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Getting Bought by Salesforce is Bad News for Thinkfuse Users

Thoughts on Salesforce’s acquisition of Thinkfuse – and what it means for small business and SaaS

Last week we received an email from Thinkfuse, a cloud app that delivers “simple status reports.”

To make a long story short, they told us (and their many customers) that they were purchased by Salesforce and were shutting down operations.

Here’s a screenshot of the email:

Getting bought by Salesforce is big news for Thinkfuse. They probably made a splash load of cash for themselves and their investors. They’re now involved with a product serving millions of subscribers, instead of a few thousand. They’re moving up the totem pole.

Unfortunately, the deal is less good news for Thinkfuse users. We don’t use Thinkfuse internally, but we thought highly of the product, and knew several clients who used it. It is (was) a great piece of software: simple, focused, functional. To lose the service abruptly, with Mailchimp as the only proffered alternative, feels a bit… well… hard to take. As one customer put it:

Couldn’t have said it better ourselves.

Oh crap

We’re the first to proselytize the benefits of the software as a service (SaaS) model.  It frees up businesses from large capital expenditures, incentivizes vendors to keep updating their software, and enables users to leave when they’d like. Unfortunately, as the Thinkfuse deal shows, it also enables vendors to dump users when convenient. That sucks. A lot.

For some users this isn’t a big deal, but for those who’ve spent the time and effort to make the software a part of their workflow, it’s catastrophic.  It’s not just the migration, it’s the retraining and the rethinking how it all works within the company.  If Thinkfuse was a CRM, an accounting system, or (gasp) an ERP or inventory management system, it’d be that much more serious. Losing such mission-critical software on such short notice could (potentially) mean significant revenue loss and change management issues. That’s a serious liability.

Lessons learned

Now, before we get too deep into slingin’ FUD around, let’s be clear: we’re cloud consultants, we love SaaS, and we’ve never had a client suffer any issues relating to a vendor’s acquisition. What’s more, the likelihood of someone like Salesforce or Netsuite acquiring a CRM or ERP and shutting it down completely (ala Thinkfuse) is pretty low – they’d want the customers as much as the talent. Salesforce’s acquisition of Assistly last year is a case in point.

Still, the Thinkfuse deal offers a few lessons for would-be software users. Here are some things to consider when evaluating software for long-term or mission critical use:

How young a company is it? In business years, Thinkfuse was an infant. They were founded in August 2010 and went through the Seattle-based Techstars incubator. Young companies = young products = unpredictable futures. Take a hard look at who they are, what their vision is and what they’re trying to achieve

Do they owe investors? Thinkfuse raised $532k. For a team of 5, that’s a lot of pressure – I’d sell the company too if a sizeable offer came around. Compare that situation with Norada, the makers of Solve360, who never accepted outside funding and remain self funded. Their future is far more their own.

The amount of money a company raises won’t tell you if they’ll be purchased or closed down, but it does shed light on the pressures the founders face. Be wary of highly funded small teams.

Are they playing for enterprise? Getting bought out is wayyyy easier if the software serves enterprise-class customers – that’s the market in which Oracle, Salesforce and others are interested. In retrospect, receiving regular status reports isn’t exactly a core small business process: Thinkfuse was always targeting enterprise.

Enterprise focused apps may be playing for acquisition (and their features are probably not aligned with you anyways…). Be warned.

Conclusions

From an entrepreneurial perspective, Thinkfuse has done well for themselves. From a small business perspective, their acquisition and subsequent closing down raises legitimate concerns for SaaS customers. A careful evaluation of software before you buy is well advised, especially for mission critical solutions.

VM Associates is a New York City cloud computing consulting firm. We help companies transition into newer, better, smarter software. Contact us to talk about your business, the cloud, and how we might help.

Read the original blog entry...

More Stories By Chris Bliss

Chris Bliss works at VM Associates, an end-user consultancy for businesses looking to move to the cloud from pre-existing legacy systems.

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