LogMeIn Acquires Meldium--Start Of The Identity Consolidation?

When an early stage company is acquired by a larger vendor there are two ways of looking at it. The first way is to put a positive spin on it, that an early exit means a good short term return for investors and that it gives the startup fuel to execute. The second perspective is that an early exit is indicative that things weren’t going well and the founders and investors took their Hail Mary pass and did a runner.

It’s worth thinking about that in context of the news this morning that San Francisco startup Meldium has been acquired by LogMeIn. LogMeIn is the listed vendor of web conferencing and remote PC management solutions. Meldium is one of a growing number of vendors delivering Single Sign On. Essentially Meldium (along with MyLogin, OneLogin, Okta and a dozen or so others) allows organizations to give their users a single portal to sign in to all their applications – thus avoiding having to remember a myriad of different passwords. Single Sign On (SSO) is an important part of delivering IT in a world where workers use literally dozens of individual applications on a day to day basis.

But having stated why SSO is an important part of modern IT, we need to look at the competitive landscape in the sector. With all of these different vendors, there is increasingly a level of concern around how much SSO is simply a feature within the far broader context of general identity. Sure SSO is important, but more important is wrapping the entire breadth of identity with a layer that embraces not only the new cloudy world but also the existing paradigm of on-premises applications. Add to that the upcoming need to provide for the Internet of Things and a burgeoning number of connected devices and we can see that SSO is only a thin sliver of the needed product breadth.

Of course LogMeIn doesn’t see it this way and are saying that Meldium is a great complement to the company’s existing offerings. Well they would say that, wouldn’t they?

The size of the deal ($15 million) is also indicative that the Meldium founders realized that their opportunity was short lived and that an exit was wise. With that many competitors, and larger platform players like Oracle, Microsoft and Salesforce starting to push the broader identity boundaries, the competition was always going to start getting hot. Meldium had been going for a couple of years and had attracted only $1 million in funding – making for a pretty good short term return for all concerned.

So Meldium did the logical thing – take a short term deal that sees everyone make a bit of money, fulfill the earn out and then move on to a space that is less fraught with competitive pressures.