Jive catches the Wave to new horizons
At the start of this week Jive, one of the dominant enterprise social vendors, agreed to a buyout. While analysts had been predicting an acquisition as the most likely future direction for Jive for some time, the buyer and the timing caught many by surprise.
So what does this mean for Jive, and for the wider ESN market? We take a closer look at the buyout.
Timing is everything in tech; Jive was once valued at $27.16 a share (a market cap of $2bn+), and rival Yammer was bought by Microsoft for $1.2bn in 2012.
Since then Jive’s stock – literally, and metaphorically – has been on the slide. Sales for the last nine quarters have been largely stagnant. More positively, it did return its first profits in Feb 2017 of $915,000 on sales of $51.7m (a margin of 1.75%); however, consensus is the profit is as a result of laying off 14% of workforce.
While the enterprise is suddenly sexy – ESN unicorn Slack is valued at over $3bn, and Facebook’s now vying for a share of the market – Jive’s being purchased for $462m. At $5.25 a share, that’s a 20% uplift on their current share price (but not great news for anyone who snapped up stock in the glory days). Agreeing a buyout at this stage, after three years of declining stock price, suggests a degree of boardroom panic and an expectation this might be ‘now or never’.
You may not have heard of Aurea, the family of customer-centric software offerings owned by private equity firm ESW Capital, LLC, through its affiliate Wave Systems. Don’t worry – neither had we. Aurea’s website blurb says they create transformative experiences for their end customers, through provision of a suite of email, monitoring tools, CRM, retail and workflow tools. They are firmly aiming at the external-facing part of B2B.
Jive is a fascinating purchase given that context. With their employee-centric, ESN focus, it’s clearly a new software offering in a new sector for Aurea but to what end? Where are the synergies? Maybe we’ll see the Jive code copied into the Aurea retail and CRM systems; maybe the customer success teams exchange notes for cross-selling opportunities.
In an internal blog to employees, Jive CEO Eliza Steele offered the first clues on why this deal made sense for both boards. “Aurea’s interest in Jive is both strategic and operational. First, Aurea knows that it takes truly engaged employees to deliver superior and differentiated customer experiences—and they see Jive as a platform for the kind of employee engagement that ultimately delivers superior customer experiences. In other words, with the Jive acquisition, Aurea is making employee engagement a key pillar of their customer experience vision.” The two companies are aligned via their “commitment to customer success”
In short, employee engagement leads to great customer experiences. That will be the $462m challenge.
What did take many by surprise was the timing, announced at the start of their annual JiveWorld customer conference this week. At the Las Vegas event they announced some exciting new changes, in particular the launch of a ‘universal identity’ for users to work across internal and external communities. It’s shifting its cloud solution to AWS and adding AI and machine learning capabilities.
Changes to Jive’s metadata will power an ‘entitlements-based universal search’ so users can get access to information and collaborate on content without leaving Jive’s user experience. Their roadmap focuses on simplifying and streamlining the experience, minimising the tool overload that results in confusion and lost productivity.
Jive’s top brass sought to reassure customers that despite the announcement the core product will continue to evolve and innovate to meet their needs.
Those who’ve bought Jive for its employee engagement and collaboration capability may find the product becomes the odd man out in the Aurea stable. That Jive-n (the employee engagement product) could be hollowed out and replaced has to be unsettling for anyone who has built their internal community and collaboration strategy around the existing platform.
For existing Jive customers then, we’re in a period of some uncertainty as the newly merged business figures out its new direction. Uncertainty is not something customers will welcome – they’ll want stability and to know that their choice of partner is here for the long term, so we predict that some will get cold feet and look elsewhere.
If you’re mid-cycle with Jive, that may mean accelerating the renewal process; if you’re end-of-life, you’re less likely to renew; new customers could hold off to see what happens. None of these scenarios play out well for Jive. We’ve spoken to senior people at other vendors who see the Jive purchase as a huge market opportunity for them.
We’ve long predicted the arrival of Facebook – with its mature product and deep pockets – was always going to create some casualties in the ESN market. (Of course, time will tell if Jive is one). If you’re considering your first ESN, Jive isn’t sufficiently better or more powerful than Facebook to justify the additional cost. If your primary competitors are ostensibly free, you’re already up against it.
So where does this leave ESNs? Two of the largest players in the market, Jive and Yammer, are both in a period of transition with their respective owners. Why is this and why now? Is this a reflection of board-level nervousness — both at client and vendor — with this form of social technology? Intrinsically, everyone knows they add value, but *what* value? That inherent struggle to identify ROI makes this software vulnerable in cost-cutting and efficiency reviews. We think businesses on both sides of the relationship are concerned about how these tools fit into the enterprise and what return they bring. Collaborative islands are all well and good but how they bridge into the rest of the business, and how that adds value, is the ultimate wish.
The timing, the partner and the price makes this a surprise deal. While many were predicting that the Jive board would cash in, no one mentioned Aurea.
Jive started out as a tool to help businesses work with other businesses – true B2B collaboration, focused on customer experience. It quickly evolved — strategically or tactically, you choose — into the enterprise world and that’s really what the tool is now known for. What is unclear to us is how this now positions Jive: will it augment Aurea’s existing customer-orientated tool suite, particularly CRM, or will it continue with its employee-focused roadmap? If we were Jive customers, we’d want that clarity. This uncertainty will not help Jive’s customer retention and acquisition plans in the near future. The roadmap ahead will be interesting to watch.