Socialtext Has Been Acquired By Bedford Funding

May 1 2012 08:00:00 AM Comments Disabled
two businessmen shaking handsI'm excited to report that Bedford Funding has acquired enterprise collaboration software vendor Socialtext. Bedford Funding is a private equity firm who over the last few years has invested in several companies and assembled them into the talent management platform, Peoplefluent.

As many of you may know, I used to be Director of Marketing at Socialtext, so on a personal level I'm very happy for my former colleagues but I will do my best to keep those feelings out of the following analysis. While financial terms have not been disclosed, I did meet with Socialtext CEO Eugene Lee to discuss several other aspects of the deal.

Unlike most acquisitions in this market, Socialtext will not (initially) be subsumed under the Peoplefluent banner, but instead continue to operate as they do today, retaining their name and branding. This differs from similar transactions such as SuccessFactors' (now owned by SAP) 2010 acquisition of Cubetree or the more recent acquisition of Podio by Citrix.

The current staff will remain employees of Socialtext and Eugene Lee will remain CEO, now reporting to Charles S Jones, Managing Partner at Bedford Funding and Chairman and CEO at Peoplefluent. With this new infusion of funding, Socialtext plans to increase staff in areas such as Development, Sales, Marketing and Support. They will remain headquartered in Palo Alto and plan to move into a larger office as the company size increases.


Integration - The combination of collaboration software ("social") and talent management software ("hrtech") is certainly a hot market, as these two areas lend themselves well to working together. HR functions such as recruitment, onboarding, recognition and succession planning can benefit from collaboration features (sharing, liking, commenting) while the workflows involved in collaborating on core business processes (Sales, Marketing, Development, etc.) can benefit from the people centric functions of HR software. However, I don't believe the initial stages of this deal will focus on tightly integrating the two platforms. Yes, there will be integration such as events from Peoplefluent being broadcast into the activity stream in Socialtext, but don't expect to see a single HCM / Social Networking platform emerge in 2012.

Potential For Growth - The go to market aspect of this deal has benefits for both sides. Socialtext will have the opportunity to be introduced into existing Peoplefluent customers (which they say includes 80% of Fortune 100) and Peoplefluent can now more effectively compete against other HCM vendors whom already offer social networking features. But while both organizations will have the chance to expand their customer bases, there will be challenges. For Socialtext, getting into F100 companies means competing against the incumbent vendors that these organizations already have relationships with such as IBM, Microsoft, Salesforce, Oracle and SAP. They will need to show these prospects the benefits of working with a smaller social business vendor, such as more rapid innovation and delivery of social features. Additionally, other social business vendors such as Jive and Yammer are also competing for customers in the F100 space.

Technology - Not only will the new infusion of funding provide Socialtext the ability to increase the size of their engineering team, it could also provide them access to some of the development expertise at Peoplefluent. I'm thinking specifically of areas such as mobile where Socialtext is currently lacking but Peoplefluent excels as seen by their iPad application. Other areas I'd like to see Socialtext invest in include social analytics and integration with the business tools people use everyday like email, calendar and office documents.

For more details on this deal from the HRTech point of view, please read my colleague Yvette Cameron's post.

Overall I think this is a great deal for Socialtext, Peoplefluent and their customers. Plus, I'll admit that I'm happy for my former colleagues! I look forward to watching how things evolve over the next few quarters. I hope to see some early examples (prototypes are fine) of integration and maybe a mobile app at the Enterprise 2.0 Conference in Boston in June. Perhaps we'll even hear a customer story about someone using both products. For now, If you're an existing customer of either company (or both) I'd love to hear your thoughts.