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Wednesday, June 30, 2004

Why Did We Invest in NewsGator? by Brad Feld

The investment in NewsGator is based on just the outlook based RSS aggregator. While the most popular product from NewsGator is currently their Outlook-based aggregator, what really attracted the investor into NewsGator as a potential investment is NewsGator Online Services (NGOS). Greg Reinacker's vision is much broader than simply an RSS aggregator - his goal is to provide RSS content on any device. NewsGator currently provides clients for Outlook, the Web, POP email, mobile devices (web-based and wap), and Microsoft Media Center (how cool is it to get an RSS feed on your TV?).Brad Feld writes,"the misperception that NewsGator is simply an RSS reader for Outlook (although it is a damn good Outlook-based RSS aggregator!). Let me move on to why we invested in NewsGator. When I started really digging into RSS and blog technology, I began by actively playing with and trying as many different products and services as I could find. I had three goals: (1) figure out which were the most interesting products available today, (2) determine what the segments of the RSS / blog universe were, and (3) determine the "analog analogs" from the evolution of other segments (publishing, email, web, and ecommerce).The first was fun for me as its appeal to my inner-nerd was very tactile. In many of the market segments that I invest in (such as IT infrastructure software products - companies like Cyanea, Newmerix, Oxlo, Rally Software and Xaffire) I can't actually use the software in a sustained way. Sure - I can look at demos - but I'm not the target customer or user - so any real use case is contrived. In the RSS / blog universe I could set up a blog, read blogs, use RSS syndication, explore the tools, look at and think about my stats, and play with new search and advertising technologies as they appeared. Once I got into this, I ran across a number of interesting new companies.Once I became "a user" (meaning I was no longer in demo mode, but I was actually using this stuff every day), I starting figuring out which segments each company fit in and correspondingly began to rank the companies in terms of my perception of their future potential. The segments I came up with in hindsight are not that surprising, so I'm happy to share them here (and take constructive feedback from anyone that's bothered to read this far). The segments I identified are content management systems (CMS), readers (aggregators), tools, hosting, content, search, analytics, and advertising. There is obviously overlap between these segments (e.g. a company could be in more than one segment - search and advertising are a natural pairing, as are readers, tools, and analytics).I decided that rather than try to find one "ultimate investment" in RSS that spanned all the segments (I don't think this will exist), I wanted to make investments in several segments. I've been working closely on this with Ryan McIntyre who was previously a founder of Excite and knows many of these segments well from his experience there (and - hence - another view on the analog analog). We identified several companies in different segments that excited us and have been systematically exploring working with / investing in them. In several cases these companies overlap in various segments, but when in the same segment (e.g. search), they are complementary to each other rather than competitive.In fact - today - NewsGator (through the Outlook client as well as NGOS) has capabilities that cross all four segments. Clearly the emphasis is readers and tools - but if you dig into NGOS - you can see how NewsGator could be very complimentary to other companies that have their emphasis on search and analytics. Very perceptive comments and a key investment indeed.
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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"