Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

SugarCRM: Thorny and Open Source . . .

Posted by Tom Foremski - November 5, 2008

John Roberts, the CEO of SugarCRM, seems to enjoy being a thorn in the side of his much larger competitor, Salesforce. He says Marc Benioff, the CEO of Salesforce wasn't too pleased when he found out SugarCRM was hosting its user conference at the Marriott, just a few yards from the Salesforce Dreamforce conference at the Moscone Center in downtown San Francisco.

JohnRoberts.jpg"When Marc Benioff found out we were at the Marriott he pressured the hotel to move us out. That's how we ended up here at the St. Regis, and Marriott is paying for it." The move might have backfired for Salesforce because the St. Regis is a lot nicer than the Marriott and just as close to the Moscone.

The reason SugarCRM might be irking Mr Benioff is that it's growing very fast. "We now have more than four thousand customers, and more than half-a-million users, in 80 languages. That's in just four years."

While Mr Roberts credits Marc Benioff with educating the market about the benefits of software as a service, he says SugarCRM is winning business because there isn't any customer lock-in as there is with Salesforce and its proprietary behavior. For example, application developers for the Salesforce Force.com platform have to use a programming language called Apex.

"What is the point of Apex? We built SugarCRM in PHP and we use Internet standard technologies. We are open source, our technologies are owned by the Internet. We view ourselves as the Linux of the CRM world."

Much of the demand for SugarCRM comes from word of mouth, says Mr Roberts. "I don't have to have a big sales force that needs to travel all over the place." Daily downloads average 5,000 per day and recently exceeded 5 million total. Site licenses are $449 per user or customers can choose to the on-demand version for just $40 per month.

"The Internet has totally changed the software industry. We allow our customers to try before they buy."

SugarCRM is home grown and developed in Cupertino from scratch. "We don't off-shore development. I don't believe that you can build innovative software that way," Mr Roberts says.

The company has strong growth and money in the bank. "We raised $20m last year but we haven't had to touch it. We were planning an IPO in 2008 and we needed to show we had $20m in cash."

Mr Roberts says the company might have to wait until 2010 before it can IPO. SugarCRM was hoping that MySQL would be the first commercial open source company to have a successful IPO. But MySQL abandoned its IPO plans and agreed to be acquired by Sun Microsystems for $1bn at the beginning of this year. Now SugarCRM could become the first commercial open source public company.

Until the IPO market reopens, Mr Roberts isn't twiddling his thumbs. "There are five million businesses in the US, and only 10 per cent of them have CRM, the rest are using spreadsheets. That's a huge opportunity for us."

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