I agree with Jeff that it's difficult to keep both a hosted weblog business and a weblog software business viable. We only need to look at the other blog (and other software) companies that have tried to walk the same line with mixed success. Don't know if divesting is the answer but that definitely would allow each unit to focus on their business.

From The SixApart solution: Divest TypePad - BuzzMachine... by Jeff Jarvis:

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But what has irked -- to say the least -- many until-now-loyal MT users are the rather extreme limits on the number of users and blogs for each license. I wondered why MT would be so cheap about something that would cost them nothing incremental and would not greatly affect the volume of licenses sold (in fact, with reasonable limits, I'd say that most users would end up buying a version more than big enough, just to be safe and give themselves flexibility... instead, SixApart greatly limits that flexibility). Sure, any software company has to have ways to charge for volume usage but these limits are driving present and potential customers beserk, which means that they got something way wrong.

And then it occurred to me: Of course, it must be about TypePad. SixApart has never wanted others to become major-league hosts of Movable Type software because the founders have long planned to make a business from paid hosting. And that's fine... except now that they are charging for their software, the conflict of interest immediately comes to the surface: SixApart is not selling generous licenses to MovableType because it does not want to affect TypePad's business; it does not want to enable competitors (even small ones) to TypePad and it still wants to motivate people to move to TypePad (and pay a monthly fee instead of just a one-time fee: an annuity, we call it in the biz). But that, in turn, is clearly hurting the software business. They are in inherent conflict.

I've seen other companies go through this and the answer is either to drop one line of business or to divest. I suggest divesting. Then SixApart, the software business, will come up with licenses that serve its customers well and will sell as many as possible. Rather then having your entire customer base scream in protest -- as they are now -- they would beat a path to your door to pay for your mousetrap (whenever your customers are screaming in protest, you know you are doing something very wrong). Meanwhile, TypePad -- a licensee of Movable Type software -- would offer no-hassle and reasonably priced hosting and would compete with other licensees. Competition would lead to more business for the two companies and happier customers and probably market dominance for Movable Type and its standards (e.g., TypeKey and Trackbacks). Instead, what we're seeing now is that SixApart is driving present and potential customers to competitors.

Bottom line: If I do not believe a company has my best interests as a customer at heart, then I would be a fool to stay with that company. That is the net net of this conflict of interest.

There is another advantage to divesting: The management of each company will not be distracted as the management of this one company is. I'm not a VC, but I have seen this in many companies as a corporate investor, board member, and corporate customer: Startups always try to do too many things and that means they will end up doing nothing extremely well. SixApart started by developing a damned fine product in Movable Type but it has neglected that product (as I've whined) as it built its hosting business at TypePad; now it is handicapping the software company to advantage the hosting company; and when the protests get loud enough, it will surely neglect the hosting company in turn. The company is small with extremely limited resources and management focus and trying to run these two very different businesses is difficult unto impossible.

So it is with nothing but respect for SixApart and its founders, staff, investors, talents, and products -- and a strong desire to stay a customer -- that I suggest: Divest.

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