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Sorry SAP Campaign - The Making Of

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I needed to change the world. I wanted to ... You know how it is when you are young; you have big dreams, a lot of energy and naïve stupidity. My dream was to lead the enterprise management market with a fully open source software. (I also wanted to get 100 employees before 30 years old with a self-financed company but I failed this one by a few months).

To fuel my motivation, I had to pick someone to fight against. In business, it's like a playground. When you arrive in a new school, if you want to quickly become the leader, you must choose the class bully, the older guy who terrorises small boys, and kick his butt in front of everyone. That was my strategy with SAP, the enterprise software giant.

So, in 2005, I started to develop the TinyERP product, the software that (at least in my mind) would change the enterprise world. While preparing for the "day of the fight" in 2006, I bought the SorrySAP.com domain name. I put it on hold for 6 years, waiting for the right moment to use it. I thought it would take 3 years to deprecate a 77 billion dollars company just because open source is so cool. Sometimes it's better for your self-motivation not to face reality...

To make things happen, I worked hard, very hard. I worked 13 hours a day, 7 days a week, with no vacations for 7 years. I lost friendships and broke up with my girlfriend in the process (fortunately, I found a more valuable wife now. I will explain later why she is worth 1 million EUR :).

Three years later, I discovered you can't change the world if you are "tiny". Especially if the United States is part of this world, where it's better to be a BigERP, rather than a TinyERP. Can you imagine how small you feel in front of Danone's directors asking; "but why should we pay millions of dollars for a tiny software?" So, we renamed TinyERP to OpenERP.

As we worked hard, things started to evolve. We were developing dozens of modules for OpenERP, the open source community was growing and I was even able to pay all employees' salaries at the end of the month without fear (which was a situation I struggled with for 4 years).

In 2010, we had a 100+ employees company selling services on OpenERP and a powerful but ugly product. This is what happens when delivering services to customers distracts you from building an exceptional product.
It was time to do a pivot in the business model.

The Pivot

We wanted to switch from a service company to a software publisher company. This would allow to increase our efforts in our research and development activities. As a result, we changed our business model and decided to stop our services to customers and focus on building a strong partner network and maintenance offer. This would cost money, so I had to raise a few million euros.

After a few months of pitching investors, I got roughly 10 LOI from different VCs. We chosed Sofinnova Partners, the biggest European VC, and Xavier Niel the founder of Iliad, the only company in France funded in the past 10 years to have reached the 1 billion euro valuation.

I signed the LOI. I didn't realize that this contract could have turned me into a homeless person. (I already had a dog, all I needed was to lose a lot of money to become homeless). The fund raising was based on a company valuation but there was a financial mechanism to re-evaluate the company up by 9.8 m€ depending on the turnover of the next 4 years. I should have received warrants convertible into shares if we achieved the turnover targeted in the business plan.

The night before receiving the warrants in front of the notary, my wife checked the contracts. She asked me what would be the taxation on these warrants. I rang the lawyer and guess what? Belgium is probably the only country in the world where you have to pay taxes on warrants when you receive them, even if you never reach the conditions to convert them into shares. If I had accepted these warrants, I would have had to pay a 12.5% tax on 9.8 m€; resulting in a tax of 1.2m€ to pay in 18 months! So, my wife is worth 1.2 million EUR. I would have ended up a homeless person without her, as I still did not have a salary at that time. 

We changed the deal and I got the 3 million EUR. It allowed me to recruit a rocking management team.

Being a mature company

With this money in our bank account, we boosted two departments: R&D and Sales. We burned two million EUR in 18 months, mostly in salaries. The company started to grow even faster. We developed a partner network of 500 partners in 100 countries and we started to sign contracts with 6 zeros.

Then, things became different. You know, tedious things like handling human resources, board meetings, dealing with big customer contracts, traveling to launch international subsidiaries. We did boring stuff like budgets, career paths, management meetings, etc.

2011 was a complex year. We did not meet our expectations: we only achieved 70% of the forecasted sales budget. Our management meetings were tense. We under performed. We were not satisfied with ourselves. We had a constant feeling that we missed something. It's a strange feeling to build extraordinary things but to not be proud of ourselves.

But one day, someone (I don't remember who, I have a goldfish memory) made a graph of the monthly turnover of the past 2 years. It was like waking up from a nighmare. In fact, it was not that bad, we had multiplied by 10 the monthly turnover over the span of roughly two years! This is when we understood that OpenERP is a marathon, not a sprint. Only 100% growth a year is ok... if you can keep the rhythm for several years. 

 

OpenERP Monthly Turnover

As usual, I should have listened to my wife. She is way more lucid than I am. Every week I complained to her "it's not good enough, we should grow faster, what am I missing?" and she used to reply; "But you already are the fastest growing company in Belgium!". (Deloitte awarded us as the fastest growing company of Belgium with 1549% growth of the turnover between 2007 and 2011) 

Changing the world

Then, the dream started to become reality. We started to get clues that what we did would change the world:

Something is happening... And it's big!

OpenERP 7.0 is about to be released and I know you will be astonished by it.

The official release is planned for the 21th of December. As the Mayas predicted it, this is the end of an age, the old ERP dinosaurs.

It's time to pull out the Ace: the SorrySAP.com domain name that I bought 6 years ago.

 

If you want to test the v7 version online, just go the homepage.

Fabien Pinckaers,
OpenERP Founder

 

Date : 3rd December, 2012