SM: Can you take us through the process of building your sales team?
JR: People started calling from all over the world, so we built four different sales channels: an ecommerce engine, an inside sales team, a channel sales team and enterprise sales team. We built them all from scratch. I used the same approach to sales that I did in the development of the software. We let people do sales in areas in which they were strong. What is good for us is that over the last four years our sales teams have divided themselves up proportionately. Today we have 50 salespeople and continue to grow. We have made our sales numbers for 16 quarters in a row. We have never had a negative quarter.
We have developed an ecosystem that is fair and just. People agree with the way we generate revenue. People recognize that software is not written free, and they want us to be successful. Without reward you are not going to get great software. We have earned the right to generate revenue.
SM: What is your presence in Europe like?
JR: We have 550 paying customers and are growing. I am heading to Germany next week and will be there for two weeks. We have several thousand production servers there. Countries like Germany love to rip software apart, and the same is true of Japan. For us it is a question of how to optimize the business in a way which matches how people want to interact with you.
SM: How has the financial crisis affected your business?
JR: What we have seen now after the correction and what we are going to go through over the next year, and hopefully it is just one year and not ten years, is that people are aware they are overpaying for software but are not changing because it works. Now they are looking deeper at their costs, top to bottom, as well as their customer experience. What are we getting in return? What are we paying for? That is when the free alternative helps.
This is my third recession, and I have been in the same software segment each time. I always figured people would buy salesforce automation software because they want to be more efficient, but that is the last thing they do. They go right back to spreadsheets and stop the expensive stuff. What is different this time around is that there is now a free database, a free operating system and a free CRM.
SM: How do you see Zoho?
JR: They are trying to compete with Microsoft and Google. They are trying to create a broad suite of productivity tools. They are doing a good job of going after that market. Our experience has been enterprise software. We really focus on high availability human interaction systems. Sugar is more enterprise grade in our approach.
SM: Now that you have pioneered enterprise-grade open source business applications, what else have you seen come about in that genre between 2004 and 2008?
JR: Anything in SaaS, on demand, cloud computing, whatever you want to call it. It has grown like a weed. It makes a lot of sense for a lot of companies. If you were to run Sugar on an Intel box internally, you would have far more control than going on-demand, although you have to maintain it, which is where the cost comes in.
Web technologies are fundamentally easier to deploy. You are not dealing with client server. It is just a web app. SaaS is stratifying right now. You have Amazon, Sun, IBM and British Telecom building services, and it seems like everyone is getting on board. What is missing? Applications. I am talking about big providers building big infrastructure on demand. There is no reason I can’t buy my BlackBerry from Verizon and get my CRM from Verizon as well. Telecoms are not in the software development business. We are in the middle and we don’t care. If you want to buy SaaS from us, great. However, we will allow our partners to run it in their environment.