Convio Summit, Austin TX 2007

Convio, one of the leading online nonprofit marketing product companies, had their annual confab this past week.  Here’s my take:

APIs, DataSync tools, and extensions
One of the non profit bloggers I read but often don’t agree with says you shouldn’t comment on APIs you haven’t used.  I say bullshit on that.  An API that lets you extend the product of a company that’s not a viable vendor is myopic.  I haven’t programmed to the API, but I’ve examined the programs in this area, so I’m going to comment on everything *but* the coding experience.  A good API in a bad program, or from a non-viable vendor, is worse than useless, it in fact is a DANGEROUS SUCK ON YOUR TIME AND RESOURCES.

APIs are all the rage, and Convio released theirs right before the conference.  I had already taken the Kintera API webinar, and have looked into the Blackbaud online product.  I don’t think Blackbaud’s online product has an API they’re pushing, though I’ve heard rumors it’s going to be out soon. I can’t comment on that.

I have to say, I wasn’t impressed with the Kintera program.  When it was announced I read it to say, "Only if you join our program, we’ll give you documentation.  If you produce something, we’ll need to approve it before it runs on the platform for clients."  I thought, an API with non-public documentation?  I need your permission to spread my apps to people?  As one of my former engineers would aptly summarize, "That’s stupid."  During the webinar, at no time did anyone from Kintera ever mention that they were going to open up the program.

Then, I assume they got a rumor that Convio was going to put out their API with a very open approach of documentation, sandboxes, open application exchanges, and suddenly they got religion.  They announced it was all going public a day or two before Convio got their announcement out.  I don’t buy this stunt.  This is the same company that is trying to patent technology that form basic, obvious techniques that fundraisers need.  That kind of intellectual property fight isn’t good for the market, and isn’t good for nonprofits.

The Convio API is basic at the moment, but still incredibly useful.  I’ve seen inside the kimono and it’s gotten real commitment from all the senior management.  They’re also devoting very real resources, beyond engineering, to supporting the program, a sure sign that they’ve got the right religion.  They’re even starting to recognize that it will change them as a business (more on that below) which is crucial to get the partner community support.

The other two parts of open, Datasync and extensions, are exciting too.  Using the extension platform, they’ve integrated into a number of other platforms, including Facebook, to leverage the investment in the Convio product.  Check out the facebook extension, you’ll see how huge this is.  While it’s really still a beta it hugely changes the effort/reward calculation of what it takes to maintain an outpost on social networks.  And it’s certainly not the end.  The abstraction layer they’ve created should allow them to quickly add extensions for everything from Myspace to Linkedin to the new social network that will be big that hasn’t been invented yet.

Datasync is the coolest piece that I’m going to actually use for an upcoming project.  It allows you to synchronize the silos in your organization so you don’t have islands of data anymore.  The demo I saw made it look pretty easy.

The new channel conflict with all these APIs
The vendors in this space have traditionally had an uneasy relationship with partners.  Kintera, Convio, and GetActive all have made choices with my company in the past that had them pitch one of my clients and pitch for work that a good partner would have forgone.  After all, integrators and services firms like my own form their sales channel, and when you go to my client and convince the client to take work from me for yourself, why should I continue to recommend your product, or program to it’s API? 

The market for nonprofit IT products isn’t big enough to attract an enormous following of IT vendors who don’t also pitch services to program to the API.  At the end of the day it’s going to be partner firms who want to accomplish strategic objectives for their clients who use the API.  There will be some pure play IT companies producing products, but strategy firms are going to form the bulk of API users.

So the more serious and open the API is, the more partners are going to want to use it, and the more the vendors will have to de-emphasize their own service offerings to avoid a channel conflict.

To their credit, Getactive handled this the best, and in ways that always maintained a good relationship.  Convio and Kintera are now going to have to de-emphasize their services business in the sales channel if they want the partner community to enhance their platform through their APIs and other avenues.  Here are several very likely scenarios:

  1. Services conflict: Partner firm pitches nonprofit on a solution that includes vendor product and additional strategy and execution services.  Vendor pitches same nonprofit and offers to do everything themselves.  In this scenario the vendor should withdraw it’s services offering unless it’s the kind of enhancements that you need proprietary access to the codebase for.  And both parties should combine their response.
  2. Module conflict: Partner firm pitches nonprofit on a solution that includes vendor product, but their own content management system, with integrated recruitment through the API, and their services.  Vendor pitches nonprofit on a solution that includes vendor product, vendor content management system, and their services.  Vendor should pull it’s services, vendor and partner should discuss what’s the right content management system and give client some options.  And of course, both parties should combine their response.
  3. Multi-partner conflict: Multiple partner firms pitch nonprofit on a solution that involves vendor product, extension modules, and their unique services.  Vendor pitches nonprofit on a solution that involves vendor product, modules, and their services.  Vendor should withdraw services portion and submit a non-conflicting response with just product and modules.  And share with partner bidders.

Some might look at these scenarios and see that the product vendor is losing services revenue.  Others might look at it and see that:

  1. The vendor has multiple entities pushing to get new clients to adopt their software, and
  2. It’s a reminder that the product vendor is in the product business, not the services business.

Vendors will always have services offerings, but they fill the gap where partners don’t exist or can’t be found.

This isn’t easy, and will represent grand changes in how the company sees itself, and very detailed changes in how people at these companies are rewarded.  But long term they’ll sell more software, and at a higher profit margin this way.  I’ve always used Verio as my example here.  With what appeared to be a sales force of 3 or 4, but a reseller channel of hundreds, they sold ungodly amounts of webhosting.  For a while we counted for almost as much as $30k-$40k a month of revenue for them, and they never paid us a dime, just ensured that our incentives and discount schedule were motivating.

The next two years probably belong to Convio
Convio will get this right.  I don’t have a good enough relationship with Kintera to know if they’ll get this.  It doesn’t matter though, there are many known issues with Kintera (high staff turnover, continuing financial losses, terrible stock price, performance issues, high profile client defections) that makes them a problematic vendor choice long before you get to the quality of their product.  There are also the lesser known issues that I hear from disgruntled employees, such as unhappiness with the lockup on employee share sales, a product in deep need of a rewrite and no money to do so, and the infamous weekend staff meetings. Incidently if you work for (or have recently worked for) Kintera and want to tell me if these still exist or not, call me at 415-683-7526 and leave me a message.  Don’t send me e-mail from work.

Convio has it’s own challenges, including the channel conflict, the potential for the IPO to be a distraction, the danger of brain drain after the IPO lockup ends, and the looming potential of Blackbaud as a serious contender in their space.  While I wouldn’t recommend that Convio rest on their laurels, they certainly have some breathing room they haven’t had for a few years.

I think it will be two years before a serious contender emerges.  Blackbaud will have a strong offering up by then and I still think it will be a version of eTapestry unless there’s something in eTapestry’s platform I’m overlooking.

Someone may actually package an open source offering that matches the Kintera/Convio/Blackbaud set by then, but I kind of doubt it.  Going open source for your eCRM as a large nonprofit typically means accepting less cost and less functionality.  Most large nonprofits like the less cost part of that equation, but not the less functionality.

Salesforce may have figured out that the nonprofit offerings in AppExchange need some help and grown more partners.  I think a third party will have emerged that today either doesn’t exist or is considered too small to be a serious threat.  During that time Convio will have to ride the IPO and should be putting it’s foot on the gas.  With a strong development platform, lots of partner applications, and some more targeted verticalization*, they could make ‘catching up’ even more expensive and reduce the potential competitor set.  If the API continues to gain expansiveness inside the platform, having fewer vendors in the market will be less problematic for clients as they will just start with the Convio core and then integrate other products as needed.  Small nonprofits will continue to buy a complete package and be the major consumer of their modules, but nobody who knows technology thinks one company is good at all of this.  Also at the low end there are a lot more options than just Convio, Kintera, or Blackbaud.

Our engineers, who go through content management systems like Paris goes through scandals, will probably rarely use the Convio CMS and just code all the registration pages into Convio through the API for their favorite CMS of the moment.

Those are my thoughts.  If you want more advice targeted towards your own technology choices, I hope you’ll give me a call at 415-683-7526.

* This is a topic for another time.

Additional Reading
YOU SHOULD READ: Clayton Christensen’s and Michael Raynor’s work should probably be required reading for Convio/Kintera/Blackbaud senior management, though the steel mill examples have some caveats when adapted to their market.  I know at least one old-timer at Convio shares my love of Christensen’s/Raynor’s analysis of innovation, and I think there are many parallels to their experience.  After all, Convio disrupted someone else’s business to get where they are, why shouldn’t someone do it to them?  Social networks are their current disruptor, but the rise of platform API marketing means that those ‘being disrupted’ have options.  Something else will disrupt though, it always does.

I DO NOT: sit on any Convio special advisory committees, nor am I paid by Convio for anything.  I’m not even comped into the conference.  I’m just a company that has clients that use their stuff, and I get the same ‘partner communications’ you could get if you signed up on their site for the program.