Commercial OpenSource: SpringSource CEO Rod Johnson (Part 4)

SM: What was it like to pluck yourself from the UK and land in Silicon Valley? Did you know people and have contacts? How did you navigate Silicon Valley?

RD: It didn’t bother me, but it was tough on my family. I know most entrepreneurs would not consider it a family-friendly activity because it is so intense. I would love to find an excuse to go live in New York for a couple of years, although it probably won’t happen because I have two small kids.

SM: My question is slightly more on navigating the Valley as an outsider coming in. How did you meet the VCs?

RD: That is an interesting question. Since I have been here, I have observed that the Valley tends to reject outsiders that it cannot categorize. I don’t feel like such an outsider because I fit a pattern. They found a CEO who came from a technical root, and people recognize a pattern of folks who fit that role coming from all over the world.

It is more of a problem for executives. They tend to get treated with distrust. It was not a problem for me because Spring was so well known. We were actually approached by investors. Our experience dealing with them has been very positive and easy, and I almost feel guilty about having discussions with entrepreneurs about raising money. We raised our second round six months ago. I spent one day doing four pitches and we had three tender sheets as a result.

SM: What was your first round?

RD: It was $10 million from Benchmark. They approached us. Peter had heard me speak at a conference a few years earlier. We then raised Series B which was a total of $15 million led by Accel. That closed about five months ago.

SM: You moved to Silicon Valley and had $10 million in venture funding. How did life change?

RD: Life didn’t change that much because I have always, like many entrepreneurs, been pretty brash and believed we could take over the world. It just gave us more runway to do it. I have always been audacious in the sense that I fundamentally tried to remake Enterprise Java. Enterprise Java was by and large a bit of a mistake, and Spring fundamentally remade that. Our mission as a company was to continue to spread the different areas of Enterprise Java infrastructure and provide that degree of simplification. It has always been an audacious play.

SM: The product was getting downloaded in an OpenSource mode all over the world. How did you build a monetization model and when did that start?

RD: Monetization was originally around consulting and training. We still have a fairly large training business. The primary monetization model is around software. We have a number of software add-ons which improve the ownership experience of Spring. You can get 24×7 support via a subscription, which is important in large organizations. They get software updates for up to three years. They get additional tooling, which is closed source, as well as monitoring and management software.

Fundamentally our model is one that recognizes that the OpenSource software is great. It is better than any other alternatives, but we provide things around it which make Spring better, and we charge for those additions.

SM: What kind of revenues are you doing?

RD: We have doubled our revenues for two years in a row and we are now in the $10-$50 million range.

SM: How many users do you have?

RD: One of the frustrating things about OpenSource is that it is really hard to truly know the number of users. We just don’t know. Our best estimate is that we believe two-thirds of Enterprise Java users are utilizing Spring. We have commissioned a number of independent surveys and they come back with that. I would say that the user population is around 1 million.

SM: What do you estimate is the total available market for what you are doing?

RD: Potentially it is very big. In the past year we have launched an application server product as we think the incumbent Oracle and IBM products are too complex. That application server will address many of the issues corporations will face as they move to cloud computing infrastructures, so it could be very large. Analysts think the cap is around $8 billion.

This segment is part 4 in the series : Commercial OpenSource: SpringSource CEO Rod Johnson
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