Tomorrow, that's exactly what Sendmail will announce it has done, as Dave Anderson takes over the company whose livelihood depends on a popular open-source email program. The new CEO spent 27 years at mainframe and services giant Amdahl, retiring last year after having risen from one of the company's first employees to the rank of chief technology officer.
Co-founder and former CEO Greg Olson will remain chairman and vice president of marketing and business development for the 150-person software company based in Emeryville, Calif.
Sendmail sells technical support, consulting services and proprietary add-ons for the freely available email program called Sendmail. It's one of a host of companies that aims to make money off the basis of open-source software, which may be downloaded for free and modified by anyone.
Other such companies include Red Hat, which bases its business on the Linux operating system; Covalent Networks, which bases its business on the Apache Web server software; Tripwire, based on the file tampering detection software of the same name; and Active State, which bases its business on the Perl programming language.
The Sendmail email software package, which is responsible for the back-end aspects of sending, receiving and storing email, is nearly as old as the Internet itself and very widely used. It's used at 29 of the world's largest Internet service providers and at 84 of the Fortune 100 companies, the company said.
But key to the company's success will be converting some of those people who use Sendmail software into paying customers, Anderson said in an interview. "We see a huge opportunity in enhancing email systems," he said, adding security services, tracking and logging services, and other customizations.
The company plans eventually to migrate such enhancements to the open-source version of Sendmail, the executives said.
One of Anderson's initiatives will be to beef up the company's services offerings--the customization, installation, planning and other jobs that require expertise. "We've got a huge opportunity in services. We've really got to address that," he said.
The company's historic revenue split has been about 50 percent from services and consulting and 50 percent from boxed product sales, Olson said. In the last quarter, it was about a third from services, a third from support and a third from software sales, Anderson said. In the future, the company expects product sales to become the most significant area of business, Anderson said.
The optimistic way to describe the company's business is to say that the software's popularity means the company doesn't face the difficulties of making a name for itself. "It's very nice to start with a product that has the kind of name recognition and installed base that this product has," Anderson said. "We don't have those problems."
But a more pessimistic way to look at the issue is that the company's biggest competition is a free version of its basic product--indeed, one that ships with about every copy of Unix or Linux. In addition, the company faces competition from email software from IBM, Hewlett-Packard and the iPlanet partnership between Sun and AOL.
The company raised $35 million in March, led by Morgan Stanley Dean Witter and with other investments from Adobe Systems, Network Appliance, Red Hat, Intel's IA-64 Fund, Novell, Networks Associates, Chase H&Q and Allen & Co.
"We've still got a substantial portion of that in the bank," Olson said. Anderson added that the firm has about enough to pay operating expenses for a year.
Other investors include a host of industry heavyweights: Unix pioneer and Sun Microsystems co-founder and chief scientist Bill Joy; Sun co-founder Andy Bechtolscheim; Compaq Computer chairman Ben Rosen; Novell CEO and former Sun CTO Eric Schmidt; former Hewlett-Packard chief operating officer Dean Morton; and former Sun chief operating officer Owen Brown.
During the most recent investment round, Bill Harding, who is Morgan Stanley Dean Witter's Private Equity managing director, joined Sendmail's board of directors.
Anderson joined Amdahl when it was 9 months old.
"I saw it go from 50 employees when I joined to about 14,000 employees now," he said. The company is now owned by Fujitsu. Anderson retired in 1999.
"My intent was to retire and relax, but I failed miserably. I very rapidly ended up with multiple board seats and lots of consulting," he said. But he longed to be a leader again, which wasn't an appropriate role for a consultant. "I decided I like to lead. The opportunity was pretty compelling."