Defrag Blog

Dennis Howlett (disclosure: I’m a big fan) has a post up today about the RightNow acquisition of HiveLive (which reminds me, why oh why are we incapable of spacing out 2 words in a company name anymore?). It’s an interesting post that begins to dive into the necessity of integrating “Social CRM” - but that’s not what really caught my eye.

In the post, Dennis points out that HiveLive took 7.8 million in funding, but sold for 6 million - and then he muses on a bit (with the help of Sameer Patel) about who could be next in this “consolidation” phase.

All of which got me thinking a bit about things I’ve been hearing as of late and the mindset of the enterprise buyer. The LAST thing an enterprise guy wants to do is purchase something from a startup, and then watch them go under (being acquired isn’t that - obviously). But, I’ve also been getting this sense lately (from conversations with “e2.0″ vendors) that we’re reaching a point in time where a second wave of startups is about to have “funding” problems; that we’re about to see a lot of “distressed consolidation” and outright door closing.

Now, I would *never* assert that a vendor that isn’t a sponsor of Defrag is somehow in a weakened financial state. There are just too many factors at hand (maybe they chose to be at another show instead; maybe they’ve re-aligned they’re marketing initiatives away from events; who knows). I will, however, assert that when a vendor has a presence at a conference it does at least betray some sense of financial stability. Sure, you get the rare case of someone going “all in” on a conference presence - hoping it’ll save the company. But, honestly, that is really really really rare.

The more likely scenario is that a company that is a sponsor of an event like Defrag is running their operations along at an appropriate pace, and spending their marketing budgets accordingly. I wouldn’t extrapolate it too far from that point, but I know for a FACT that enterprise buyers use the “saw them at show X” as an implicit gauge of company strength.

Right or wrong, fair or not - it is what it is.