The not surprising answer: you end up a tiny company.
Convera’s 2QF08 results?
- $255,000 in revenues. Yes, that’s measured in dollars, not kilodollars. Approximately the amount it would take to buy an Aston Martin V8 Vantage. A nice car mind you, but a car. One car. They must set the record for smallest public company.
- A 275% growth rate, but off a tiny base. For perspective, if they can maintain a 275% growth rate, then in two years they’ll be doing $3.5M quarters and should still be a record small public company.
- One customer accounted for 92% of revenue. So, they’re actually one $235K deal plus $20K company.
- Loss of $6M in the quarter.
I’ve heard one Convera customer describe them as “cheap as chips.” You can see it in the numbers. They still have $54M in cash, so they can keep losing $6M/quarter for a long time (i.e., 9 quarters).
It’s hard for me to imagine that under these circumstances they’re a stable partner on which to bet a company’s vertical search strategy. But I know some folks are doing it anyway, probably based on the “cheap as chips” argument.
Those without kevlar stomachs might take a look at MarkLogic as a platform for vertical search instead. We have a different base business model (we charge for enterprise software, don’t spider, and don’t host). But our business development guys are starting to look at revenue sharing models for vertical search sites if that’s of interest to you.