Collanos Blog

In earlier blogs like Disruptive Innovation at Work and Gartner Prediction Supports the Collanos Business Model I wrote about our progressive go-to-market strategy entering new markets for collaboration, and our starting point to ride the most recent consumerization wave across enterprise boundaries.

Two inspiring new blog articles and their discussion threads seem to confirm our approach:

• Chris Anderson, author of The Long Tail, in his blog The Black Wire and the White Wire connects a second ethernet cable to his business laptop kicking off an IT “civil war”.

On my desk at work I have two ethernet cables. One is black and one is white. The black one is connected to our corporate network. I use that one when I want to print things. I could also use it for Internet access and stuff, but I don’t because the corporate network blocks a number of ports, including those used for Skype and Second Life. It’s also pretty slow.

The white cable, meanwhile, is a standard consumer-grade DSL connection to the Internet, with nothing blocked at all. Our local IT staff installed it by popular demand, possibly without checking with headquarters (we love our local IT staff!). It’s fast. I use it all the time.

Consumerization of enterprise IT at work…

• Jason Hiner, Executive Editor at TechRepublic, in “The six consumer technologies that are destroying traditional IT ” explicitely sees p2p Collanos Workplace being adopted even by corporate IT supported by some pressure coming from consumerization.

That doesn’t mean IT should necessarily abandon P2P software altogether. It can often prove extremely useful and efficient. For example, Collanos software can be used for sharing and collaborating on documents between various users in a team or workgroup.

Disrupting the collaboration market outside the enterprise platform and being brought in through enterprise doors via consumerization seems like a promising new business strategy – not only for Collanos.

In the 10th Annual Global Information Security Survey, conducted by InformationWeek and Accenture, some of the conclusions drawn from the data, gathered from over 3,000 US and Chinese organizations, are startling. A large majority of organizations feel just as vulnerable to security attacks as they were the previous year.

Although this survey focuses on large enterprises, here at Collanos our goal is to provide professional users (SMB and other organizations) with a true sense that their systems and data are in good hands and that with minimal resources (hey, Workplace is free!) you can reduce much of the security risks identified in this survey. As you can see in the chart below (drawn from the survey), viruses/worms, spyware/malware, spam, unauthorized employee access are the top four priorities on company’s security agenda.

Using Collanos Workplace all four of these vulnerabilities can be avoided altogether since Collanos workspaces are closed to invitees only. Your team decides who gets invited to these invite-only workspaces. Instead of using same-old-vulnerable-email to collaborate, users communicate in the workspace via Discussions and Chats.

Collanos does not install any spyware/malware on users’ machines (See Privacy Statement). You can create as many workspaces as you wish and invite only the employees that are members of the specific project at hand.

In regards to Customer-data theft (Priority #5) and Mobile device theft (#7), Collanos workspace data can be viewed only via the Collanos application, which is password (login) protected. If a computer is stolen, the thief would have to get access to the password protected application, otherwise, the data is plain gibberish. No team data is stored outside of the team members’ computers. Synchronization and storage is fully encrypted, using standard AES 256, and goes directly between team members’ computers when they can communicate directly in the network. Very often this is not possible because of Firewalls and NATs (Network Address Translation). In that case encrypted data is transferred through a relay peer in the internet outside of the peers firewall. These relay peers only buffer a small number of messages during the information transmission so the data is very fragmented.

The other concerns listed, for the most part, are vulnerabilities related to email, which again are not very relevant to Collanos workspaces.

Don’t get me wrong, there are still several items on our product roadmap that we feel are required to provide our users additional mechanisms to secure their data and systems. One example is extending the functionality of our Permissions matrix, so that teams can assign different levels of access to different employees and data. Collanos continues to focus on delivering an ‘enterprise-class’ reliable and secure solution that non-enterprise users can feel very confident using with one caveat, it will be simple and inexpensive to deploy and administer.

Top 10 lists are out. Analyzing the short tail of registered Collanos users per country is nevertheless revealing. The distribution of the countries is changing slowly, not really surprisingly.

United States is number 1 with 35% of the registrations. This percentage share is growing steadily since the introduction of version 1.1.

Position 2 is Switzerland with 12%! After all, it is Collanos’ home country and Collanos Workplace has a German version of the product. The share of Switzerland is slowly decreasing which actually is expected given the size of the market.

Not surprisingly number 3 is Germany with 9%.

Rank 4, 5 and 6 are Canada, UK, India with each 4% and Australia 7th with 2% as all are strong English speaking markets. These countries have shown the strongest growth percentage over the last month with India having the highest growth rate.

8 and 9 follow the top markets even without national language versions: Netherlands and Italy with 2% of registrations.

Ranked 10 now is China also with 2%. The introduction of the Chinese version has led to nice growth, not only in China but overall in East Asia. Many countries in that area are climbing up the list and are in the meantime positioned between 20 and 30.

And who is positioned to enter the top 10? 11 to 20 are Portugal, Sweden, Austria (Collanos needs some push in the German speaking neighbourhood it seems), Brazil, Bulgaria, Malaysia, Russia, France, Poland and Philippines.

It will be interesting to see the changes over the next few months. Since the numbers of registred users are still small the effects of launching new language versions as well as of the work of active Collanos Ambassadors and communities are strongly influencing the growth of the user base.

Great to see the number of Collanos users growing all over the world. I am glad to share these stats with all of you regularly.

Dr. Clayton M. Christensen, author of The Innovator’s Dilemma, said, “Disruptive technologies bring to a market a very different value proposition than had been available previously. Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based on disruptive technologies are generally cheaper, simpler, smaller, and frequently, more convenient to use. … . Ironically, in each of the instances studied in this book, [Innovator’s Dilemma] it was disruptive technology that precipitated the leading firms’ failure.

It is very interesting to see how Christensen’s research is being further validated by the rise of up-and-coming incumbent internet technology companies who are now taking away market share from enterprise application vendors. Telecommunication, content management, customer relationship management (CRM), database, and portal enterprise vendors are slowly seeing their market share erode as smaller more agile companies are building technologies that meet 80% of the customers need at a much lower cost. Companies such as Alfresco, Liferay, mysql, and salesforce.com have all built products that are competing against leading vendors such as IBM, Oracle, Microsoft, SAP, and EMC.

Other smaller companies have selected not to compete directly with enterprise application vendors, but to compete with specific functionality in an enterprise application. A good example of such a company is Xing. Xing created a business network that allows business professionals to maintain and share their business contacts with others. Xing now has over one million members who share their contacts freely. Businesses have been trying to do this same thing with CRM systems but with little success. As Xing continues to grow and build its network, businesses have started to turn to Xing for assistance with managing their company contacts.

The Internet provides a way for small businesses to build a solution that either competes directly with enterprise vendors or with functionality in an enterprise vendor’s product. Both strategies are potentially disruptive to enterprise vendors. Today, expensive marketing budgets, unaffordable infrastructure costs, security concerns, and technology superiority are a lot less penetrable barriers to entry. Companies can leverage the internet to cheaply market their solutions, buy hardware and host their products at very low and affordable costs, and outsource and use open source components to build products faster and cheaper. Although security concerns are increasing, trust in vendor hosted solutions has greatly increased. All these forces, plus the fact that existing vendors are tied to out-of-date architecture and are delivering functionality for the most demanding user, set the stage for market disruption.

In the Collaboration market, the innovative disruption has started. Companies such as 37signals, Zoho, and Zimbra have build collaboration solutions that challenge the likes of IBM, EMC, Oracle, and Microsoft. Collaboration prices have dropped, and continue to drop, making technology more affordable for the enterprise. But because of their hosted architecture, that incurs hosting and storage costs, incumbent vendors have faced price barrier that have prevented them from truly disrupting enterprise vendors and serving underserved markets.

Similar to Xing, Collanos choose to first compete against a few specific functions offered by enterprise and incumbent collaboration vendors. Where more holistic collaboration solutions required a high degree of computer expertise, monthly costs to support hosted infrastructure, restrictive company policies, and closed networks; Collanos choose to focus on a basic collaboration functionality that was easy to use, free, and open. Selecting a peer-to-peer (P2P) architecture was the innovation that has enabled Collanos to become a disruptive technology.

User feedback has been overwhelming positive. Students, small businesses, non-profits, and global markets have received Collanos simple but very innovative Collaboration solution. Users around the world can now experience the benefits of a collaboration system and a collaborative network for free. Thousands of users have downloaded and registered with Collanos. Daily teams have joined the Collanos network.

Collanos ambition is to provide its user network with a complete set of functionality that will allow them to benefit from the same tools that help make the enterprise successful.

Collanos aspiration is in line with Dr. Christensen’s findings, and according to Christensen’s theory, disruptive technologies such as Collanos who successfully start out serving underserved markets, eventually blossom and pick up the speed required to displace established vendors.

Gartner (NYSE: IT), the largest technology analyst company in the world, predicts Collanos’ type business model will become “the most significant trend affecting information technology during the next ten years.”

The Collanos’ type consumerization business model focuses on providing consumers with a collaboration platform that will allow internet home users, university faculty, small businesses, and inter-enterprise users to benefit from the collaboration tools that only enterprises have been able to provide at an expensive price to their employees.

By differentiating ourselves from other Collaboration vendors who require the use of a server, utilize a resource expensive development model, depend on longer release lifecycles, and have their own agenda that forces the need for further infrastructure investments, we gain a strategic advantage that allows us to deliver to the consumers the collaboration tools they need at prices they can afford.

David Mitchell Smith, Gartner Vice President and Gartner Fellow, predicts that our approach “will affect every enterprise.” Collanos’ approach is much like Wi-Fi’s, smart mobile phone’s, pc’s, voice over IP call’s and conference call’s, instant message’s, and the internet’s approach. Each of these was quickly adopted by consumers who benefited from the use of these technologies in their homes, families, clubs, and organizations. Consumers then took these technologies to work and caused the viral spread that later led to enterprise adoption.

Already in our beta offering, we see Collanos Workplace being not only demanded by ad-hoc teams, but by teams in the enterprise. Enterprise users refuse to constrain themselves to their current email and server based collaboration tools. Collanos, starting with its peer-to-peer Collanos Workplace, will soon provide consumers with a complete set of collaboration tools and like that create greater demand for Collanos in the enterprise.

Collanos prides itself in helping internet teamworkers and leading the evolution of the consumerization of collaboration technologies. We do not believe collaboration tools should only be available for the wealthy enterprise but should be available to everyone both outside and inside of the enterprise.

Often I am asked what an “Angel Consultant” is, since this is the term commonly used to describe my (as well as others) role in the company. Angel Investors is a coined term in the start-up world; however, Angel Consultants is less prevalent. The one thing that Angel Consultants and Angel Investors share in common is the desire for the company to succeed in the long term as each is invested in their own way. Whereas investors put their money on the line, consultants, such as me, forsake a steady stream of income and benefits for worthless pieces of paper dubbed ‘equity’ similar to a lottery ticket.

People who like the idea of working without pay at a startup without revenue, funding, or even a fully formed business plan in exchange for what basically amounts to a lottery ticket.” It’s the chance to work for a small, high-growth tech company that could either go bankrupt or turn into the next Google.
(http://patentbaristas.com/archives/000278.php)

Bootstrapping in Collanos takes on many shapes and forms, however, its end product is not only measured in the form of input vs. output. Indeed maintaining a low cash run rate is the most explicit goal but by grouping a team of committed people, additional factors contribute to the likelihood of the start-up to mature to a sustainable company.

As I make my final stretch getting back to San Francisco, following my first trip to Collanos HQ in Zurich, Switzerland, I cannot help but reflect on the unique circumstances of this truly global start-up. We are currently a spread out team of multi-national Collanos members with first-rate outsourcing teams in Bulgaria and Ukraine (including a designer in Indonesia). Our European investors all contribute more than just cash to keep us pushing forward. Call it ‘smart money’, these investors, each independently, contribute their time, contacts and a sundry of services that allow us to keep our run rate low, morale high and future outlook very promising.

On my trip to Zurich I was fortunate to take shelter at our CEO’s countryside home with the gracious hospitality of his family. Bootstrapping 101? Yes and No. Clearly the cost savings of a two week stay in Switzerland are significant but this was not the reason I was residing in the boss’ home. Staying in his home was a reflection on the cultural diversity and team commitment inherent in Collanos. How often do you hear of an American company hosting members in each others’ homes? Not often, if ever. For my European colleagues it comes so naturally. Even to me, with my Israeli roots – where there typically is no clear separation between work colleagues and personal relationships, this was a very pleasant surprise. The intensity of the gung-ho start up mode and the 18-hour work days allow us to leverage the remote time zone differences, progress in ‘internet’ speed and complement each others’ skills wherever needed.

Don’t get me wrong, Swiss-American work cultures clash quite often. I saw this first hand and very likely will see more of it as we evolve. However, the sincere desire to build trust amongst the core team via strong personal relationships, lays the foundation to keep the team intact and not let differences (and there are quite a few) distract us from pursuing our common goal.

The CEO and parts of the core team at the headquarters in Zurich, Switzerland, the CTO and another part of its nucleus in downtown San Francisco, USA, a software development team in Sofia, Bulgaria, as well as a number of additional small contractors and “company ambassadors” around the globe - Collanos Software is a what Business 2.0 Magazine calls a “Global Startup” in a recently published article:

How startups go global

Think multinationals have to be big? Think again. Scrappy, savvy small companies are operating worldwide in the battle for technology, talent, and customers.

Collanos is just at the beginning of this development. “We want to add additional talent to our already global team.” says Franco Dal Molin, Collanos’ founder and president, “We are ready to push the limits by implementing collaborative innovation networks and global sourcing models”.

The International Herald Tribune published an article on an important trend: European Internet and software companies are bringing to the market waves of relevant innovations. The following excerpts and quotes are taken from the article by Victoria Shannon:

• For one, companies expect and plan to have an international presence from the moment of inception, knowing that they can count on a more mature Internet as a global distribution and communications tool.
• And Europe has a head start in several technologies that are especially hot, according to Danny Rimer, a managing partner with Index Ventures in Geneva.
• Another particularly European niche is peer-to-peer computing, in which much of the work of conveying information on a network is handled by many small computers rather than one central server.

Collanos pretty much shares the same attributes and fits nicely in this “fire-catching” category. The IHT article can be found here.

Turns out we have once again pioneered a business trend. The following article was published today in SFGate.com: “For outsourcing, Bulgaria is ‘in’ / Proximity to Western Europe, U.S. makes it an attractive option”. Collanos has been using nearshore software development in both Bulgaria and Ukraine since 2003. We manage all our development activities from our European office in Zurich.