VENDOR WATCH

Poised to Pounce on IPO: Q&A With SugarCRM CEO John Roberts

Around the time when Software as a Service (SaaS) was pre-empting the on-premise vendors, SugarCRM burst onto the CRM scene with its owndisruptive business mode: open source for CRM.

The build-it-yourselfmodel wasn’t for everybody, of course — or so many thought at thetime. As SugarCRM continues to refine its code and product lineup, itis attracting more and more customers that once would have opted for apackaged or SaaS product.

Now SugarCRM is waiting for the financialsystem to right itself so that it can enter the next stage of itscorporate development: going public. CRM Buyer spoke with CEO JohnRoberts about its plans.

CRM Buyer: How is SugarCRM weathering the economic downturn?

John Roberts:

We are feeling bullish. We had a strong Q1 — a record growthquarter for us, and in spite of the economy, our business is strong,healthy and growing. We were concerned in Q3 and Q4 and watching forsome kind of affect. So Q1 was an interesting test. Right now I amfeeling we will be that one in 10 or two in 10 companies that growsin recessions.

CRM: What are some of the cost-cutting measures you’ve taken?

JR:

We haven’t taken that many. We are always optimizing thebusiness — we have done that from day one. But we have not doneanything in particular cost-cutting-wise — in fact, we are doing theopposite. We are investing heavily in our Europe and Asia headquartersin Munich and Shanghai, for instance.

CRM: How can your products help your customers’ bottom lines inthe near term?

JR:

We live in an environment where CRM systems are overpriced.They are overpriced combined with a lack of flexibility. So for us, asthe premier open source CRM vendor, we provide the best price and mostflexibility. Our application takes costs out of the business and givesa competitive advantage; it doesn’t [push] customers into one-size-fits-all.

CRM: What are some of the bright spots for your company right now?

JR:

Over the last four years we have built a global network thatwe are continuing to expand. That is paying off for us now, as we areseeing a huge adoption of our on-demand systems.

CRM: How will your company look a year from now?

JR: This economic crisis has been similar to the test that theTreasury Department is giving to banks: Vendors are asking themselveswhether they really have a revenue stream from customers that like youand support you. I think we will be bigger and stronger, not justdespite of but also because of the crash.

CRM: There was talk of SugarCRM going public at one point. Areyou still planning that?

JR:

I would like to see the IPO market come back to life at somepoint. But yes, we are still planning for an IPO. Actually, it hasbeen a goal from day one. But it is one thing to have a goal like that but realize you have to start off with venture capital and so on. Itis something else to realize you have the financial foundation tobecome a public company within your grasp. That is usually a stagethat takes years and years to get to. It is a big validation for us.

CRM: I think you will be one of the few open source companies togo public.

JR:

Yes I think you are right. Outside of Red Hat, most opensource companies wind up being acquired. An IPO is also good news forthe CRM industry, which has had about 20 IPOs in the last 20 years. Werepresent the latest generation.

CRM: You talked about expanding overseas. Are you stepping uphiring as well?

JR:

Yes, but I can’t give a specific headcount. We are buildingon the sales team in both international offices, hiring engineers andso on. It is less about headcount targets and more about having theright infrastructure in place.

CRM: I think you are due for a product upgrade soon, correct?Can you tell me more about that?

JR:

We will be making significant announcements about newproducts within two weeks. But I can’t share any details with you now– sorry.

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