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Will the enterprise market spend significant IT budget on Windows Vista in 2007?



CEO Spotlight: Marc Fleury, JBoss, Inc.
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Angel Mehta: Has open-source evolved, at least within JBossí category, to the point where the senior business managers are as comfortable with it as the technical people?

Marc Fleury: Yes, I firmly believe it has. I was recently at a Gartner Web services conference in L.A with Yefim Natis, a leading analyst in middleware, moderating the panel. With 500-600 IT managers (selected by Yefim himself) in the audience, he asked how many used open-source and 80% raised their hand. Today, itís a foregone conclusion that open-source is the way to go. What youíre witnessing now, with companies like ours and others exploring the next maturity level of the business models, is the delivery of the support past the big bang of 1999 with the Red Hats, etc., and the excitement around free developers, free software. Youíre seeing a maturity stamp of an industry thatís more than just a cottage industry, again, where small companies are playing with the big boys, proving the power of the model. It still puzzles me that much of the attention out there is about ďis open-source for realĒ? Weíre three steps ahead of that. Itís about support and what are the right strategies to introduce open-source as a standard in the corporate environment. Thatís the kind of advanced questions we help customers solve. Again, weíre past the question, Ďis open-source just a fad?í The answer is absolutely NOT. Open-source is a FACT.

Angel Mehta: Letís look at your sales strategy for JBoss. Do you attempt to market your products and services to companies that are not already in the open-source game or are you essentially just sailing into those companies who already adopted the application.

Marc Fleury: Angel, thatís a great question and it goes to the heart of the business model. We brought on Rob Bearden, who you know, and he hired his ex-boss, Tom Cooper, who heads our channel strategy so I have the bad boys of Oracle running sales here. Both Rob and Tom used to lead the East and West Coast operations for Oracle respectively so weíre taking this very seriously from a sales standpoint. The little insight is that we flipped the traditional sales game on its head. Let me explain.

When Rob was at i2, after Oracle, he realized that they were spending $2.00-$2.50 in customer acquisition for every dollar in maintenance. We only spend $0.20 on customer acquisition to acquire $1.00 of maintenance. Why? Because we sell to people who have already tried the application server. Again, at the Gartner conference, that was 80% of the audience. Weíre talking about large corporations such as Telcoís, banks, travel, manufacturing consortiums, and government agencies that have tried the software and are coming to us to buy the support. That is why we have lower sale costs; because weíre not funding an expensive sales force to knock on doors and convince people, they need to pay us a large chunk of money in order to use and test our products. Theyíve already done their homework; theyíve tried it and now theyíre looking to roll it out and standardize on it. These companies want a relationship with the software vendor thatís producing the software and that is JBoss.

The fact that we removed the license as a pre-requisite for our customers is at the heart of the distribution game. Weíre in the game of controlling mass distributions and monetizing 1% or 2%- of that user-base into a paying customer.

Angel Mehta: What about competitors? Does JBoss have open-source competition?

Marc Fleury: Yes, we have. There are many open-source projects out there and the most famous is probably the French consortium that produces JonAS, which Red Hat bundles, but that really hasnít gotten any market traction, not even in Europe, and itís still at 0% market share. Thereís always competition from the proprietary and open-source space. Unlike the proprietary vendors where you usually have six or seven competing vendors that all survive in their respective niches, markets and maintenance space, open-source is really a magnified Ďwinner takes allí dynamic. In open-source you donít have that much money so thereís an aggregation around very few brands. Luckily, JBoss IS one of those leading brands in open-source so that in and of itself results in a very big positive feedback loop.

Angel Mehta: What is the single most critical challenge that JBoss is facing right now?

Marc Fleury: Very frankly, what keeps me up at night right now are sales and operations. Nobody has done this before but weíre pioneering with a few companies who are visionaries of open-source and professional open-source. We know weíre running towards the goal line and itís not that somebody is going to catch us and tag us; itís that weíre running and have to make sure we donít fumble the ball. We have this big opportunity, weíre inventing a new model and itís not something you learn in an MBA class, itís not a formula thatís known and weíre just replicating it. Weíre staffed with industry veterans; guys like Rob Bearden; David Skok on the board, and Bob Bickel as VP of Strategy. Thereís great deal of execution when youíre in hyper-growth. We went from 25 to 100 people in a year and that has its own set of challenges and associated risks. Weíve seen other companies in our space disintegrate overnight because of various things: sales donít scale or the company implodes under the tension between the open source communist fringe and then the right-wing fringe of the company. We have a lot on our plate trying to execute with excellence and grow it at the same time. So right now, weíre focused on growing up and doing it the right way and thatís very inward-focused.

Angel Mehta: What about yourself? How do you spend your time as CEO?

Marc Fleury: Well, Iím enjoying PlayStation Portable very much (Laughing). Truthfully, I donít do anything. I talk to you, for example, and I do a lot of press. Itís very low stress. The job is becoming fun again in the sense that I went from being an engineer and a scientist to, almost out of necessity, having to build a business without any experience. The best thing Iíve done was bring onboard Bob Bickel. Bob, an industry veteran, was one of the founders of Bluestone, and general manager of middleware at HP, has deep corporate experience. Having that depth of talent and industry veterans onboard, running the day-to-day business is a great thing because it enables me to transition to a more hands-off role. Iím still very involved in every aspect of the business but I donít sweat it as much. I have total trust in my executive team and thatís a luxury position to be in. It frees me up to go back to development. At heart, Iím a product manager and thatís how JBoss became successful. So now Iím going back to development and helping my developers think about ease of use, packaging, etc. Iím still the CEO; Iím free to keep my technical edge, to go out and evangelize our model at conferences and to work on new things. Weíre thinking about a mezzanine round right now so Iím working on that and not sweating about building the business day-to-day. Personally, Iím in a much better place today than I was a year ago when we were trying to build the business as fast as we could.

Angel Mehta: I understand that your wife also works at JBoss. How does it impact your relationship with her?

Marc Fleury: As you know, Nathalie and I started the business with a third partner, Scott Stark. It started as a family business and today itís much bigger than us; there are investors, employees and a lot of people I feel responsibility for all these constituencies. In the early days, Nathalie was doing sales, PR and marketing. Now, she is Director of PR and manages our relationship with Schwartz Communications, who take care of the heavy lifting. We speak every night about the business; itís something we take home and itís part of every conversation because itís just who we are. The communication of the company is successful in part because Iím so involved with Nathalie and sheís so in sync with whatís going on that weíre capable of doing a lot of good work there.

The negative is just that itís very hard to separate whatís home from business. There is no separation still but weíre trying to do a little bit better because bringing the stress of business back home is not necessarily healthy. So weíre trying to self-regulate and not talk about it on Sundays when weíre with the kids. I know of other couples that ended up in divorce but I think weíre handling this pretty well so far.

Born in Paris in 1968, Marc started in Sales at Sun Microsystems France and then transitioned to engineering and moved to Silicon Valley where he worked on early Java enablement of SAP at SAPLabs. An ex-Lieutenant in the paratroopers, Marc holds a degree in Mathematics from the Ecole Polytechnique, a master in Theoretical Physics from the Ecole Normale ULM and a Ph.D in Physics from Ecole Polytechnique for work he did as a visiting scientist at MIT's Research Lab of Electronics. Marc publishes research papers on middleware and aspect oriented programming. Marc can be reached for feedback at: marc.fleury@jboss.com

Angel Mehta is Managing Director at Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies. He can be reached for feedback at: amehta@sterlinghoffman.net


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