Original URL: http://www.theregister.co.uk/2009/05/07/john_roberts_sugarcrm/

Sudden exit for SugarCRM co-founder and CEO

Open source and cloud no guarantee of success

By Gavin Clarke

Posted in Applications, 7th May 2009 23:55 GMT

The chief executive and co-founder of one of Silicon Valley's pin ups for open-source and cloud services has suddenly resigned.

SugarCRM's John Roberts has left "to pursue other opportunities," the company said Thursday. He has been succeeded by an interim chief executive Larry Augustin. Augustin is a serial board-member and himself a former CEO - of VA Software, which became VA Linux and suffered the pain of the dot-com boom and bust.

Underlining the sudden nature of Robert's departure and how this was related to SugarCRM's business performance, Augustin said that his immediate priority is to get to know the team, customers, and partners and that he's looking forward to taking the company to the "next level."

Sources, who wished to remain anonymous, told The Reg that Roberts' future has been in question since March. The talk around the halls of San Francisco's Open-Source Business Conference (OSBC) around that time suggested it would not be long before Roberts was ousted.

Roberts helped found SugarCRM in 2004 with Jacob Taylor and Clint Orem as it turned from an open-source customer-relationship-management (CRM) project into a company. Today, SugarCRM claims 4,000 customers. Most are small and mid-sized deployments. With its on-site and on-demand PHP application, SugarCRM was considered a model start-up and held up as an example of cloud computing by Sun Microsystems' chief executive Jonathan Schwartz who frequently appeared at SugarCRM events as a keynote speaker.

SugarCRM, though, has failed to grow or develop along the same explosive trajectory of Salseforce.com, which has eclipsed SugarCRM in revenue, customer numbers, and deal size.

This will have frustrated the company's three investors in general, but even more so now that the recession is seen as good for open source and that venture capitalists find themselves increasingly stuck with start-up investments lacking an exit strategy. Investors have put $46m into SugarCRM.

Adding to the challenges for SugarCRM's backers, its operational costs are understood to be high, while the PHP-based CRM software itself is relatively complicated to install and run.

SugarCRM suffered a mysterious exodus of senior and experienced business staff in early 2008, some of which involved personal clashes with Roberts, sources told The Reg, and saw Roberts take more direct control over sales and growth.

Between January and June 2008, SugarCRM lost its director for enterprise sales Dean Warshawsky, regional vice president of sales Richard Baldwin, senior sales executive Amy Hu, and vice president of marketing Tara Spalding.

Sales and marketing people are considered expendable, but the loss of a co-founder is seen as a sign of something more troubling. And so it was Taylor left in June 2008, with senior vice president of business development Lars Nordwall going after three years at SugarCRM - one year short of Taylor. Nordwall is a veteran of Cambridge Technology partners and Novell.

SugarCRM's former team has since been spread across the industry at other start-ups, working as entrepreneurs, or joining rivals SAP and Oracle.

SugarCRM has refused to comment on the reason for the departures. ®