I've been struck by the contrasting reactions to two separate company shutdowns that have taken place this week.
It emerged on Monday that SaaS business intelligence vendor LucidEra emailed customers late last week to inform them the company will cease operations at the end of this month. Immediately there was a flurry of blog posts debating what this meant for the future of SaaS and of SaaS BI in particular. Tech journalist Christina Torode even wrote that LucidEra's demise harkens to ASP downfalls.
Monday also brought the news that Clear, a subscription service that operates fast-track security lanes for frequent travelers in a number of US airports, had abruptly ceased trading. No one blogged that its demise raised question marks over the future of business services sold on subscription, nor whether the notion of commercially operated fast-track channels was simply not viable (indeed many speculated who might enter the market to take Clear's place). This was simply seen as a story about a company that couldn't renegotiate a crucial loan, and went under.
LucidEra, too, simply ran out of money, and it is fatuous to attempt to draw any broader conclusions about the state of SaaS or SaaS BI from its demise. Darren Cunningham, LucidEra's VP of marketing, was contacted by phone Monday and told SearchDataManagement.com that, "it was a matter of funding or being acquired. And neither of those things happened." In an email on Tuesday, reports Intelligent Enterprise, he elaborated further:
"All that I can say at this time is that our product and pipeline were both stronger than they'd ever been. Customer adoption was growing ... We got hit by just really, really bad timing to have to be raising our next round of funding in this economic climate."
The crux of LucidEra's difficulties is no more and no less than that it raised its last funding round of $15.6 million in August 2007. It's evident that the company's business plan and company structure back then would have been predicated on the boom economics of those times continuing. As we now know, they didn't, and LucidEra therefore had no chance of making the numbers that would allow it to fund its next round. This is nothing to do with SaaS, or BI, it's just another of the many startups around the world that got funded when the times were good and now has run out of cash.
The most intelligent comment I've seen on the LucidEra story was made by a commenter on Jeff Kaplan's post about its demise. Tsahy Shapsa wrote:
"There's a bigger question here, do I go with a start-up product or not? Not all start-ups are going to make it. That's a fact. If one is buying a into start-up product with a perpetual license model, that goes belly up, then one probably needs to write off the whole capital expense/investment (vs. a SaaS product with a subscription pricing model — one only pays for what one used it for)."
Something else to note in favor of the SaaS model, even when it fails: LucidEra's management is spending the company's last few days trying to help customers achieve what Cunningham in his email called "an orderly transition." Om Malik at GigaOm reports allegations have surfaced that Clear spent its last few days urging customers to buy company gift cards that are now worthless.