Regular readers will know this blog is about e-discovery and not about my company, Clearwell. That said, every now and then, the two intersect and it makes sense to write explicitly about Clearwell, since our experience speaks to broader market trends.
That’s the case today, with Clearwell’s announcement of 2 significant milestones. First, the company has crossed the threshold of 100 customers using the product to lower their e-discovery costs. Since the technology bubble burst in 2000, I have been involved with several early stage companies that have brought new products to market, either as founder, CEO, investor, or advisor. All have capable teams; some attacked huge markets; none have seen the rapid customer adoption that we have experienced at Clearwell. Nor were they able, as Clearwell has done, to so quickly break into top tier accounts such as BP, Boeing, Cisco, Del Monte and a host of other household names which I am not at liberty to mention.
The second milestone is that Clearwell has closed its third round of funding for $17M. This is a larger amount than planned, and it happened much more quickly than I anticipated. It was driven by the simple investment philosophy that has powered large investments elsewhere: find a large, growing market and pick the winner, as it will likely be worth more than all the others put together.
I see both milestones as significant for the broader e-discovery space. The fact that a company can introduce a product and, a little over a year later, have over 100 customers using it, says that there is huge latent demand. Clearly, everyone from small hedge funds to mid-sized insurance companies to large departments of the federal government desperately want to lower their e-discovery costs. If history is any guide, this untapped demand will be recognized by a large number of existing players who will all repurpose their existing products towards e-discovery. But, again looking at similar phenomena play out in other markets, the space will likely be won by a “pure-play” vendor unencumbered by the baggage of a legacy business. The investment community recognizes this and is increasingly willing to open its check book in the hope of backing that winner.
No doubt, other young companies will raise money to attack the e-discovery opportunity, and other existing players will continue to dress up their generic search or storage solutions in e-discovery clothing. But over the next 12-24 months, a leader will emerge from the pack and will grow into a significant, standalone company – and the others will either sell for whatever they can get, or try to find a different application for their technology.
3 comments:
Great news Aaref!
There are great themes in your comments from one blog entry to the next.
However, when I asked which companies your product line competes with, you referenced EDRM.
Conversely, when you talk about the eDiscovery market place, you refer to people entering it as if they aren't allowed or shouldn't.
There appears to be orthogonality with you positing your company in EDRM, but when another company identifies their place in eDiscovery (EDRM) ,whether it be classification, preservation, processing, etc., they may be referred to as "dressing up" their products (using language from this post).
EDRM created the pillars of market identification which analysts, customers and other companies use as a reference point. Isn't it fair to welcome them to the game and let the customers, companies, press, and analysts flush out the winners?
Looking forward to seeing your new products and strategy for control (accountability, authority and responsibility) as it relates to data (e.g. eMail).
Thanks
Joshua
Hey Joshua,
It sounds like some of my "tongue-in-cheek" comments gave the wrong impression. Let me be clear:
1. Clearwell's primary competitor in enterprise accounts is the existing process of outsourcing e-discovery to expensive service providers. Every now and then, we get compared to different products. But it happens so rarely that it would be misleading for me to call any out as being directly competitive.
2. I did not mean to suggest that people "shouldn't" enter the e-discovery market. To me, the question of what companies should or should not do is irrelevant. Good or bad, it is a fact of life that lots of players jump into large, growing markets. It is also inevitable that most of these players fail -- that's just how life is.
3. As you say, EDRM is a helpful reference point. In days gone by, e-discovery was viewed as a monolithic process; with EDRM, it can be broken down into different steps to show - for example - how collection/preservation technology is complementary (and not competitive) to review/analysis.
Nice post! You have said it very well. Keep going.
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