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Posted: March 30, 2011

Colorado success stories: Newsgator

Enterprise social computing - making Facebook, Twitter, and LinkedIn work

David P. Mead

Editor's note: This is part of a series of Colorado company success stories as told by CEOs and business owners.

NewsGator specializes in Enterprise Social Computing which involves integrating social media and social computing (Facebook, Twitter, and LinkedIn, etc.) at the enterprise level. The company started in 2004, but hit an inflection point in 2007 when it married NewsGator's software product to Microsoft's collaborative software, SharePoint. NewsGator has been doubling in size each year for the last three years. I recently met with President and CEO, J.B. Holston in NewsGator's downtown Denver offices.

How do you compete? To what do you attribute the fast growth?

We have a bit of a first-mover advantage. We solve problems and fill voids in the Microsoft product set. We can easily drop our NewsGator solutions on top of SharePoint. The IT folks love us because our solutions are simple to deploy and allow them to take advantage of the latest innovations. Literally, we can email the application. We make SharePoint a much more user-friendly product. SharePoint was created when collaboration was document-centric; today it's people-centric. Our solutions enable the social computing side. Since SharePoint has a 100 million seat installed base around the world, we have a considerable available market to target.

Has the growth always been smooth? Were there any bumps in the road?

While from a financial point of view things have been relatively smooth, there have been a series of big decisions regarding focus. We had to decide to STOP doing certain things so that we could concentrate on other areas. For example, at one point we had an online consumer RSS reader (similar to Google Reader). We made the decision to port our product to Google. So, along the way, we have had to learn to focus well - and saying NO is tough.

Your culture is very important to your success. How would you describe it?

Our culture is centered on innovation and is very client-focused. We spend our days watching what the consumer is doing and determining how to deploy these new features and applications on an enterprise level. Because the adoption of new applications is accelerating so rapidly on the consumer front, we can wait to see if something is successful with the consumer before we decide to commit resources. That means we can effectively avoid false signals. By reading these signals accurately, we provide our customers with only the most valuable, innovative tools.

How do you maintain that culture?

We do a number of simple things. Communication is extremely important. We have an all hands meeting by video conference and in person every week. We hold mandatory meetings every six weeks in each region. As CEO, I am very transparent. We use our own system. Perhaps 50 times a day, I post messages on our system (like Facebook) sharing information, praising an employee, commenting on a project schedule, etc. By posting these messages on an open system, we include a broader group of employees rather than guessing who should be included on an email distribution. The pleasant surprise is when someone in the whole population comes up with an unexpected solution. Interestingly, we have reduced email use by 2/3. We also have an ongoing focus on training and recruiting which we are working to improve as we scale the business.

How do global factors impact your growth?

Currently, 30 percent of current sales are outside the U.S. We will need to continue to establish operations outside the U.S. where local and regional "go to market "strategies are different. Additionally, outsourcing and cost competition are factors that need to be addressed and balanced with such factors as speed to market.

What are the keys to growth for NewsGator over the next 5 -10 years?

The company needs to grow at least 4X over the next two years - just to keep pace with the market. How do we keep up with that growth? Talent management is the most critical variable. We'll need to find, recruit and develop the right people, including building a management team that can scale as the company grows and adapt to an ever-changing environment. Along with finding adaptable people, we need to keep pace with the technological shifts.

A great example is what has happened in our sales effort. In the early stages, we needed a high percentage of people in outside sales. Now we no longer need to evangelize; enterprise social computing is well understood, but we need sales people who can understand the customer's specific need for social collaboration much more quickly and get to a ‘quick yes.' We will also need more inside sales people. With the advances of video technology, I can see a time when even our "outside sales" people will not actually travel.

Comment on the business climate in Colorado?

While there are not as many people in Colorado who have operated in a hyper-growth business environment (such as Silicon Valley, for example), Colorado employees are extremely smart, loyal and engaged. There needs to be a better eco-system in Colorado to support software companies that want to grow to a significant size. This will be a critical issue for us as we continue to grow.

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David Mead is President of The Mead Consulting Group, a consulting and advisory services firm, based in Englewood, that has been helping Colorado companies grow since 1981. The firm's 40+ senior consultants with operating backgrounds assist Colorado-headquartered companies with strategic growth and execution, improving profitability and cash flow and maximizing value at exit. Dave is the past Chairman of ACG Denver and a long-time Board member and is on the Board of Young Americans Bank. Contact Dave at: meaddp@MeadConsultingGroup.com or (303) 660-8135.

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