Startup Of The Week: Spiceworks Trades Software For Ads

Another IT management tool? Boring--until you realize it's free. Spiceworks IT Desktop is network monitoring and management software that's entirely ad-supported. Customers download the software for free in exchange for ads on the management screen.
--Andrew Conry-Murray SPICEWORKS PRODUCT: Spiceworks IT Desktop

FOUNDED: 2006

PRINCIPALS: Scott Abel, CEO; Greg Kattawar, VP of development; Francis Sullivan, CTO; Jay Hallberg, VP of marketing

FUNDING: $13 million

INVESTORS: Austin Ventures, Shasta Ventures

CUSTOMERS: London Symphony Orchestra; Master, Sidlow & Associates; Fort Maier Homes; Pioneers Medical Center; Intelligent Decision Systems

MARKETS: Spiceworks targets businesses of up to 250 employees with IT staffs of one to five people. IT Desktop performs agentless discovery, inventories the network, and monitors configurations of discovered devices. It supports Windows, Linux, Unix, and Mac and includes basic help desk capabilities. The user community provides collaborative help. The company has 120,000 users.

BUSINESS MODEL Spiceworks uses Google's AdSense to display ads on the right-hand side of the management console, which is a Web browser. The ads are text-only and take up about 15% of screen real estate. The company has established advertising relationships with tech vendors such as Netgear and Symantec. No information about their customers' networks is sent to Spiceworks. Instead, ads are presented in general categories, such as servers, printers, security, and software. OPPORTUNITY Small businesses weren't being well-served by existing IT management products, which can be expensive and hard to use. "We thought we'd do the Salesforce .com of IT," says Hallberg. "But what if someone came up with a cheaper alternative to our SaaS model?" The company decided "free" would be hard to beat. Spiceworks runs on Windows, which helps differentiate it from low-cost, open source options such as Zenoss and Nagios that require some Linux experience. EXIT STRATEGY Given the regulatory mandates that have been piled on public companies in recent years, Spiceworks is less inclined to run for an IPO. "We'd be more inclined to being acquired than going public," Hallberg says. TIMELINE