Thursday, March 19, 2009

Swimming Naked

After yesterday's announcement, a few people speculated that we made the changes out of some financial desperation. We are a privately-held company so we don't make our financials available to the public. However, I will give you a few important facts so that such speculation does not create a lot of unnecessary worry.

Last year, more specifically the second half of last year, was challenging for most businesses. For many, revenues dropped dramatically requiring immediate and drastic cost reductions which resulted in significant job losses that continue this year. One of my favorite quotes is from Warren Buffet who said, "Only when the tide goes out do you discover who's been swimming naked." As it turns out, there was an awful lot of naked swimming going on last year. And when the economy falters, it impacts most businesses because there's less money being spent and as a result, the current of the economy flows more slowly. I started to notice something in April, but wrote it off as a bad quarter until September when it became obvious to everyone that the global economy was in trouble.

Last year was challenging for us and we did have to make some cuts as a result. But they were necessary and this year, despite the current global economic crisis, things are looking much better for us. Sales have exceeded our projections and are in fact higher than they were for the same year-to-date period last year. That's important because the economy had not yet gone into crisis at this point last year. Even more important are new license sales, which are already stronger than expected this year. We are profitable for 2009 and are cash flow positive.

So why are we making the changes we announced yesterday? Like any smart company, we are always looking at how we can make changes to our offerings to make them more attractive and generate more revenue. We are, after all, a for-profit company. The new product line-up and pricing are more appropriate, and by having more clearly segmented editions, we can target features to specific types of users to make REALbasic even more attractive.

I founded this company at near the peak of the internet boom at a time when Java was shiny and new. People thought I was crazy. Fortunately, some friends and family believed in me, and I was able to get REALbasic off the ground. We have had no significant additional investment since then and are entirely self-funded. We have been doing this now for more than ten years and plan to continue for many years to come. I hope this will alleviate any concerns you might have about our longevity.

6 comments:

Paul.R said...

Excellent- Bravo even! Keep up the good work. We are not big customers for you, but we do "spread the word" here and there.

It is refreshing to find an well run, responsive, and honest company to work with. That last bit of the description is what sets you well above the rest of the crowd.

-Paul R.

Kundalini said...

Congratulations!

I love your product and your company's friendliness and integrity. I'm sure all RB users are wishing you a flourishing and prosperous future.

- Christopher

Anonymous said...

Hmmm... so you cut a large percentage of your development team last year and and you are at least three years late shipping Cocoa support:

January 2006:
http://realsoftware.com/company/news/2006/cocoa
"Support for Cocoa ... will ship later this year"

Now you want us to believe that REAL's future is rosy simply because you say so?

How do we even know that you are not teetering on the edge of insolvency right now?

MichaelB said...

Hi Geoff,

Thanks for this brief overview on how things are going. As a mostly satisfied REALbasic user, i've been wondering for a while how big the REAL team really is. Is this top secret information or can you tell us something about the number of people working in the company? I think this also might be useful information for people who want to look forward and keep investing in the future.

Thanks for all the work.

Michael

Anonymous said...

Nobody expects RB being a welfare organisation or product.
You're working on it and it's normal that you get paid for the time you spent (as a lot of us do using your product).
It's just the move you made. Cutting the professional product and urge the customers into a much more expensive model, blinding with some discount and surveys.

You once decided to place RB on a loyal base of customers, keeping a dialog between developers and users. This loyal base will oversee a lot of mistakes and on the other side, give you a lot of useless tips, how to lead a company.
Never much grateful, but loyal. Family business somehow.

Now you changed to a cash cow behaviour without any new features adding to the product.

Surely, nobody expects that you want to give a present to your user base. Why should you? You're not leeding a welfare company and we all need (some money).
But you should have been awared, that surprising us with an insincerely "we want all YOUR best, you just doesn't know it, everybody ever was looking for this" offer, that really sounded like the usual rip offs, feathers and sugar, is something, you can only present the "anonymous customer" out there without getting response.

Personal example:
A few days before the new "offer", I renewed my update plan after a while of absence. I did this, although or because I read before, that Cocoa support had been scheduled to later this year. I realized, that I won't get stable Cocoa before my plan ended. This is O.K., as long as I don't feel fooled. As well as my products aren't perfect, I don't expect these from my suppliers (as long as we speek the same network-of-trust-language).
A few days later I received the new big bright shiny future product mail and thought, that I should have hold back my money to the day X.
If this happened with any anonymous company, it's O.K., that's what they treat others.
If you founded your business on loyality, this is a no go.

When RB decided to move to update subscriptions, it was my loyality too, to subscribe. I'm sure, you don't go heli-snowboarding with russian moguls in Aspen, while chinese people do the hard work for you.
It is my decision to trust you, rely on your product and to sell its output to others. But the arrangement we had, was based on loyality and trust.
If you're leaving this, please call it by the name. Or better, don't leave it and call it by the name too.
The truth has nothing to do with global economics.

Gareth said...

Thanks for the update. As a small business owner, I understand the need to explore new pricing schemes in tough times. Having to lay people off here and raise some prices, I understand that it is no picnic making hard choices.

I was at first aghast at the new model, but after some contemplation it seems more reasonable. I applaud that fact that Studio users will now be able to install on multiple operating systems which will keep me from having to maintain multiple licenses. The new profiler has been a big help, but I can appreciate the need to reap some financial benefits from that tool (my .Net profiler costs a pretty penny).

You did all us Pro licensees a favor by offering such a favorable upgrade path to Studio and up to 2-year discounted renewals. Though I only use RB for internal tools these days, you guys make a good product and will continue to have my support.