It was the title and the byline of this Forbes story which caught my attention. “David Versus Microsoft…A 23-year-old founder who’s turning away calls from venture capitalists for his software firm? No, this isn’t a time warp.”
The story was about David Koretz’s Bluetie.
Bluetie provides applications such as e-mail, scheduling, instant messaging and contact management to small businesses. Firms with, say, ten employees can get all these tools delivered over the Web for $10 to $20 per user per month.
The young entrepreneur is breaking all the rules: that you can’t compete against Microsoft, that no one wants to rent software over the Web, that no one of sound mind would start a software firm in Rochester. BlueTie’s revenue was just $1 million in 2002, but Koretz expects $7 million this year and $26 million by 2004. If he can meet his expectations and continue to grow, he might indeed become a competitive threat to Microsoft in the small-business market.
Typically, small companies either use free e-mail from Yahoo or Hotmail, or buy an expensive server-based product–usually Microsoft Exchange–designed for larger companies. Microsoft sells most of the e-mail systems for the estimated 1 million server-hardware packages sold annually to small and medium-size companies. According to a study by the Radicati Group, average total cost of ownership for Exchange is $24 per user per month in the first year. The initial investment in hardware and services for a small business can be as much as $40,000.
Koretz aims to sell to small businesses that find Exchange overpowered or overpriced for their purposes.
Its something we should have done. We’ve been in the messaging business for 5+ years, but have not expanded much beyond the Indian market. Should do so. SMEs are a key focus segment for many of our ideas, and messaging is the most fundamental need.