Recent Google acquisition JotSpot found itself the subject of unwanted attention this week, when an early customer complained of being shut out after the Google deal. A blog post by someone named Kevin (no last name supplied) had all the gory details, but Kevin then subsequently deleted it (note: I'd already read it before it disappeared). Techcrunch then posted the cached text of the post. My concern when I first read it wasn't so much for the damage to JotSpot's reputation (which the company is more than capable of defending), but the implication that hosted applications in general carry more risk than people normally assume. Here's the key extract from Kevin's post:
"Pick your hosted application service provider well. Relying on web hosted application services is much more dangerous than I ever would have assumed. This is especially true for those services that are “closed source” like those of JotSpot."
What's more, in the Techcrunch comments another person who claims to have been a JotSpot customer has his/her say:
"I can’t reveal much about my experience with Jotspot either, but our company has been heavily screwed because of the merger.
After the merger, Jotspot went on some kind of blackout as far as communications, and a portal we developed on jotspot’s servers is half-assedly done, but the developer can’t do anymore work because Jotspot has been quiet on whether they will pay him or whether google will. Unfortunately, we already have 50 customers (NOT USERS, CUSTOMERS) not understanding why basic functionality is not fully developed.
We’re probably going to dish out tons of cash to redevelop the portal on another engine entirely.
Thanks, Jotspot. Thanks a ton."
To his credit, JotSpot CEO Joe Kraus then leaps into the comments to defend his company. He says that Google has a policy of "not announcing anything about future product direction" and so "our ability to give any sense of timeline and capability is extraordinarily limited". Joe promises they're not going to abandon their partners and customers. Now, I have a lot of admiration for Joe Kraus and I think he's one of the smartest people in the valley. Nevertheless, the sense here is that JotSpot's customers have indeed lost out in this deal - and there's not a whole lot JotSpot can do about it because of Google's restrictive policies. So where does that leave the customers?
Peoples faith in web hosted applications has been shaken by this - and in particular in the Web Office realm, where hosted applications have a lot of business value invested in them by their customers. How can customers be guaranteed that a Web Office company acquisition (or worse, a bubble burst) won't negatively impact their own business?
This problem isn't new - back in the dot com days these types of hosted providers were known as ASPs (Application Service Providers). But ASPs very rarely replaced entire office suites (in particular Microsoft Office). In the case of Web Office, over the past year or so some of us have been talking up the potential of a whole business being run on a hosted platform - which is of course a threat to Microsoft Office. However the smaller the hosted provider is, the bigger the risk. Just as Amazon has a decided advantage providing hosted infrastructure (S3 etc), the likes of Microsoft and Google (with their own apps) have a big advantage over the smaller Web Office providers.
This has to be a concern going forward for Web Office startups. How on earth can they convince customers that they're as rock solid a (business) investment as purchasing a license for Microsoft Office, or downloading OpenOffice? Will they need to open source their technology, as Kevin's post alludes to? Or will it just require tightening up the service level agreements for customers?
And from the Web Office startup's point of view, how difficult does this make it for them to compete with Microsoft or Sun Microsystems? Imagine a Microsoft ad campaign that has as its main message: 'why take the risk of running your business on a small startup's servers?' It's not that far fetched an idea for an ad campaign.
I'm interested in your thoughts, because obviously I think Web Office startups have a lot to offer in terms of innovation and Web native functionality. But the business risks are something they need to overcome, to gain the trust and uptake of customers.
Comments
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Google should have realized that aquiring JotSpot is not like buying Picasa where the users all all consumers. There are other businesses betting the bank on JotSpot's platform, and their should have been private talks with them, not a total blackout.
Posted by: Hashim | December 1, 2006 12:17 PM
I've got to admit reliablility and security have been holding me back from using many apps, mainly wassabe. How can I trust them with my financial when their a small startup?
Posted by: Dan | December 1, 2006 4:31 PM
Part of that concern can be mitigated by open standards and the ability to easily export your data for backup locally.
Posted by: shadilac | December 1, 2006 8:14 PM
I think you've really hit the nail on the head here. I was having the same thoughts about mashups - if you build a cool mashup, how can you provide any real guarantee of uptime or of service availability at all if a majority of what you are providing comes from third party sources who provide no guarantees themselves.
I think the answer is two-fold. First, the web office or other ASP has to provide you a guarantee and mechanism for archival of all your content -- the freedom to leave that Simon Phipps talks about.
Secondly, I think it really needs to be open source. And I wouldn't trust the "open source" that is controlled by a single company, either, ala MySQL or Berkeley DB, where they can disappear or be acquired and the code can disappear or be taken in an unexpected and unsavory direction. This needs to be true open source, where there is an active community around it and no one company has control. This is one of the things I really like about Apache's governance model -- nobody can "take away" an Apache product.
These are the issues why I don't trust Google, I wouldn't want to put all my content with them, and wouldn't run my business off of them. But if it were fully open-sourced and there were APIs or other mechanisms that allowed me to export/archive my content (after all, it is my content), that would go a long ways.
Security, of course, continues to be an issue. Stories of stolen laptops and compromised data abound. It seems to me that if you want collaboration, you have to risk putting your data out there on the web. If you don't need collaboration, you could use a web-based service, but it could store all of your data on your local machine (e.g. using something like Apache Derby). But this does impact the power of a web-based architecture, as now you have to manually keep your data with you (e.g. on a memory stick) to be able to move from machine to machine, and nobody can collaborate with you.
Posted by: David Van Couvering | December 1, 2006 10:23 PM
That means only the big companies Google can giveservice level guarantees for web 2.0. That is no happy news for web 2.0 startuos which are being made for flipping.
Posted by: Pramit | December 1, 2006 10:54 PM
There needs to be a code of conduct of sorts for businesses of this type that decrees 'the customer owns his data' and can retrieve it and go elsewhere at any time - everything must be exportable. Eric Schmidt as much as said the same thing at a recent conference.
Personally, with the rate of acquisitions and failures in this industry, I wouldn't trust any company that doesn't allow me to export my files into some vendor-neutral format that I can migrate elsewhere.
Posted by: Mike Johnston | December 2, 2006 8:20 AM
Yeah, Google should not have shut JotSpot down the way that they did...JotSpot had people and businesses really counting on them. They weren't a toy. I don't see how shutting down helps their users in any way. And from all that's going on we certainly learned it hurt JotSpot partners. And even from Google's perspective -- how do you win this market when end users are now forced to go to competitors because your product is no longer available? If I need a hosted wiki today, I'll use Socialtext or Wetpaint, but I probably would have used JotSpot before. But after considering the danger of going hosted with a startup, I'd probably be best off with installing my own wiki. Am I really going to migrate back to Google if and when they re-release JotSpot? After this episode, kind of doubt it...
Posted by: Frank | December 2, 2006 10:51 AM
This seems to have less to do with web startups in general and more with how Google tends to deal with customers. A similar thing went down when Google bought Urchin to start Google Analytics. Urchin customers where left in the dark, their service simply stopped working, and nobody could comment on what had happened. These were customers paying 500+ dollars a month mind you and they still got treated like shit.
I love the products Google develops/buys but this tendency to simply not care, or at least appear to not care, about the people actually using the product worries me quite a bit.
Posted by: Tijs Teulings | December 3, 2006 7:24 AM
I used to love Writely for its colours and functionalities. After it became Google Docs I find it boring and I hardly visit it.
Posted by: Phoenix | December 3, 2006 9:16 PM
Google's personality works great for consumers.... how well does that really translate to businesses? Just take a look at how many false starts their Enterprise Search division has had. Being 'user friendly and open' means one thing for consumers, and something totally different for businesses.
Posted by: Andrew | December 4, 2006 12:42 PM