1Mby1M Deal Radar 2010: Liferay

Liferay is the creator of Liferay Portal, an enterprise Web platform for that includes packaged applications and an enterprise application framework in a single solution. The portal’s capabilities include a variety of business solutions, such as content and document management with Microsoft Office integration, Web publishing and shared workspaces, enterprise collaboration, social networking and mash-ups, and enterprise portals and identity management, among others.

Brian Chan, chief software architect and founder, created Liferay Portal in 2000 to provide non-profit organizations with an open source solution to facilitate collaboration on the Internet because he believed there was an absence of quality portal technology at an affordable price. The only other viable open source option was JBoss Portal, which required the JBoss App Server, and thus limited users to a specific IT stack. Chan created Liferay Portal and open sourced it a year later. Demand quickly built up, resulting in the need to offer consulting services and the growth of a professional services team. Liferay, Inc. was incepted in 2004 to provide consulting, training, and enterprise support. The company is headquartered in Los Angeles.

As mentioned above, the applications on the portal can be used for a variety of functions. Clients can use them to build their own self-service portals, social networks, dynamic websites, and knowledge sharing workspaces. It runs on a client’s existing application servers, databases, and operating systems. Features include more than 60 out-of-the-box tools, dynamic drag and drop, single secure sign-on (SSO), and auditing and performance monitoring for administrators. Liferay charges roughly $3,950 per server for the paid version. It estimates that there are over 250,000 deployments worldwide. This includes both paid customers and users of the free Community Edition version.

Clients span industries and include governments, private enterprises, and nonprofit institutions. The DGA, part of the French Ministry of Defense, uses Liferay Portal to communicate technical, financial, and contractual data among the members of the defense community. Cisco Systems’ Cisco Developer Network uses the portal to create and maintain wikis, blogs, and other tools to keep developers more connected. Andorra Telecom manages its online content and created and executed a marketing and branding campaign through Liferay. Other clients include Allianz, Liz Claiborne, AutoZone, Fox Channel Germany, Penn State University, Sesame Street, York University, and Vodafone.

In 2004, there were several vendors offering portal products. Many were much larger companies like IBM, BEA, SAP, Oracle, and Sun Microsystems that had portal products as part of a larger stack of offerings. Independent portal vendors, both open source and commercial, included JBOSS, Vignette, UPortal, and others. Since that time, the portal market has consolidated and has shrunk considerably, with several products folded into Oracle’s portfolio. Liferay positions itself as “the best of WebShpere and SharePoint in one solution” in that it is cheaper and faster to set up than WebSphere and more flexible than SharePoint for non-Microsoft environments. Further, the company believes that its commitment to a single product, the portal, its independence from VCs and vendor lock-in, and the open source model help it to offer a quality service that is more flexible than the competition. Recently, Liferay was listed as a leader in Gartner’s Magic Quadrant for Horizontal Portals and was the only independent vendor in the leaders quadrant.

The company has been profitable since its founding, and projected earnings for 2010 are $15 million–$20 million. No VC funding has ever been taken. While Liferay has gotten offers, Chan says they have turned them down in order to maintain full control over company and product direction. In the process of speaking with VCs, the investors have affirmed the company’s conservative approach to growth, advising the staff to spend only when the cash is there; to hire only when there is real need; to keep overhead low; and to propagate a strong company culture.

The company aims to abide by a scalable business model that emphasizes enterprise support, the largest percentage of our revenues and also the most easily reproducible. Its worldwide support team has grown accordingly, and, says Chan, comprises talented software engineers rather than lower-skilled staff commonly expected of IT support teams. Consulting engagements and opportunities are, for the most part, forwarded to Liferay’s partner network. Partnership continues to be a key part of the growth strategy, especially in regions such as Europe or East Asia, where local business relationships are so crucial for adoption. There is no exit strategy. The team wants to continue to grow organically and maintain control of the company.

Recommended Reading
Liferay, portals, & social product marketing – Interview with Liferay’s Paul Hinz – a video interview from Michael Coté on RedMonk
Enterprise Portals – an introduction to portals from Toolbox.com

This segment is a part in the series : 1Mby1M Deal Radar 2010