Cupertino – August 15th 2018. Aged 14, quietly surrounded by venture capitalists, SugarCRM announced that their ambitions as a global brand had passed away.
A press release announced that SugarCRM has been acquired by Accel-KKR. Accel-KKR’s own website gives the game away – “Accel-KKR focuses on middle market companies”.
A cursory look at their portfolio tells you that this is not a company that builds global brands. It’s a company that acquires plodders. Their portfolio consists of companies like Kana and Kerridge. Both solid, unexciting performers that have been around for a long time but aren’t setting the heather on fire.
SugarCRM are positioning this as good news. It’s not. It’s a defeat. It’s the end of the line. After 14 years and $110m of investment, SugarCRM had stalled. Investors did not get a good return on their investment. No major ambitious investor was prepared to sink more money into the brand.
Accel-KKR will de-layer SugarCRM and centralise core functions like marketing and finance. Job losses are inevitable including the leadership team that drove the company to this position. Staunching the losses will be one of the first tasks.
SugarCRM blew it. Between 2005 and 2013, they were one of the most talked about software brands in the world. An IPO was confidently forecast. The company attracted column inches like billionaires attract wives.
SugarCRM had built their business riding on the coat tails of open source. By positioning themselves as a “commercial open source company” they were building a proprietary software business and leveraging the marketing magic of open source branding. This strategy was initially successful and attracted a stellar cast of top tier investors including Goldman Sachs who ponied up $40m in 2013.
By the end of 2013, they hubristically stuck 2 fingers up at the open source world and announced that they were walking away from open source and would henceforth be a proprietary software company only. As they did, so the pixie dust fell away. The open source community immediately announced a software fork (SuiteCRM) and SugarCRM were exposed as just another wannabee competitor to Salesforce with no compelling USP.
The last five years have been tough. As they burned through the Goldman Sachs money, they were stuck between a vice that consisted of SuiteCRM and Salesforce. On the one hand buyers could see that they could get what SugarCRM offered from SuiteCRM as a completely open source offering, or from Salesforce as a proprietary one. They started fading from long lists and almost completely disappeared from short lists. They were no longer referenced in the cauldron of technology media.
If there is one big take away from this tale it’s that the power of open source community shines bright. It was a community of more than half a million developers, collaborators and users that propelled SugarCRM to it’s stellar position as the company that was going to knock Salesforce from its dominant perch. It was the same community that abandoned SugarCRM once it became clear how deeply SugarCRM had dishonoured the open source movement.
It’s also the same community that is propelling SuiteCRM forward. The SuiteCRM project started with a very clear declaration that it was and always would be completely open source. Within a community that was left badly scarred by SugarCRM’s cynical disrespect of their commitment, there was doubt. Many thought and said that SuiteCRM would just do the same as SugarCRM did. But here we are, nearly five years on and every line of code is open source and the commitment to the open source way of doing things is as deep as ever. The project continues to grow and thrive and the community continues to engage and grow.
Long live open source!!