Friday, November 21, 2008

The perfect storm

Magnolia has been available as a java-based, free, simple-to-use Open-Source Content Management System for five years this month. We are in an amazing position right now - Magnolia is a great brand, a great and stable product, we have built a great team, we have an amazing client list, we are seriously cash-flow positive while most of our competition is either burning venture or making losses and we have two amazing products in the pipeline. We are in a position of strength in a massively overcrowded marketplace that will see many competitors vanish in the very near future.

And while the markets tumble and companies struggle to stay alive, there is a very real possibility that Magnolia will fit the bill for those companies that need to update their web infrastructure. Not only is it cheaper (or free if you choose the GPL'd variant), it is also following a completely different philosophy: Magnolia's focus from the beginning was ease-of-use.

Let's face it, the demands of knowledge workers have changed dramatically. IBM still tries to use a database driven web model as the basis for their web site deployments (and in doing so, cripples Magnolia in its projects to a text editor). How much longer will they get away with this in a world where anyone can sign up for free to create blogs like this one, or complete websites without involving a battalion of consultants?

Some wake up to this new reality. Today, if I read press announcements of our competitors, they read what we announced 5 years ago. "Easy for administrators, developers and users". "Joy-of-use". "Simplicity". Yes, but a press release is no substitute for the real thing, which is why these companies directly drive their clients and prospects to us.

Yes, requirements in a multinational corporation can be massively complex, but that doesn't mean you need to torture users with your outdated content management processes or unusable user interfaces. It means you have to take usability serious.

In today's climate, many of our competitors will be unable to sustain their outdated business model which is based on promises and good relations. The number of competitor's senior sales representatives applying for a job at Magnolia has reached a level of one per week. But guess what: our clients don't need senior sales representatives. They visit our website, download Magnolia, talk to our evaluation team to understand how they can make Magnolia fit their needs and if they are satisfied with the result, they become our clients with a simple email or fax message stating the number of licenses they wish to obtain. Did you see the need for a sales guy in this process? Neither did I. So "no sales" is the motto of the day.

Since Magnolia has minimized the cost of sales, it can invest more in development (hence our ability to innovate through tough times) and it can invest more in marketing. The next step our closed-source competition will do is cut down on marketing expenses. This directly enables us to reach a higher visibility with less marketing effort.

So the closed-source competition is loosing money, losing senior sales guys, (have to) maintain an old code base to somehow keep their clients happy (and increasingly fail to do so), and has to minimize their cost of operations (you don't believe that any of these companies will invest into anything in these times) to stop losses. Thus, they go down the death spiral ever faster. 

Having dismissed Open-Source as an unmaintainable business model, they failed to seize the opportunity of building more with less. Now they lay off excellent developers (*). Thanks again. 

For us, this is the perfect storm.