SM: Because your are so open, all of your customers and potential customers can know about not only the benefits but also potential drawbacks to your software. What has been the impact of your open policies?
DD: If you look at a traditional software company, the customers are at the top of the funnel and all of that information gets channeled to one product manager. Hopefully that guy is very wise and filters only the information that is appropriate. There are many challenges to that model. If you look at the product manager role, in most software companies it is very difficult to have a role like that. The engineers often drive the entire development process and the voice of the product manager often gets ignored.
In our scenario, the engineers see every single request coming from the customers. Marketing sees the information coming from the customers. Information flows. Because of that people can, as a group, identify trends in customer requests and determine what actions to take.
SM: You share customer feedback information openly, but there is still a process to put it together and facilitate the process, right?
DD: Sure. We have a quarterly plan we go through where we establish what tasks will be accomplished during the quarter. We just manage it in a formal manner instead of with a single product manager.
Affordability is also a big key for us. If you think of an application for someone like H&R Block, there are going to be thousands of people coming in. They want a pricing model that is effective for them. We enabled that to happen.
We are also seeing people use peer based social networking in a rich media environment over DimDim. This is particularly popular in education models. People can discuss any subject over various media. That community found out about us because of the open source nature of DimDim.
SM: Is there a constraint on how many people can simultaneously participate in this communication?
DD: No. We have thousands of people in one room.
SM: Can you do video with thousands of people?
DD: Video is reduced to four videos simultaneously.
SM: So you can have four skins at any one time?
DD: Correct. You can’t have thousands of people on a single screen.
SM: You started building the product in 2005. When did you launch?
DD: We launched the open source version in September of 2006. The free hosted version went into private beta in November of 2007 at demo. We opened up the public beta two to three months ago.
SM: What has been your funding strategy?
DD: This has been very interesting. When we first started our plan was actually to raise money in June of 2007. We accelerated this because VCs came to us after reading about us in some blogs. The VCs came to us because as entrepreneurs we do not want to raise money when we do not need to raise it. We spoke with them and closed a round.
SM: How much did you raise?
DD: The first round we raised $2.4 million. This was from Index Ventures in London, Nexus Capital in California and Bombay, and Draper Richards. After the Demo launch we had more VCs approach us. Our plan was to raise money in the third quarter of this year, but we closed a $6 million round a few months ago.
SM: What is your investment thesis? How does DimDim make money?
DD: There are three different versions of DimDim available. One is DimDIm3, which comes in an open source edition and a free hosted edition. There is DimDim Pro, which is destructively priced compared with WebEx. It starts at $99 per year. DimDim Enterprise is the dedicated version which actually has two versions, and starts at $1,500 per year, based on the number of users. It can be on the customer’s premises or hosted in our data center. We make money from DimDim Pro and Enterprise.