President; Michael Crosson replaced Bob Berry as Senior VP of Sales and Business Development; and Jennifer Stephan replaced Clive Beavis as VP of Engineering.

Interestingly, Butler and Crosson are also listed on the I/PRO Web site as being CTO/COO and Senior VP of Sales and Business Development of I/PRO, respectively.  In fact, Crosson was appointed to his position at I/PRO only two months ago, according to an I/PRO press release.  First, I figured that Butler and Crosson had left I/PRO and I/PRO hadn't updated its Web site.  However, I eventually realized that I/PRO had purchased Datanautics' customer base and probably some of its IP:  the I/PRO Support page now refers to support for Datanautics customers.

Datanautics has a long history.  Five years ago, it was one of a trio of Web analytics darlings:  Accrue (Datanautics' earlier name), NetGenesis, and WebTrends.  Accrue was a great solution in 2000, probably the strongest of the three technologically.  However, it had relied heavily on dot.com sales, and so got nailed bigtime in the dot.bomb era.  The other two ran for cover:  NetGenesis sold itself to SPSS, WebTrends sold itself to NetIQ (and recently, back out).  Accrue sold off a bunch of assets, renamed itself, got some VC funding, and basically languished, while ASPs such as Coremetrics, Omniture, WebSideStory, and WebTrends signed up big names.

Given that Datanautics had a very small installed base and no new sales within the last year, it will be interesting to see what I/PRO does with its Datanautics assets.

Progress Buys EasyAsk

On Monday, Progress Software announced it was buying EasyAsk, an enterprise search company several miles down the road.  The two companies know each other well.  As the press release notes, "several PSC directors serve on the board of EasyAsk and several PSC directors hold, directly or indirectly, equity interests in EasyAsk."

EasyAsk has concentrated on e-Commerce search.  The press release states, "EasyAsk is the leading provider of natural language question/answer and eCommerce search solutions" -- a clear case of PR hyperbole.  While "leading" is incorrect -- FAST, iPhrase, and Endeca would certainly disagree -- is it one of the players, and counts among its customers Ann Taylor, Lands' End, Sony, and Talbots.  However, it hasn't been minting money, as its $9.2 million sale price attests.

The owners probably figured things aren't getting better anytime soon, and decided to (1) get money (a bird in the hand is worth two in the bush) and (2) work under the larger Progress umbrella, which has deeper pockets and a much larger installed base.

Progress is one of those quiet database companies, somewhat like Sybase, in that oficionados like the technology, even if the company doesn't have a large mindshare with the general public.  Progress cruises along, growing each year, selling to VARs, making them look like heroes.

What's interesting about the acquisition is it signals that search is starting to become embedded in other applications.  Search has been standalone for a number of years because the technology has been so specialized.  However, as it becomes more mainstream, it will now no doubt be absorbed by applications, in the same way that workflow became absorbed a decade ago.