There can be little doubt that this earnings season is one of the bleakest in living memory for companies of all sizes and in all sectors. But as I have pointed out, open source continues to be a bright spot of hope. This blog has featured a diverse group of companies that all use open source to solve problems while challenging the traditional software business model. Today’s Deal Radar company, Plain Black Corporation, offers an open source content management system (CMS) that helps companies and other institutions build and manage advanced websites. The international software company develops the WebGUI system, an open source platform for managing web content. Plain Black also offers a variety of services such as hosting, training, design, custom development and support.
The company was founded in 2001 by JT Smith, CEO, who has been in the open source software industry for over a decade. Plain Black is privately owned and completely self-funded. There are four owners including JT, who is also the primary shareholder. The company is based in Madison, Wisconsin and has 17 employees.
JT built Plain Black’s open source application framework to be able to quickly deploy web applications with reusable code and not have to reinvent the wheel for each project. Large organizations began to use the platform for their websites and applications. The content management market was relatively young at the time Plain Black was founded, and only a few expensive commercial software solutions were being used by large corporations. WebGUI provided extra flexibility and utility, making it popular among large companies early on. The revenue from these contracts provided funding and stability for Plain Black in their early years.
The current market scenario, however, is different. Now there are several similar products available. CMSMatrix.org, a web site dedicated to comparing content management systems, has over 1,000 products listed on its site while experts believe the number of products to be close to 2,000. Popular names include Joomla, Alfresco, Drupal, Microsoft SharePoint, Oracle Portals and Plone. Plain Black’s target customers are global 1000 companies, government agencies, universities and schools, and non-profit organizations.
Plain Black works on a simple business model. WebGUI is free to users and is licensed under the General Public License, making it available without any financial obligation to businesses with a limited budget. A full line of professional services is optional and includes ‘Rockstar Support’ at $850 per month or $10,200 per year for an annual contract. Businesses that save on the purchase of expensive software and licensing fees can instead spend on support and training, which generates revenue for Plain Black. This is the essence of open source, which I have discussed in my recent Forbes column.
The company has grown 100% in revenue each year for the past five years with over $800,000 in total revenue in the past year. This year the company has already signed contracts exceeding $1.3 million. As the economic downturn has become more severe, Plain Black has seen increased demand for both its software and the professional services surrounding it. If such demand continues, the company hopes to exceed $2 million in revenue in the current year. Plain Black has been profitable since its inception and has used those funds to grow the business.
Since WebGUI is a free product it is difficult to track the number of customers. The company currently is aware of 10,000 deployments worldwide, but the estimated number is around 30,000-40,000. WebGUI is currently downloaded over 5,000 times a month, and Plain Black has nearly 3,000 paying customers.
Unlike other popular systems, WebGUI’s core software features, which include applications like blogs, wikis, message boards, polls, surveys, job posting systems, weather data and stock tickers, can be used without installing third-party plug-ins or modules, simplifying the CMS process and eliminating the risk that plug-ins will not work together. Users of WebGUI get automatic upgrades, and all features are secure.
As the economic downturn continues, there is a growing trend of organizations using cost-effective open source solutions. In addition, President Obama’s administration and the US Department of Defense have both publicly declared their interest in using open source solutions to improve efficiency in the government and save taxpayer money, giving traditional software a run for its money.
For the future, Plain Black intends to continue focusing on WebGUI’s development through commercial contacts with customers and through their strong community of volunteers and contributors who help improve the software by contributing bug fixes and feature requests and by developing new features.
The partners at Plain Black are not so focused on selling their company. CEO JT Smith has other ideas: “We are, instead, using some of the profits to spin off small, related start-ups that generate recurring revenue streams with the idea that these ventures will make up the vast majority of our revenue and profit. One such startup is CMSMatrix.org, which brings in a nice stream of advertising revenue. Our next startup will launch in late summer and should easily dwarf CMSMatrix.org both in scale and profit.”
It is very nice to see a group of entrepreneurs growing their company organically, while preserving complete control over their lives. That, simply put, is the essence of bootstrapping, and it is also the economic reconstruction weapon that I am keenly interested in.
This segment is a part in the series : Deal Radar 2009