Comments on: Bad economics are difficult to shake off

By: Jiri Zatloukal

Jiri Zatloukal — Mon, 26 Oct 2009 15:10:29 +0000

Dobrý den,

Rád bych se Vás zeptal na pár otázek ohledně Vašeho podnikání. Mohl byste mi poslat mail, eventuálně telefonní spojení.

Děkuji předem,

Jiri Zatloukal
Časopis TÝDEN

By: Ajay Dawar

Ajay Dawar — Sat, 03 Oct 2009 01:14:38 +0000

@Roman. You are mostly right. What I imply by mostly US team is the following: They were not offshore (I personally don’t like outsourced) – in other words the cost could have been much lower. They off shored quite late and only for a small portion. Secondly they tried to build everything from scratch, including the database – the team (including me) took the building everything from scratch a bit too far – DB, ETL, Connectors, Reporting UI, Dashboards, Charts, Administration, Grid Deployment, multi-tenancy and more.. – you name it. Imagine doing all of this in the US and add to that the support and service staff – also in the US. Not that there is anything wrong with it per-se but when you juxtapose this against the meager revenue stream from focusing just on Sales Analytics it created a burn rate that was too risky. Like most things in life there is some gray here. The downturn created a tight funding environment and it precipitated in the company’s shutdown. Hard to single out one particular thing – but I would say, wrong technical approach (wrong because it was too costly, too slow) combined with bad funding environment. Absent either one, the company would have been around.

By: Geoff D

Geoff D — Tue, 29 Sep 2009 15:51:17 +0000

Roman et al.,

It’s really difficult to pin down the failure of a business to one area. There’s many factors that coalesce into a “behind the woodshed” moment. I would argue this space will see plenty more dead dogs before a true best of breed emerges.

Remember that SFDC needed somewhere in the neighbourhood of $70M to fuel its ascent if I am to mix metaphors momentarily. I’m not saying throwing money at the problem will solve the problem; I’m saying that I doubt, based on the rounds of financing gained, that they planned on needing as much lead time.

My hope is that the decomposing bones of these corpse companies will serve as a warning and a lesson to the next generation. That is all.

By: Jerome Pineau

Jerome Pineau — Mon, 28 Sep 2009 17:43:26 +0000

@Ajay: “with a mostly US based engineering team that burned through $23MM quickly” – I have to jump in here. You’re implying that their [Lucidera] burn rate was caused mostly by their using a US-based engineering team as oppose, I presume, to an outsourced one to build bits from scratch? And if so you are claiming they ripped through $23M in doing so?
Just trying to make sure I understand here.
Thanks.

By: Ajay Dawar

Ajay Dawar — Mon, 28 Sep 2009 17:37:25 +0000

Roman

When I started reading about your comment around window dressing, I thought you were onto something. After that you disappointed me.

Each of the companies that you mentioned LucidEra, SuccessMetrics, Cloud9 and PivotLink – all of them funded innovation. Although each had a different take on what was the most important problem to solve, as a first problem. I can say the same for GoodData – Your company isn’t solving all the BI problems – which is a wise business decision. You have a take on what is important to address first and are directing your innovation efforts there. Time will tell if this was enough. None of these companies – as far as I know – went the VMWare/AWS route. So, I am not sure that you have the right perspective here.

LucidEra did not fail because it was a Broadbase restart. It failed because it tried to build all the technology itself with a mostly US based engineering team that burned through $23MM quickly – and decided to limit itself to Sales Analytics – a small market that got commoditized by Cloud9.

I don’t think that having a history as a different name, equates to a VMWare/AWS backend and hence a window dressing. Secondly, all of the companies above have been in business much longer than GoodData has so please wait until your company has accumulated some BI experience.

By: Jerome Pineau

Jerome Pineau — Thu, 24 Sep 2009 20:13:50 +0000

Oops, I clicked too fast and posted as Anonymous by mistake — Hate then that happens I never post anonymous ever.
Sorry.

By: Anonymous

Anonymous — Thu, 24 Sep 2009 20:12:38 +0000

IMHO, being backed by a “leading VC” (whatever that means anymore) who is “well funded” (again, not sure what that means anymore) in the BI space and specifically in the SaaS arena is far from a sign of potential success. I would refer your readers to this article as well: http://bit.ly/jIuVK

Fact is, most VCs don’t understand BI/database technology – much less SaaS. Heck, a lot of CEOs of such companies don’t even understand it themselves!

What we have in SaaS (and cloud in general) are a lot of worried VCs playing the sheep game and investing in that space simply because they follow each other typically much like lemmings off a mountain range. I’m not saying they’re all empty suits, but there are a lot of clothless emperors in this game out there.

In all fairness, there are also several who really DO get it (namely Evangelos at Trident, for example) and those are the people you want backing up a SaaS play, for example.

So I don’t think it’s so much the “bad economics” we need to shake off as much as the bad investors IMHO. Yes there IS such a thing as bad money

Just my 2 cents.