Selling software that sells itself: An interview with Matt Asay

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Or if they did go forward and it turned out after a year that it just wasn’t working for them, that we’re talking tens of thousands of dollars lost, that’s an experiment that some of these bigger companies can afford to take. Several million dollars is an experiment that becomes a material error in judgment and the problem for these companies is if they go with a proprietary solution, it’s not the proprietary vendor that’s evil and wanting to do bad. It’s just that the model itself does not contribute to making them want to serve the customer. The license fee, once that sales person has that check for the license fee, they’ve checked out. I mean that’s what they get paid on. And it’s better to have a model, I think, it’s better for customers to buy into a model that says you know what, you paid zero for the software--you find out on your own whether it’s going to work for you or not, and if you buy, you’re buying support, or you’re buying some extra value that we’re providing.

Open source aligns customer interest with vendor interests, so that the customer is interested in being happy and getting the most out of the software. Well, in open source that is absolutely what the vendor’s interest is too, because if the customer is not happy nine months into their implementation guess what? They’re going to cancel their subscription. They're going to go elsewhere. And they should go elsewhere and should be able to go elsewhere. And so that means that the vendor, every day of that contract, has to be earning their fee. And for vendors that’s kind of uncomfortable. In the software world we don’t like the thought of having to really break our backs for the customer, but that’s what we should be doing. That’s what virtually every industry on the planet has to do. You have to serve the customer, and software has gotten a free ride for too long in my opinion.

So what does that mean for the sales organization if instead of dealing with incoming leads that might be qualified as far as budget, but might not know the software very well, the sales organization has to deal with customers who are all over the software and might have interesting or difficult questions about it? How does the software sales organization have to change to deal with the new open source sales cycle?

Very interesting question, and it’s not something that many people talk about much, including myself. One of the problems with open source is that suddenly your customers know a heck of a lot about your product and you can’t BS anymore. You have to train the sales people to just be very candid about what the product can and can’t do because the customer will find out really quickly if you’re lying. In fact, at Alfresco our model, and I don’t think we’re alone in this, is we don’t commission our solutions engineers, our sales engineers, at all. Because we want them to be the voice of reason with the customers so that even if the sales person gets out of line and starts talking up roadmap issues or where we’re going, we want the solutions engineer to say, "You know what? We can’t." We want them to be the absolute, honest voice. Our sales people are honest, but everybody wants to make the sale, so we need somebody there to kind of keep us from being too much like the old world.

But what it does mean, kind of coming back to your question, is again, it means you need to train sales people to be very candid and forthright with the customer. And I think, in our experience, and this may just be where we are right now in our products trajectory, I think it means you need to have more of these solutions engineers or sales engineers than you do of sales people. You need more people that are spending time talking with the customer, helping them configure the software to their needs within reason. We personally have policies that if a customer hasn’t chosen to buy or is not progressing toward a purchase after a set period of time, then we very politely say you know what, in order to keep our sales costs low and our prices low we have to focus on other things. Please contact us again when you’re ready if you think you’re getting near a purchase. But it means having that sort of a conversation as well and not spending months or years with a customer that isn’t progressing.

And it means that we commission our sales people on renewals as well. We want them to be thinking about the customer all year long, not just up to the point that they make the sale, but they have to be considering what they’re going to get out of the renewal as well. And it’s very easy, and I know a lot of subscription businesses pay a smaller percentage on renewals. For us, at least for now, we think it’s important to pay them full price on the renewals because we want those renewals to be just as important to the sales person as the initial sale was. And we aren’t yet of the belief that a renewal is just as easy or is easier than making the initial sale. At some point we may get to that point, but we really want to focus the sales people on thinking about the customer as a long term engagement, and not just as a one off.

One more statistic in your report; you mentioned that Red Hat Enterprise Linux is outgrowing SUSE Linux Enterprise Server. Do you think the JBoss connection has anything to do with this?

Matt Asay: You know what, it could, and there was a lot of that made in the press and I thought it was unfortunate. I mentioned it on my blog as well. And it was very real in our data. We saw SUSE Linux was doing just fine up until the Microsoft announcement. And then it did flatten out, the growth flattened out. But yeah, I think there are a number of different factors that could explain that. One is, you know frankly it probably is the Microsoft engagement. I mean the people that are downloading our software are people that download software. They’re developers, they’re architects, they’re savvy administrators and whatnot. And so these people, I think, do tend to care maybe more than the average IT administrator might, they care about kind of the philosophy that goes into the software that they’re buying.

So I think that the Microsoft patent deal with Novell has hurt SUSE, at least in our world. But yeah, I would agree with that. JBoss, I think, has been good for Red Hat. I think initially they had some difficulties with integrating the cultures and whatnot, but from a product standpoint absolutely. If somebody is going to use JBoss then there is a tie in to Red Hat Enterprise Linux that I don’t think you could discount. So yeah, I think that’s a valid insight.

You mentioned the Novell-Microsoft deal as being around the same time as the inflection point in SUSE sales. Is that, do you think, because of customer’s not responding well to the FUD aspects of the deal, or to customers see Novell as financially less stable or dependent on Microsoft to keep going?

I don’t think the latter. I mean if anybody was going to be worried about Novell’s financial viability, the time to be worried was actually three to four years ago, not so much today. I think it has more to do with the philosophy or ideology -- and ideology in a positive light in this sense -- around that deal. It’s no secret that I’m a hardcore opponent of the deal. I think it was the wrong way to go about interoperability and it was the wrong way to go about inviting Microsoft to be a full participant in the open source development community. And I don’t think I’m alone in that. But again, I don’t want to spend too much time on that because at the end of the day we don’t really know what caused the inflection point in SUSE adoption with Alfresco. But our best guess based on when it happened is that it was the Microsoft news.

From what I see of Alfresco, it looks like one of the key selling points for it is the Windows integration. If you’re a Windows user you can mount your Alfresco content just as if it was a Microsoft Windows shared drive and save and drag documents in and out. Is something like this patent deal a requirement, do you think, for companies like Alfresco that want to keep interoperating with Microsoft? Or is that not on your radar?

It’s not on our radar. I mean our response to it was the Open Invention Network, which protects some but not all of Alfresco’s technology. So basically anything that’s distributed with the Linux distribution is now covered through the OIN. And frankly, we’ve had internal discussions for the last two years about working with Microsoft. And every time that we start to get comfortable and want to reach out to Microsoft, Microsoft does something like this Fortune article kind of getting aggressive over Linux. And it’s just caused us to shrink back and say, "You know what? We don’t think we can trust them." And I don’t like saying that because I think Microsoft, generally speaking, is a good company with good people there. And our customers expect interoperability.

But you know what? We have worked with Microsoft on interop without doing any sort of a patent deal; as has Sugar and MySQL and Zend and these other companies. We work directly with Microsoft for a customer of ours to insure SQL Server integration with Alfresco. Didn’t have to sign any patent deal with them to get that done. We both had a mutual customer. It was in our mutual interest. We both wanted to make money, therefore we did it. But the patent thing is a complete smoke and mirrors, I don’t want to say trick, but it has nothing to do with interoperability. No matter how much Microsoft may repeat that, it has nothing to do with interoperability.

And if it did, there’s a very easy way to do that. You can do the sort of thing that IBM has done, that Sun has done, that other companies have done. And that is, make those patents available. Make a covenant not to sue over those patents. It's not putting them in the public domain, but it’s putting them out of bounds of litigation. And I think that would be the responsible way for Microsoft to engage with the open source development community. And it hasn’t.

And for some reason, despite the fact that I don’t think it’s any more threatened by open source than IBM is or Sun is or SAP is, or any of these companies, Microsoft for some reason takes it very personal. And I think it’s not because it’s IP is threatened, it’s because its business model is threatened. And Microsoft takes that very seriously. Anything that threatens a model that churns out billions of dollars a quarter in profits is a real threat to it. And again, I don’t think it’s the IP, it’s the business model that Microsoft is trying to protect. And so it’s saying you know what? Even if you buy open source you’ve got to pay us something. And that’s where the patent thing comes in. Pay us a little tax on all that open source that you’re buying. And it’s a way for it to keep making money and to raise the cost of open source software, because it’s really hard for even Microsoft, which has been the king of competing with free products, like Internet Explorer, and it’s hard for them to compete with free. It’s kind of uncomfortable, I think, for the company, and so it struggles against it. And it need not. Microsoft is a great products company. It makes great software. It should compete based on its ability to please customers, not on its ability to write patents.

Now when you show off Alfresco and customers look at this very slick integration with the Windows desktop and Office environment, do customers ever say to you, do you have some kind of a patent deal with Microsoft?

Never. Literally I’m not exaggerating -- we have never, ever had a customer ask about that.

One more question and then I’ll let you go; Alfresco recently did a licensing change. Can you explain that, and what the reactions have been?

Sure. When we started the company or when the company was founded -- I joined basically the first day that we actually started selling product. I was our first US employee. Before I joined we had basically the old SugarCRM model, where it was Mozilla public license plus attribution on eighty percent of the code, and then twenty percent or whatever the percentage is, was proprietary extensions. I didn’t like the model. I’m somewhat of an open source purist.

The engineers didn’t like the model for that reason, and because it was kind of cumbersome to manage. What should LDAP authentication be: MPL with attribution or should it be proprietary? And they were constantly have to juggle where to put things in the code line. And so three to six months after I joined we decided to go MPL plus attribution across the board for all of our code. And that’s when the attribution debate kicked into full swing. And we were uncomfortable. We had thought that it was open source, that it would be OSI approved. And I’m an OSI board member so I had kind of pain on both sides in this. But we felt like we were using a legitimate license.

The community felt otherwise and we were uncomfortable with that and so I made the decision to go to the GPLv2, which has been fantastic for the company in all respects. I mean literally, leads went up, page views went up, downloads went up, our registered community went up in significant percentages. Our sales went up 50 percentage. Our average sales price went up 25 percent, meaning the size of the deals went up. We’re now getting a thousand, two thousand leads per week. So everything was positive from it. we’ve made more money, not less. We have more community, not less. More community involvement. And that was the big driver behind it, is we wanted to license Alfresco under a license that meant that nobody had to be concerned with the company. Any developer out there, whether they’re a Drupal developer looking for robust repository to use with Drupal. And we’ve actually talked with the Drupal team, with Dries, the founder of Drupal, about this. Anybody who wanted to have a piece that Alfresco had, we didn’t want them to have to think about well, I don’t really want to deal with Alfresco’s company. I don’t trust them. They’re a corporation. They might be nice guys, but their interests are not aligned with ours. And so putting it under the GPL seemed like the best way to do that. It was making it completely free of Alfresco’s influence other than our development influence in continuing to add to that store of code that we’re writing.

And it has worked that way. I don’t think we are perfect by any stretch in how we work with our community, although it continues to get better as we, as a company, get comfortable with working in more of an open source fashion. But it’s been very good for Alfresco in making us more of a community player because again, it’s separated Alfresco the code from Alfresco the company. And now nobody has to worry about whether they like the Alfresco the company or not, because the code is sovereign. They can take and do with it whatever they want as long as they contribute back modifications that they make to it. So again, it’s been a big plus for us, and I’m a big proponent of the GPL for that reason. For corporations I think Apache style licensing makes sense in a wide array of scenarios. I think for companies I want to make a business run open source. For me there’s nothing better than the GPL, but maybe that’s because my personal experience has been so positive.

Thank you very much for being on the podcast, Matt.

Matt Asay: Oh, thank you, Don. I really appreciate you taking the time to talk with me and to listen to me.

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Matt Asay's blog

Alfresco: Open Source Enterprise Content Management


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