SugarCRM CEO Change: An Open Source Setback?
When SugarCRM announced co-founder John Roberts’ (pictured) exit last week, some folks viewed the news in a vacuum — wondering what’s right (and wrong) with the open source CRM provider. But The VAR Guy is looking at the bigger open source picture and he sees some reasons for concern.
First, let’s zoom in on SugarCRM. After Sun Microsystems acquired MySQL (the open source database) for $1 billion in January 2008, some folks (including The VAR Guy) assumed SugarCRM was the open source company best positioned to launch an initial public offering (when financial markets permitted).
SugarCRM founder John Roberts sounded pretty darn upbeat in this June 2008 podcast with The VAR Guy’s sister site, MSPmentor. And many employees praised Roberts. But if things were so sweet at SugarCRM, why did two top employees head off to GroundWork Open Source and Pentaho, respectfully, in 2008? And why is founder Roberts leaving now?
Not even Matt Asay, a SugarCRM advisor, has immediate answers.
The Bigger Picture
Although the open source industry remains full of promise for solutions providers (see The VAR Guy’s Open Source 50 report for details), there are signs of trouble across the open source landscape.
Consider the following anecdotes:
- GroundWork Open Source and SugarCRM have been busy cutting prices and/or introducing lower-cost options.
- And now, SugarCRM CEO Roberts has resigned, with no long-term successor in place. An angel investor, Larry Augistin, is serving as a short-term CEO until Roberts’ long-term replacement can be found.
- Meanwhile, venture capitalists appear to be consolidating their open source investments. Two recent examples include the mergers of XAware with Sparxent, and SpringSource acquiring Hyperic. Are venture capitalists losing faith in some of their open source investments? Or are they worried financial markets won’t recover anytime soon to support IPO exit strategies?
Alas, Red Hat remains the only pure open source company that’s publicly held and consistently profitable. What does that say about the broader open source industry? Is the recession purely to blame?
Or is Roberts’ resignation from SugarCRM a sign of larger challenges for the open source business model?