BuildOnline and Koral

BuildOnline CEO Mark Suster is running two companies. As well as running the UK-based construction collaboration vendor, Suster is also CEO of California-based Koral. This is an interesting development on two or three levels: first, Koral itself seems an interesting business with a strong Web2.0 content collaboration product; second, I wonder whether this will have an impact on BuildOnline? Third, could it be the precursor to another merger or acquisition in the AEC collaboration space?

Koral

Koral appears to be about 18-months old, with eight staff (but still growing – I found three vacancies advertised just last month), a development team divided between the US and UK (see StartUpSquad blog), and is:

“a content collaboration company delivering Web 2.0 for Business, launched by 3 serial document management entrepreneurs. The Koral solution is purpose-built for end users overwhelmed with documents in email, folders or corporate LANs and who need a better solution for sharing content with a salesforce, partners, customers or collaborators.”

The Koral website includes a blog, and judging from Suster’s updates, it’s been a busy time out in California. In “Day 1 Blog 1 Company 2”, he talks about the challenge of launching a new product (and reminisces about the start-up of BO) – you can see the 26 September video of the launch on YouTube here. At the beginning of October, he had a busy week preparing for the Dreamforce Show and dealing with VC approaches following the launch show (DEMO – see the DEMO Koral video). And late October saw him attending the Office 2.0 Conference in San Francisco.

It sounds an interesting product, and Suster certainly appears committed to collaborative technologies. In addition to his use of a corporate blog, I liked the Wiki-based FAQs (it reminds me of a similar set-up at service-now.com), and as a web service Koral is already available to users of the Software-as-a-Service movement’s favourite, Salesforce.com, through its AppExchange (see Koral news release).

BuildOnline impact

There is a strong BuildOnline presence in Koral. In addition to Suster (the same CV photograph is used on the BO and Koral websites), Koral’s management page says Suster’s two fellow co-founders are both (ex?) BO people too: Tim Barker (Vice-President of Products) “led Product Management at BuildOnline, … where he spearheaded the company’s expansion into the financial services sector” and Ryan Lissack (Chief Architect) “spent his previous 3 years in London as the Chief Architect at BuildOnline” and now appears to be based in San Mateo, California.

BTW, this is not the first time that BO executives have got involved in new start-ups. Just over a year ago, in October 2005, short-lived BO marketing director Ian Howells left BO to join Alfresco – coincidentally based in the same town as BO: Maidenhead (see post).

From the afore-mentioned blog entry, it seems Suster is keen not to repeat some of the negative experiences of BuildOnline:

“I started my first enterprise in November 1999 at the peak of the Internet 1.0 boom. We started the company in London and got a team of highly skilled people around the table pretty quickly. … We landed a key story about the company in the Financial Times, which was followed by coverage in Red Herring, Time Magazine, Fortune and then the front cover of Europe’s best known venture capital magazine at the time, Tornado Insider. …

“It was all very flattering, but we had one major problem. We were struggling to live up to the hype that was created almost by accident because our product was brand new and we didn’t really have a strong sense of who we were and what we wanted to build. Suddenly we had thousands of requests from potential customers, investors, employees, journalists and we weren’t ready to respond. We hadn’t even thought about how we were going to handle customer service let alone our product roadmap. The company eventually grew into its proper sized skin and has gone on to success in its sector but it was a difficult few years adjusting.

“I vowed to do my next venture in a totally different way. This time we spent almost six months designing the product we wanted to build and validating the market before cutting any code. We talked about what large business problems we thought existed and how we could solve them. We agreed on a business model that we thought would lead to success and we promised to keep focused on our end-users rather than just the economic buyers. We then coded for a year before telling anybody about our new product concept.”

It sounds like the Koral team have been incredibly busy and there must have been some impact on BO. Of course, there is no reason why an individual can’t be CEO of two businesses, particularly in the internet age when international boundaries and time-zones can be easily overcome. And, as Koral’s existence is in the public domain, we must assume that the BO staff, directors and shareholders are aware of Suster’s dual roles.

From my own perspective (working for a BO competitor, BIW, and meeting regularly with people from other construction collaboration technology vendors), though, I do what messages this sends to the AEC market and to BO competitors in that space.

Only last week (see BIW’s growth continues – but what about the others?), I looked at the differing financial performances of the leading vendors and the snapshot view 18 months ago didn’t exactly show that BO’s UK operation was in robust shape. Maybe things have improved dramatically since then? Maybe Mark Suster feels that BO has reached a position where he can hand over the reins, return to the US and devote his energies to Koral? Or if things are not looking so great, perhaps he is preparing his exit strategy?

If I was a BO customer, I might be wondering how much time the CEO is spending on running things at BuildOnline (remember, it was less than two months ago that Autodesk acquisition of Constructware earlier this year prompted some of my contacts to suggest that there might be further mergers or takeovers in the offing). Reviewing the search-engine entries for this blog, I have seen readers combining BuildOnline’s name with two or three other providers – Citadon has been the most frequently mentioned. Of course, they may be simply doing company or product comparisons, but maybe there is substance to the rumours of mergers or acquisitions?