Groove Networks lays off 20% of staff
Longtime Joel readers will remember when El Presidente gave Ray Ozzie, the mastermind behind Groove Networks, quite a bit of stick regarding his whole business and technology model. Well, well, well ... this article:
Mitch & Murray (from downtown)
"Groove has not disclosed a target date for profitability."
I visited the Groove forums months back and noticed sloppiness. For example, the Groove server would be down for a weekend, and ordinary customers weren't contacted nor was the webpage (which still worked fine) updated. In fact, the message was a polite version of, "Most of you are not paying an enterprise license, so we don't have the money to post, email or update our webpage." Um, ok.
How does a pure software company need so much cash? Groove's only hope is to get purchased by Microsoft in which case I don't think investors will get much return. Groove is not another Lotus Notes (which wasn't that great anyhow). I just don't get it. I've looked at the product several times and can't for the life of me figure out any realistic value it provides. Even conceptually it's a stretch.
Tell me about it! At least my Segway investment still looks promising... doh!
What are they selling? There must be some other cash source. $1.55E+8 isn't enough to pay for 290 people + overhead for 5 years even if all they are doing is software development.
To be fair though, if the severance packages were really generous and included job replacement help, cutting down on the burn is not a bad idea. Maybe they established a beachhead and are now winding down costs. And maybe things are not so clean.
Any software company that needs this much money just to get off the ground doesn't have a future ahead of it. It's run by people who don't know how to manage a business. Almost every tech giant today, was started with either a limited amount of venture capital or was self funded. And the ones that did get VC funding, became profitable super-fast.
i think this was predictable.
but the defense dept loves it and that alone justifies the investment. Groove is also very quiet about their other wins.
not a groove user
groove was initially self-funded by ozzie who made a substantial fortune from notes. but he's smart enough not to put all of his own cash at risk.
not a groove user
z, $155m is *plenty* of cash!! Even if they averaged 100 FTEs for those 5 years, that's only $100m *max* for salaries. I wouldn't be surprised if they now have at least $50m in the bank.
I find if curious that Microsoft is dumping so much money into Groove while simultaneously working on their own P2P products. Microsoft recently released betas of their Real-time Communications Server ("Greenwich"), threedegrees (multimedia IM), and the P2P/IPv6 SDK for WinXP. Well, I guess Microsoft can afford to places lots of bets, hoping for one home run.
I noticed this, too. The SharePoint development alone could become a competitor to Groove, if a lot more development was done on it. Maybe Microsoft and Groove are trying to create a market, but I don't really see the use for Groove (or SharePoint) at this point. It seems to me that groupware/conferencing is nice, but not necessary.
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