Wednesday, June 6, 2012

Shifting sands

A few months ago I posted about an investment round in Tracx and its participation in what we expect to be a fast growing market; social media management. In the 5 months since we closed the round, the company has performed quite well. However, quite recently there has been a huge upheaval in the surrounding competitive environment. Oracle acquired Collective Intellect, in response to SalesForce acquiring Radian6 and Buddy Media, which, of course is an area which SAP is dabbling in via its endorsement of Netbase.

Odds are that at least one of these transactions will not proffer the returns which the acquirer hopes to garner. Nevertheless, no doubt that the product, customer value, and distribution dynamics within this early stage market are in disarray. As an investor, I am accustomed to early stage companies making a 'left' turn as they discover the real market opportunity is a 90 degrees adjustment from where they were heading. It's not too unsettling to see the value proposition, which customers need to evaluate suddenly change too.

This is why I think it's essential to have faith in the team you back. Markets, competitors, and your target customers change oh so quickly. The team is my port in the storm.

Stay tuned.

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