SOA Under The Radar: Recap
Last night I served on a panel of VCs at IBD's "Under the Radar: SOA Death Match". The event featured 4 companies with products that were either directly or indirectly focused on enabling Service Oriented Architectures (SOA). Each company presented for 6 minutes, then the panel of VCs asked 6 minutes of questions. At the end of the event, the VC panel picked a "best in show" and the audience picked their own "people's choice".
Perhaps what I found most interesting about the conference was that you could actually get 75 people into a room on a Tuesday evening to discuss Service Oriented Architectures. Sure this is Silicon Valley and there are lots of tech geeks that are always up to discuss the latest and greatest technology trends, but I remember in 2001/2002 when the mere mention of XML, SOAP, etc. brought puzzled stares from many in Silicon Valley. I think it just shows that the whole concept of XML and SOA has reached mainstream acceptance, at least within technology circles, and really is destined to become an important and long term part the technology fabric.
In case you are interested, here's an overview of the 4 companies that presented:
Appistry: Appistry was a bit of mis-match for the conference in that they are more of a application virtualization play than an SOA play. I actually like the application virtualization space quite a bit, although many of the big players have already made acquisitions in the space so the amount of opportunity remaining for start-ups is limited. That said, Appistry seemed to have a very solid product and several good reference customers. They were a bit of a sentimental favorite for me given that the CEO was a former Wash U grad and they are located in Wash U's hometown of St. Louis (not exactly the tech start-up capital), but they clearly were at a disadvantage in the competition because SOA wasn't really their sweet spot. I suspect they knew this and were really just looking to get some valley exposure for their business/fund-raising efforts, so they should have gotten an award for entrepreneurial pluck.
Blue Titan: Blue Titan's main product is a web services management platform that enables companies to provision, secure and manage lots of different web services. Their main competitors are Amber Point and SOA Software (which was supposed to present at this conference but canceled at the last moment). Blue's Titan's founder and CTO presented and he was probably the most engaging presenter of the evening. Conceptually I like the web services management space a lot. I actually funded a company in early 2001 to go after this space (Maaya), but I was *way* too early and I was lucky just to get my money back. These days it looks as though the space is finally getting some traction, but the sales process is complicated by the fundamental architecture issues that come along with embracing SOA which means it's a technical sale that requires multiple sign-offs. In one of the more humorous outcomes of the evening, Blue Titan actually won the "people's choice" award but finished last in the VC panel's voting. I think we VCs were concerned with the difficult sales cycle that Blue Titan faces while the audience was more focused on the visionary nature of the product. Blue Titan's CTO took the difference in stride and said that the vote just proved his belief that potential customers appreciated his business much better than potential VC investors.
Ipedo: Ipedo is focused on Enterprise Information Integration (EII) which I like to call data abstraction. They aren't really focused on SOA per se, but their technology is arguably critical to the enablement of SOAs. Ipedo competes primarily with other start-ups, most notably Composite Software and MetaMatrix. I like this space a lot and actually came very close to investing in the first round of Composite Software (which I still believe is the best company in the space) but wasn't able to get my partners over the goal line. I believe Ipedo started out as more of an XML-database play, but they quickly (and correctly) realized that a more generalized EII platform had more long term promise. One of the most interesting things the CEO mentioned in his presentation was that Ipedo had an office in Shanghai, that their Chinese operations were profitable on a stand-alone basis, and that they were seeing strong demand for their EII solutions in China. Given that EII solutions are just now being adopted by many US corporations I would not have suspected that there was demand in China, but I think it just goes to show how quickly the software market is developing over there. As it turns out, Ipedo ended up winning the VC panel award. I think this had to do with the fact that Ipedo seemed to be addressing a more pragmatic and immediate business need (data integration) than SOAs, so in some senses it really isn't fair as that's really comparing apples and oranges.
Reactivity: Reactivity is a Message Aware Networking company that sells a "software appliance" focused primarily on securing XML messages as they transit a company's network. I funded one of their direct competitors, Datapower, so I am very familiar with the space. XML appliances aren't theoretically required to build an SOA, but they provide a much more secure, reliable and manageable foundation for SOAs. Reactivity has traditionally been focused almost exclusively on the security side of equation (many refer to their product as an XML firewall). To their credit this has really turned out to be the near term sweet spot of the market, however I think Reactivity's early focus has allowed some of their competitors to pigeon hole them as only security focused which may hurt Reactivity as customers begin to look for broader XML message platforms. The big news in this space has been Cisco's recent announcement of its AON initiative which I think will likely force other big networking and software players to seriously consider buying some of the start-ups in the space. I asked the CEO about Cisco and he gave a very honest, straightforward and mature response about Cisco's efforts which was very refreshing to hear from a start-up CEO. Ultimately I think both Datapower and Reactivity will do well, as the space is growing quickly and strategically important to a number of companies.
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The thoughts and opinions on this blog are mine and mine alone and not affiliated in any way with Inductive Capital LP, San Andreas Capital LLC, or any other company I am involved with. Nothing written in this blog should be considered investment, tax, legal,financial or any other kind of advice. These writings, misinformed as they may be, are just my personal opinions.