Covalent was one of the pioneers in commercial open source. Unfortunately, Covalent suffered through the dot-com bubble, along with the rest of the industry. Today, Covalent lives on under the guidance of Mark Brewer (as well as in Hyperic, which spun out of Covalent several years ago).
I caught up with Mark for our fifteenth installment of the Open Source CEO Series, hoping to glean some lessons from an open source company that rose, then fell, and is rising again. I met him in 2003/04 to discuss a possible investment, but Mark and team opted to bootstrap their way back to profitability, and have done exceptionally well for themselves.
Name, position, and company of executive
Mark Brewer, CEO, Covalent Technologies.
Year company was founded and year you joined it
Covalent was founded in 1998, and I joined in 2001 as VP of Field Operations.
Stage of funding and venture firms that have invested
Covalent was originally venture-backed by Granite Ventures (H & Q), Sequoia Capital, and Menlo Ventures. In early 2004, however, Mark led a management buyout, returning ownership to Mark and his team. [Matt note: Is this the only open source deal Sequoia has ever done? I think so....]
Background prior to current company
Most of my career has been spent in sales for software companies, including Sybase, Powersoft, Andromedia, Revelation Technologies, and a few others that were too short-lived to mention. The most valuable skill I?ve gained from my years in software sales is to actually hear what customers want from their vendors and the technologies they provide.
I?ve been fortunate to ride three different waves in technology: the move to client/server with Powersoft, the panic to get "on the web" with Andromedia, and now migration to open development and licensing of software with Covalent. Of the three, this has been by far the most enjoyable.
Biggest surprise you've encountered in your role with your company
The biggest surprise has been how slow proprietary vendors have been to respond to the market?s demand for open source software. Even when these traditional vendors are being soundly beaten by an open source competitor, they fail to make a move. This lack of responsiveness is not going unnoticed by their customers, I assure you.
Hardest challenge you've had so far at your open source company
When we decided to stop selling software licenses with traditional maintenance plans and move to a pure support/subscription model we created a number of challenges for ourselves. The obvious one was an immediate reduction in bookings/revenue which meant we had to restructure all operations of the company to accommodate the shift. Secondly, an unforeseen challenge hit us and we found ourselves having to educate and hard sell our customers on why it was a good thing for them not to have to buy a license for the software we were providing. Fortunatley, this second issue has largely gone away as the enterprises we sell into have been "open source educated" over the course of the last couple of years.
If you could start over again from scratch, what would you do differently?
I would make certain that we embraced the community (Apache Software Foundation) that develops the software we provide and support at the very beginning. In Covalent's early history we had a very contentious relationship with the ASF as we were operating like a proprietary software vendor that leveraged software mostly developed by a community. It has taken a number of years and lots of goodwill to recover from those early missteps.
Top three pieces of advice for would-be open source CEOs
- Figure out which OSI-approved license best suits your product, market and business model before going public with your plans;
- Whether you're developing your own community or joining an existing one, invest in that relationship. Make certain you feed them first, as they're going to be the difference between your product/project being a big success or not; and
- Listen to your prospective market/customers and overachieve on their expectations. This is open source: they're going to know if you have kept your word or not.
I love Mark's candor about the Apache Software Foundation, and how to rectify it. Regardless of whether it's a homegrown or preexisting community, no corporation can unilaterally dictate to the community and still expect to derive benefit from it. The community will dry up when companies try to mine it for resources without replenishing it.
Next up in the Open Source CEO Series...Gianugo Rabellino, CEO and Co-founder of Sourcesense, an Italy-based, very early stage open source company.