Brad Feld

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Enterprise RSS at NewsGator is Alive and Well

Jan 12, 2009
Category Investments

I love ReadWriteWeb.  I respect Marshall Kirkpatrick.  But I’m completely baffled by his article R.I.P. Enterprise RSS

Marshall says “It’s with a heavy heart and a sense of bewilderment that we conclude that the market for enterprise-specific RSS readers appears to be dead.” 

Huh? Marshall, are we living in parallel universes?

NewsGator has built its business on Enterprise RSS.   It has two primary revenue generating products around Enterprise RSS: Social Sites Professional and Social Sites Enterprise.  There are now over 120 companies using these products representing over 800,000 users.  Per the press release NewsGator issued today, customers that bought these products in 2008 include:

  • Two of the world’s top three banks
  • Two of the three largest banks in the US
  • The world’s largest private public relations firm
  • The second-largest advertising agency in the US
  • Two of the top three US manufacturers of network and communications equipment
  • The world’s second-largest law firm
  • Four of the top 15 US pharmaceutical companies
  • Two of the top seven US aerospace and defense companies
  • One of the top five investment banks in Canada
  • The fourth-largest generator of electricity in the US

In addition, NewsGator had a spectacular Q4.  They solidly beat the plan for Q4 that they had established at the beginning of 2008 (and met their 2008 overall plan on the top line and were ahead of plan on the bottom line.)  NewsGator added around 30 new customers in Q4, including six in the financial services sector, one of the areas most impacted by the economic downtown.

How many enterprise software companies can say that? 

Marshall goes on to say “Newsgator, one of those three companies, announced today that it has closed another round of funding. Years after the company launched, it appears to us that the funding is a life-support line for a company that has largely left enterprise RSS behind and has been humbled into selling advertising widgets.”

For starters, when we did the first round of financing of NewsGator in mid-2004, the company consisted of one person (Greg Reinacker).  4.5 years later it is 55 people and dominates the market it plays in.  You can call it “Enterprise RSS” or “Social Computing for the Enterprise” – I don’t really care.  What I do care is that the customers that have bought NewsGator’s products love them, are using them, and are realizing Marshall’s words “Any company that steps up to make serious strategic use of such software should be at an immediate advantage in terms of early and efficient access to information.”

The notion that NewsGator’s funding “is a life-support line” is totally absurd.  One of my goals with all of my “more mature” (e.g. older than three years) portfolio companies is to make sure they are “fully funded through becoming cash flow positive.”  This financing unambiguously gets NewsGator to that point with plenty of room to spare.  NewsGator still had cash in the bank prior to this financing; the last time I checked an incremental $10m of financing is a meaningful amount for any company.

Marshall, I invite you out to Denver anytime (or we will come to you) to spend the day at NewsGator, really understand their products, and get a deep understanding of how NewsGator is spreading “Enterprise RSS” to the corporate masses.  Seriously, come spend some time, do some real research, and help the industry understand the value of this stuff.