My company, Imaginatik, has had some great months recently. The reason for my post though is not, amazingly, to blow our trumpet. It was more an observation on the state of the emergent industry of software applications that tap into the brainpower of thousands to support innovation and collaborative problem solving, and a warning to large companies making buying decisions.
I get a lot of competitive intelligence through the market. We as a company keep up to date on the latest trends, we see the companies buying, browsing, chat to our competition at trade shows (those who can afford to attend), and get internet alerts when new vendors pop up (at a rate of at least one a month). So, I would say we have a pretty good insight into what is really going on, particularly where client wins are concerned, and where and how much money is flowing.
And what I can see is that a Top Six Month in Imaginatik for new revenue beats hands down the revenues from ANY start-up in this area by a long margin – and this is their annual revenue, not new revenue, monthly revenue or recurring revenue. Moreover, for those established players (i.e. those vendors who have been around for more than, say, three years), we can probably beat their annual revenues in a couple of good months (and with momentum behind us, rather than them, Imaginatik can do even better).
What does this mean for corporate buyers? Do NOT buy software and long term service provision for badly capitalized, tiny, cash poor software companies who are likely not to exist in a year’s time. Do not even look at them to complete a Request for Proposal (that is just mean, wasting their time like that and boosting their hopes). They won’t exist, and you will be stuck looking to replace whatever system they sold / promised to provide to you.
Another implication. To the winner, the spoils. The company with the most money has the most to invest in new products. Can attract the best staff. Can attend the trade shows to win new customers. Can – am I allowed to say this – BUY its weaker competitors to roll them in as a consolidation play. The impact of the latter is that firms who do buy from the weaker, tiny players find the technology they originally bought scrapped, the contracts ripped up (“not sufficiently commercial, sir”), and have a choice of buying from the larger company, or asking their IT folks to make them something, possibly from the remnant source code from the now defunct micro-vendor, or do nothing to help their company innovate with purpose.
Are my words and views harsh? Possible. Are they realistic? Absolutely. Watch this space.