May 17 2005

NewsGator’s New Friend – FeedDemon

I’m stunned.  It’s 11am Colorado time and there are already 200+ posts listed on Technorati about NewsGator’s acquisition of FeedDemon.  It’s amazing how the word spreads and it is fascinating to read the feedback (both positive and negative), speculation, and rants (good and bad) about this deal.

I’ve noticed several negative comments asserting that “this was driven by the VCs.”  While I’ve clearly been involved in NewsGator’s strategy (and Fred has some flattering words to say on the matter), JB and Greg have been driving the strategy and execution of this business (as a VC, I get to “be helpful”, hopefully in a more productive way then the IRS when they show up and say “we are just here to be helpful.”)

Early on in my exploration of RSS aggregators, I came across FeedDemon (how could you miss it – it’s the clear leader of the Windows Desktop aggregators.)  I played around with it, liked it, and kept my eye on it.  As my Feedburner subscribers increased and I started to have enough subscribers where my data meant something, the position of the top aggregators became clearer (following are my top 6 as of today: Bloglines, NewsGator Online, FeedDemon, My Yahoo, NetNewsWire, and NewsGator Outlook – hint – if you add up NewsGator Online, FeedDemon, and NewsGator Outlook, #1 is still Bloglines (by a little) but the gap between Bloglines / NG and everyone else is huge.)

In the fall as we were crafting our long term strategy – especially around RSS in the enterprise, the idea of a desktop client kept coming up.  We had a unique market position with our Outlook client, but as we laid out our enterprise strategy, it was clear that some users wanted a desktop client.  As we speculated on the future use case for RSS, item level synchronization became a critical item and we started thinking about how best to do this across all the various aggregators (duh – think like a platform – build an API dudes – get it together.)  So – we started working on the API and Greg reached out to Nick to integrated FeedDemon and NewsGator at a sync level (arguably the version that was integrated was pretty light weight.)

At some point in a conversation that Greg, JB, and I were having, one of us (I can’t remember who) said something like “why don’t we approach Nick and see if he’s open to joining forces.”  Greg called Nick and you can read about the rest of the story on Greg or Nick’s site.  This deal would have never happened if (a) Greg didn’t have the vision he had, (b) Greg wasn’t able to articulate the vision, (c) Greg and Nick didn’t have deep respect for each other as technologists and competitors, and (d) we weren’t collectively (including Nick) able to paint a long term compelling vision for NewsGator.

I’ve seen a couple of posts speculating that Feedburner and Technorati are next in line to be acquired by NewsGator since they share an investor (me).  While Feedburner, Technorati, and NewsGator are all complimentary and are discussing a variety of ways to work together, I think it would be a dumb idea to combine these companies.  As an investor, I’ve placed my bets on three companies that are the current leader in each of their segments (Aggregator: NewsGator; Feed Management: Feedburner; Search: Technorati).  You can argue about how you define the specific segments, but these are mine (the one I missed that I wish I had an investment in is the CMS segment.)  I’d much rather try to create three separate platform companies that are complimentary then jam them together into one big mess and fight the battle on three fronts.

There’s a lot more coming, but this is our strategic move of the day.  Nick – welcome aboard.