The Open Source CEO: Pete Childers (Part 19)

We're approaching the end of our Open Source CEO Series, but there are a few more executives that I'd still like to profile here. One is Pete Childers, CEO of Zmanda. Pete and I got to know each other through Red Hat's RHX, which he led until he left Red Hat to join Zmanda. He's a very thoughtful person with great insight into open source, having helped to build the world's most successful open source company, and to create one of the industry's biggest open source businesses...within Red Hat.

In this nineteenth installment of the Open Source CEO Series, I caught up with Pete to get his thoughts on open source, and the difference between his old role at Red Hat and his new role at Zmanda. Pete is one of the open source world's savviest executives on the force of the Internet, which comes through here.

Name, position, and company of executive
Pete Childers, CEO, Zmanda, leader in open source storage solutions.

Year company was founded and year you joined it
Zmanda was founded in 2005 and I joined in May 2007. We are based in Sunnyvale, CA, and also have offices and operations in Pune, India.

Stage of funding and venture firms that have invested
Zmanda has raised $14 million in two rounds of financing. Most recently we closed a Series B round in May 2007 with original investors Blue Run Ventures, Canaan Partners, and led by Helion Venture Partners.

Background prior to current company
Most recently at Red Hat I was VP, Online Strategy and Operations, running Red Hat's online P&Ls, including new offerings such as RHX. Prior to that I was VP, Global Learning Services, a business line I started when I came on board as Employee #41 in 1998 and grew it into a $60 million worldwide IT training and certification business, Red Hat's second largest P&L after the OS, and the fourth largest P&L in all of open source. Before that I was Sr. Manager, Services, at Seagate Software. All this was after leaving academia for industry in 1996.

Biggest surprise you've encountered in your role with your company
I am awed by just how much energy, creativity, and excitement there is right now in the open source application space. Much more than two years ago or even one year ago. I came to Silicon Valley very purposefully this year, 2007, on the premise that now is the time for open source to rise beyond the Linux operating system and the infrastructure layer, to transform the customer value story across all the categories of enterprise applications as well as on-demand application services. So Zmanda is part of this surprisingly large and strong "Class of 2007" and the only open source backup and data protection company.

Hardest challenge you've had so far at your open source company
The hardest challenge has two sides, process and people. From a process point of view, everything about open source is either just slightly different or completely different from traditional enterprise software marketing. Open source marketing has more in common with consumer marketing or technical consumer marketing than it does with enterprise marketing.

And yet when the inbound user comes to your web site or calls wanting serious commercial-level support and solutions, your web site and your sales and marketing teams must be ready to do serious enterprise solution selling. Viral early adoption plus the subscription model - buy as you grow - mean your sales team must be willing to start small; be technically adept at explaining value propositions, overcoming objections and giving superb customer value; and do all of this mostly via phone, email, chat(!) until the account is large enough to warrant anything resembling enterprise field solution sales.

The marketing team in turn must be able to understand and translate enterprise technical advantages to crisp, punchy value propositions and conduct compelling value-oriented participatory marketing, using evidence-based leads-to-sales metrics-oriented approaches via the web, developing brand and product pull rather than push. Rather like Web 2.0 but one loathes that term already.

The net-net of all this is that finding and selecting the best people for this unique opportunity, and particularly finding the right talents in marketing and sales, getting their activities understood and supported within an engineering oriented environment: all these are a huge and continuous challenge. Truly disruptive business models require truly disruptive approaches and personalities in sales and marketing.

If you could start over again from scratch, what would you do differently?
More, faster, better, earlier. Always.

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

1. Be always mindful of what it means to be open source based, and to have or practice an open source oriented business model. Hint: This doesn't mean using the term open source everywhere but assuming all else will look like a traditional proprietary software company.
2. Customers are king. The old relationship gets stood on its head in open source. There is no push. Customer experience (of your products, services, web site, team, company, brand) is paramount. This should make things simpler, more honest, and easier to focus on.
3. Sales and Marketing: Online is king. It's an Inbound World, as Saleforce.com's Tien Tzou has said. Never bet against the Internet, as Eric Schmidt has said. The Internet is made of open source software and makes open source development, distribution, viral adoption and business models possible. Never forget that. Make it the core of your strategy. Prepare to be unconventional.
4. Hire well. Hire superbly, Hire brilliantly. Hire innovatively. Or hire again...

This is what nearly 10 years at the world's most successful open source company will do to you: turn you into someone that knows how to talk the talk and walk the walk. (It also apparently teaches you that "top three" equals "top four," but who's counting? ;-)

Great insight, Pete. I particularly like the "online is king" statement, as I've found this to be true in my own experience. Open source companies that try to do too much offline end up...looking like traditional software companies, with all the baggage that brings.

Next up in the Open Source CEO Series...Rod Johnson, CEO of Interface21, home of the excellent Spring Framework.