eSold
Just when you thought they couldn't get any bigger, Digital River has announced the acquisition of eSellerate. Long heralded as the one of the last hold-outs, Steve Kiene has eSoldOut, despite many vocal promises to users that would never happen.
What does this mean for shareware developers? Falling sky, impending doom? No, this really has little impact. Sure eSellerate will wither away to a mere shadow of its current self, as many of the other DR acquisisions have, but in the long run, they are only one piece of a very large ecommerce market. There will always be other players like Verisign (the company I use with great success - and only a 2% transaction fee to boot), and there will always be a choice.
The best DR coverage always comes from Sharon Houseley's Software Marketing Resource. Be sure to check it out over the next few days as details emerge.
Update - June 16, 2006:
Steve Kiene, founder of eSellerate, has posted an announcement on his blog explaining his decision and a bit about the acquisition. Read about it here.
posted by Mike @ 4:41 PM
4 comments
4 Comments:
I believe you would be hard pressed to show any of the acquired businesses at Digital River being a "shadow of their formerselves" or software publishers not otherwise benefiting from lower prices, enhanced features and greater reliability.
Well, I was a victim of the Reg.Net buyout, so I can speak of it first-hand. And discussions of other acquisitions being gutted to a skeleton crew with limited tech support are numerous over the years. So, no, I'm not hard-pressed to find an example, there are many.
Specific example: Within six months of the Reg.Net buyout, I had customers sending me emails that the phone was not beign answered for taking orders (services provided by Reg.Net), and that if I didn't want their money, forget it. In another, more recent case, they dropped one of their phone lines without telling any customers. Forwarded calls were sent into limbo. That never would have happened while Trevor owned the company.
Finally, look at their home page. Their "reasonable prices" are 20% of products less than $20, and $3.00 + 10% of products over $20. Where are the lower prices, enhanced features and greater reliability you speak of? Certainly not at Reg.Net.
It should not be a surpise that eSellerate was sold to Digital River even though Steve Kiene, the owner of eSellerate/MindVision, promised his clients that would *never* happen. Over the last two years eSellerate has not be projecting forward on the track the company thought it would be on. Growth was slow and they still had the dot.com boom mentality. Employees were cajoled by the owner into believing they would all become the next tech millionaires once they grew to the point where the company could be sold. The eSellerate track, from day one, was to sell out to a large company but “have fun” while growing to that point.
Additionally, the company was having serious issues keeping things cheery with the employees. Upper management started treating its employees as assets once Steve Kiene left as CEO. Upper management tried to figure out the best way to stoke the dying embers but the handwriting was on the wall. After a rejection of an initial DR deal two years ago along with some interest by Handango, it got to the point where eSellerate was ready to jump onto any buying bandwagon that came into town. Things turned drastically worse at the departure of Kiene as he went off to “retire” and start another company. Employees felt lost and that the company had forgotten its vision and that the creativity jumped through the window. Employees who bucked the system to try to fight back to a healthy attitude of creativity and innovation for the customer were either reprimanded or let go. Attitude was therefore kept in check with an iron glove from the top down.
It will be interesting to see what happens now as the employees received a bit of the shares of the sale. There is a lot of fluff from Kiene’s blog about it (the sale) being for the employees. But a new taskmaster is now at hand and holding the ship’s reigns. There is no more dream of a sell out to a bigger fish. This is it. Unless DR understands the underlying problems that exist at the company and do a lot to reinvigorate the VISE product, sales will continue to wane and a mass exodus may be in store with regards to the employees. Time will tell whether the sale of eSellerate will be a good thing for Digital River. eSellerate already cashed out on its dream.
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