Gigaom Research, where I was working as a research lead for the past several years, has ceased operations as part of the takeover of the operations of Gigaom by creditors. Obviously, the company as a whole was living beyond its means for some time, as $22 million in venture money has been burned in the attempt to grow the company.
Danny Sullivan’s teardown of the Gigaom crash makes a strong argument for not trying to build this sort of business based on VC funding. I would concur that trying to build a research business with VC backers is problematic, too: the returns aren’t the right scale.
However, there were things going right at the Research part of the company. I have significantly less insight into what was happening in the editorial and events side of the business. And my understanding of Gigaom Research is somewhat one-sided, too, as I was a freelancer and not an employee.
Duncan Chapple of Influencer Relations wrote Mid-size analyst upstarts are creating value faster in June of last year, and his research showed Gigaom Research (see top of page) gaining in influence along with other innovative boutique firms, at the expense of the well-entrenched, larger analyst firms.
In my practice area — which I have shifted over the past few years from social business and collaboration tools to work futures and work technologies — we had brought on a growing list of serious tech companies as clients, including Microsoft, Google, Dropbox, Jive, Smartsheet, Adobe, EMC, and many others. I have been working closely with the product teams in those companies, and the clients had indicated regularly what Chapple said about Gigaom in his research:
Firms like HfS Research, Constellation and GigaOm have built their brands very quickly, in just a few years, and are now more visible than more established firms.
That’s something we got right: we had rapidly grown in influence. Lamentably, I had functionally no insight or influence over the business model at Gigaom Research. Aside what I was being paid for my monthly retainer and fees for specific projects, I seldom knew what clients were paying for their subscriptions or sponsored research projects. There was a real lack of transparency.
Somewhere between Rolnick’s optimism two or so months ago and Monday’s devastating news, things went pear-shaped.
Worse than that, Gigaom Research was providing ‘the lion’s share of revenue’ at Gigaom according to the former CEO, Paul Waborsky, who left the company late last summer and was interviewed by PBS soon afterward. That means that there might have been a viable business for research, but who knows. The theory was that Gigaom’s editorial side created the draw that made Gigaom Research possible, but now I believe that may not be the case.
The business model for Gigaom Research was also predicated on the use of freelancers, who are the subject matter experts involved in the research and analysis. I think my example proves the errors in that, since many of my contacts at the client companies have told me — some prior to the shut down, and some this week, afterward—that they had become clients specifically to work with me. This is not intended as a humblebrag, but to show the fragility of the model, since freelancers can walk easily, and we had no non-competes in place.
I had been advocating that lead researchers like me should come onto Gigaom Research as full-time employees, and to take on the research direction of our practice areas. That would have involved at least five or six leads including me. My intention was that if the new —now interim—CEO, Michael Rolnick, did not proceed in that direction, I would leave the firm and go elsewhere to ply my trade, taking along the most committed of my clients with me. Who knows what his plan might have been, but somewhere between Rolnick’s optimism two or so months ago and Monday’s devastating news, things went pear-shaped.
In Gigaom Research reports you are supposed to leave with takeaways, so here’s a few:
- The tech sector’s hunger for high quality research and advisory services remains large. I will have interesting work to do, I believe.
- A disruption has been going on for some time, with established analyst firms — Gartner, Forrester, etc — falling in perceived influence. I expect that I will either grow my own practice here at Work Futures, or if I can find the right firm, I might jump aboard to lead a practice area for work futures and work technologies.
- Gigaom’s model was flawed in part or whole. I think a research business could have been spun out, even as late as a few months ago, and it could have been sustainable. I have seen no evidence that the creditors plan to do such a thing, though, and once the handful of really influential researchers move off to do other things, the true assets of the research business will have been lost. The thinking of the researchers is what matters, what has value, not the archive of reports or the Gigaom brand, now all a bit shopworn.