by Aner Ravon
Filed under: web 2.0, Aner Bio, business, My Web Life Experiment
Israel based Clarizen announced having raised $7M from Benchmark Capital and Carmel Ventures yesterday. This announcement is significant in more than one way.
Clarizen provides web 2.0, software as a service, hosted project management tools. This is a brave attempt to dive head first into a very crowded pool. Microsoft on one side, Google as a potential competitor on the other and wide variety of very good Internet start-ups in the middle. Zoho and 37Signals, for example, have been providing comprehensive productivity suites, including project management, for some time now. Moreover, Zoho and 37Signals have already built good products, customers, corporate identities, press and blogsphere relations - or in short - a brand. I covered Zoho a couple of times and have been following their progress closely, they seem to be only accelerating. How can Clarizen effectively penetrate this market in a way that will eventually generate market leadership?
They can. While this market is seemingly crowded it has not nearly shaped yet. Most of the current users are very early, blog reading, techie adapters. Enterprise customer acquisition is still based on random opportunity chasing and on Grass roots marketing. Enterprise customers do not use web 2.0 productivity tools yet. There are no real distribution chains and other elements which make up a mature enterprise software marketplace. Zoho and 37Signals have been successful, but they haven’t really tickled Microsoft or real Enterprise customers yet. Then there are verticals - health-care, financial, legal, travel, banking, etc. - all requiring special customization and regulatory attention. This market has not only not matured, it has not really begun.
So what can make Clarizen different?
First of all Clarizen is not a bootstrapped web 2.0 company. The founders come with extensive and deep enterprise background. It already employes 34 employees and top notch developers. With this type of investment and backing they can aim at bigger targets. I don’t see Zoho developing a health-care suite and I don’t see 37Signals dropping everything in order to train a 5,000 employee construction company.
Clarizen is Israeli and that can be both an advantage and a disadvantage. I really hope they won’t use the money to open a North American branch and compete for the American Dream in 2007. While VCs may have a tendency to push in that direction, it will be a big mistake for a number of strategic reasons. The US is where competition is dominant, where the enterprise software market is extremely developed and where Israeli companies need to learn too much before they are able to compete. The simple truth is that American IT managers appreciate receiving service from Americans. This means local marketing, sales, support and training organization. Creating all those and going through the mandatory learning cycle will take a lot of time and money. Too much time and money. And it won’t create a real competitive position for Clarizen.
My advise to Clarizen? Climb the mountain slowly is your best shot at leading. The Enterprise SaaS market is not going anywhere too fast. If anything, you’re early. Grow the customer base, test different opportunities in different countries, make the service really reliable, grow your expertise, implement a real internal enterprise culture and only then focus on geography and a specific customer segment. Don’t jump overboard but build something real.
Kudos to Benchmark and Carmel for investing in Israeli Enterprise SaaS. Not the typical common sense investment. Israel is not reputable for dominating with enterprise software or services. Something about the innovative but messy Israeli mindset that collided with enterprise philosophy. But the Israeli scene has matured greatly and it is visible inside Israeli companies as well as with their products. There is no reason why Clarizen should not outperform it’s rivals anywhere in the world. Good luck!
Aner Ravon
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Clarizen is indeed a first in a number of ways. We have taken upon ourselves the challenging task to supply businesses of all sizes an on-demand project management solution that provides the robustness, security and scalability required from enterprise-grade applications with the collaborative nature and ease of use of web2.0 services.
The feedback we’re getting from the market is extremely positive; we already have over 20 design partners worldwide and met dozens of potential customers that are eager to be the first to enjoy the benefits of our service.
Thank you for your words of confidence.
Eran Aloni, Clarizen.
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Trackback 05.26.07 @ 1:40 pmThere are a lot more better solutions on the market than 37Signals and Zoho! ProWorkflow is IMO the leading SaaS solution for Project/Task/Time management and has been steadily growing it’s customer base and maturing the product as well as developing secure, automated back-end systems… www.proworkflow.com
05.28.07 @ 5:45 amRegardless of who the dominant players are (MS, Google etc), in the SaaS space it’s important to remember that there can be many, many strong players and there’s room for everyone. If you capture only 0.1 percent of the market, due to all the verticals, you can create a 100M turnover business. Nobody can make a one-size-fits-all application. So it’s good that there are many great solutions. The SaaS players should just focus on sustainable business models, and not on market doninance. We should be peers in this market, not strive for the world leading position, rather create world class solutions! I say “Go Clarizen, all the best to you!” - keen to see what you develop! (even though I’m the CEO of www.ProWorkflow.com)
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Hi Aner! I’m on the clarizen team and i enjoyed reading your column. Thanks
12.05.06 @ 12:37 pm