Deal Radar 2009: Central Desktop

Central Desktop is a web-based collaborative tool that allows users at small and mid-sized businesses to share information and communicate in real time with others in their workgroups. Users can also manage projects, coordinate tasks and share files on their own time by using this collaboration platform, whose features include web and audio conferencing, wikis and group calendars.

Central Desktop is the third company founded by Isaac Garcia, CEO, and Arnulf Hsu, CTO, who have been business partners for over eight years. They previously founded Upgradebase in 1997 and Vendorbase in 1999, both of which were acquired by CNET in 2002. Garcia handled enterprise sales and management of CNET’s global partnerships with Microsoft, Google, eBay, etc. While managing these deals, he realized there was a lack of an easy-to-use collaboration platform to share files and manage projects with the rest of the team. When he was working on the largest marketing campaign at Microsoft, to launch Windows Marketplace in 14 countries, Isaac wanted to deploy Sharepoint but was unable to do so due to budget restrictions. The team had to resort to emailing notes and passing a USB stick around the conference table to share files. Garcia and Hsu realized the need for an easy, quick collaboration platform that was accessible via the web and could be set up in minutes.

Central Desktop was founded in May 2005, at which point the collaboration space was dominated by Microsoft Sharepoint, Lotus and other enterprise players with on-premise solutions. Central Desktop provided a solution for small and mid-sized companies to have access to the same powerful tools as large companies, giving them a web-based SaaS technology platform for business teams to interact, share and manage their daily work activities from anywhere. The product was built with direct feedback from its users. 

Just as Salesforce.com provided an alternative to on-premise CRM software, Central Desktop aims to be the SaaS-based alternative to traditional solutions. The company was bootstrapped for three and a half years, from its inception until March 2008, when it received its first round of $7 million from OpenView Venture Partners. This capital is being used to accelerate growth and capture market share. With no immediate plans to raise more capital, Central Desktop plans to expand using its “work within constraints” motto. 

Currently used by over 260,000 people worldwide, Central Desktop’s customers are organizations in industries like technology, media, marketing & communications, professional services, architecture & design and manufacturing. Key customers include iSoldit, Gymboree, NXTV, chapters of the Project Management Institute, the California office of HIPAA Compliance, and Workday. The Barack Obama Presidential Campaign was also a client.

The company says that the use of its social technology platform delivers a 30% increase in productivity while decreasing total costs. Central Desktop has maintained triple-digit growth every year since inception. Its user base grew 1000% from 2007-2009 and it has added hundreds of users each week. According to a study by Bersin & Associates, the corporate social software market was expected to exceed $420 million by the end of 2008.

Central Desktop has levied a fee for its services from the start, unlike others who were trying to provide ad-generated models. The company works on a pay-as-you-go model with a low price point and ease of use, all of which have contributed to nine consecutive quarters of profitability. The lowest trial version with limited access is free, and fees range from $49 to over $249 depending on variables like the size of storage and number of workspaces. The service can be discontinued at any point without any cancellation fees. According to Central Desktop, it has leveraged strong word-of-mouth buzz via blogs and launched a strong PR campaign early on in an attempt to penetrate the market and gain early traction. Central Desktop’s revenues have increased by more than 150% from last year, and they expect revenues to increase 300% in 2009. It remains to be seen if this is an achievable goal: US tech spending is expected to be down 3% in 2009 after decades of steady growth, but it is not clear how newer products like web-based software will fare.

The company was voted Business Week’s ‘Best for Collaboration’ and also made the 2008 EContent 100 ‘Companies That Matter Most’ list. In terms of growth, Garcia plans to continue rapid sales and revenue growth through focus on product, organic growth and adhering to old-fashioned business values, which he feels is itself innovative in today’s valuation-driven market.  

Garcia thinks that “every entrepreneur thinks about exits, but good entrepreneurs never focus on exits. It’s critical at the early stages of a company (whether they are financed or not) to focus on the business, not the exits”.

Recommended Readings:

Enterprise 3.0 Collaboration: eProject
Deal Radar 2008: Dimdim
SaaS: Webex and the Extended Enterprise

This segment is a part in the series : Deal Radar 2009