I was glad to see this post from Tony Byrne this morning with a more practical reaction to Jive’s layoffs. I had been meaning to get something similar up myself. Jive has grown quickly– from 43 employees when we first profiled the company in March 2007 to 160 in August of this year. Maybe that growth was too far out ahead of revenue, but I can’t say that for sure and I don’t think anyone really foresaw how radically things were going to change economically or how quickly.
Staffing up for anticipated future growth and then scaling back when that growth is expected to be slow due to overall (unprecedented) market conditions seems like prudence to me, however unfortunate for those involved. Jive took $15m in venture funds from Sequoia in September 2007 and unless your Internet was unplugged last week, you know how Sequoia is advising its portfolio companies.
More generally, I agree with Tony when he says “I don’t foresee a decline in the social software space that’s any steeper than we’ll see in other software categories.” That is to say, it’s going to take a hit — most everything and everyone is really — but it’s not going to disappear. I don’t really buy the rah-rah outlook either (no real irony intended by linking to a post from Jive’s Sam Lawrence here, it’s just a good exmaple) that says social software will let us work more cost effectively and transparently and thus do more with less. This may be true in some cases, but growth is going to slow all the same. I think companies like Jive that have started to gain real name reconigition in the enterprise market, with many big name customers, will come through ok, though I’m not forecasting here which will remain independent.
I may not be quite as optimistic as Tony though. We make a particular effort here at The 451 Group to talk to all the start-ups, and there are too many of them with too similar “community” or social networking platforms for the enterprise. Sometimes after I meet with a company, I decide not to write it up because it just sounds too similar to XYZ company I profiled last week. I think this was generally felt by most everyone that walked the show floor at Enterprise 2.0 here in Boston last June. As funding becomes more scarce and IT spending slows, some of these won’t make it, plain and simple, which is probably as it should be.