Spiceworks: We’re Nearly Profitable

I must concede: Each time Spiceworks issues a press release with big deployment claims, I raise a skeptical eye. The company makes free, advertising-driven remote monitoring and management software for MSPs and IT managers. To Spiceworks’ credit, the company isn’t shy about answering my questions. In a FastChat video interview, Spiceworks co-founder Jay Hallberg (pictured) explains the company’s business model, MSP focus and march toward profitability. Take a look.

First, a little background. Spiceworks earlier this week announced $16 million in series C funding. Within that announcement the company claimed to be adding more than 1,000 new IT users (MSPs and corporate IT managers) a day. The Spiceworks system includes an on-premises tool (for the IT administrator) and a back-end, SaaS-oriented advertising network and social media network.

To me, some of Spiceworks’ business growth figures seemed too good to be true. Then, Spiceworks’ Hallberg agreed to do a quick video interview and answer my questions. I came away impressed with what he had to say.

FastChat Video

The video covers:

0:00: Introduction
0:10: How Spiceworks serves MSPs and IT managers in SMB markets
0:35: How Spiceworks delivers free software
1:00: Spiceworks’ design, features and functions
1:40: Does Spiceworks have a sustainable business model?
2:00: Marching toward profitability
2:15:  What is Spiceworks’ goal for $16 million in new funding?
3:00: More Info
3:23: Conclusion

Remaining Questions

Hallberg gave me concise answers each time I asked about the company’s finances and Spiceworks’ march toward profitability.

The one question I didn’t quite get answered involved user stickiness. Think of it this way: Millions of users sign up for Skype, Google Apps and other free online software every day. But what is the actual use rate for those applications? In the case of Spiceworks Hallberg didn’t have a clear answer.

Still, Hallberg clearly articulated that the company is on the brink of profitability. And venture capitalists seem to firmly believe in Spiceworks’ business model.

Will Spiceworks wind up competing with more traditional remote monitoring and management software? Perhaps they already do…