The Open Source CEO: John Roberts, SugarCRM (Part 11)

The eleventh installment in the Open Source CEO Series, this time with John Roberts of SugarCRM.

I've been highly gratified to see the response to this Open Source CEO Series. I've been impressed by the sincerity and wisdom most of the answers have revealed. Running an open source company at the beginning of the commercial wave is challenging.

Nowhere is this more true than with John Roberts, CEO of SugarCRM. I've known John for several years now, and can still remember first meeting him at an SDForum event (back in 2004, as I've described before). John, Clint, and Jacob approached me after I spoke on an open source panel and told me about their idea for an open source CRM company. I thought they were fools, because clearly open source wouldn't work in the application space.

Four years later, it's clear that I, not they, deserve the "fool" title.

In this eleventh installment of the Open Source CEO Series, John took time from his growing business to talk with The Open Road. John is a friend and someone I respect deeply. He has stayed focused and true to his ideal to make CRM easy to use and affordable to deploy.

Name, position, and company of executive
John Roberts, CEO and Co-founder, SugarCRM.

Year company was founded and year you joined it
Jacob, Clint, and I started full time on SugarCRM in April 2004, when we formally founded the SugarCRM Open Source Project. We incorporated SugarCRM Inc. in June 2004.

Stage of funding and venture firms that have invested
We have raised three rounds of financing (not including the self-funding the founders did in the beginning), with $26 million total raised from Draper Fisher Jurvetson, Walden International, and New Enterprise Associates.

[Matt note: I tried to get Thomas Weisel Venture Partners to invest in SugarCRM for its Series B round, as I was then advising TWVP as an EIR back in 2004/05. But John and team raised the round so fast that I had no chance. The company has always been a hot property.

Background prior to current company
Prior to co-founding SugarCRM I spent fourteen years in the enterprise customer relationship management applications industry. I spent most of my time in sales engineering and product management roles. In the fall of 2003 I began to question the traditional 'lock-in' based business model used by proprietary CRM vendors. I started to think about a new more efficient business model design for a new class of enterprise software company. SugarCRM utilizes a 'Commercial Open Source' business model design that I believe generates more innovative, higher quality, and less costly software then the traditional lock-in based model.

Biggest surprise you've encountered in your role with your company
As everyone knows, the Internet has changed the game. Ten years ago you could not sell a CRM application without a face-to-face sales call. Today, a large percentage of our customers buy SugarCRM directly from our ecommerce engine without talking with a sales person at all. Why, because we put our software in front of our sales force. No artificial restrictions, no heavy selling. If the software is really good, it should be able to demonstrate its value on its own.

That's the theory. The surprise has been how closely reality hews to theory in this case.

Hardest challenge you've had so far at your open source company
In 2004 the prevailing thought was that open source only applied to operating systems, programming languages, and databases. [Matt note: Go ahead, John - I can take it. You're talking about me!] Everyone was telling me "open source will never work with enterprise applications." They were wrong and I'm glad I didn't listen to them. Within two and a half years, SugarCRM has over 1,300 customers spanning 30 countries. I do not believe any proprietary software company is safe from the disruptive momentum of open source software. But the challenge was cutting against the grain of industry opinion. We had to go it alone on this.

If you could start over again from scratch, what would you do differently?
The Commercial Open Source business model has evolved from being a "could it work?" to a "this is a superior" business model design. So for me, I would spend more time writing great software and building a great company and less time thinking if this or that idea is totally crazy.

Top three pieces of advice for would-be open source CEOs

  1. Make great software, not sales and marketing the core competency of your company;
  2. Prove your ideas and software deliver real value, before you hire a sales force.
  3. Growing on open source project from scratch takes time, as in years.

John also noted the following: "If you have a great idea that you believe in, get started now. Looking back, I wish I had co-founded Sugar in 2002 instead of 2004."

It's interesting to me how many of the CEOs have urged patience in developing open source businesses. None of them see this as a two-year flip (or, in the Web 2.0 world, a 6-month flip). This makes me think that open source will have real staying power, if the effort that goes into building them is patient yet insistent. Wrinkles will get ironed out over time.

One of which will be attribution, which was neither rejected nor accepted in SugarCRM's case (or Zimbra's, SocialText's, Intalio's, Alfresco's, etc.), yet seems to have been easily accepted in Larry Rosen's excellent Open Software License. What I do know as an advisor to SugarCRM is that the company believes in open source and will do the right thing. Of that I'm confident.

Next up in the Open Source CEO Series...Toby Oliver, CEO and Co-founder of Path Intelligence, one of the most interesting open source startups I've ever seen.

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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