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I've long been convinced that every well-run Drupal agency of 30 people or more can afford to hire a Drupal core contributor and let him/her work on Drupal core pretty much full-time. A healthy Drupal agency with 30 people should be able to do $5MM in revenue at a 15% net profit margin #1. This means they have $750k in profits that can be invested in growth, saved as reserves, or distributed among the owners.
There are many ways you can invest in growth. I'm here to argue that hiring a Drupal core contributor can be a great investment, that many Drupal agencies can afford it, and that employing a Drupal core contributor shouldn't just be looked at as a cost.
In fact, Chapter Three just announced that they hired Alex Pott, a Drupal 8 core maintainer, to work full-time on Drupal core. I couldn't be more thrilled. Great for Alex, great for Drupal, and great for Chapter Three! And a good reason to actually write down some of my thoughts.
The value of having a Drupal core contributor on staff
When Drupal 8 launches it will bring with it many big changes. Having someone within your company with first-hand knowledge of these changes is invaluable on a number of fronts. He or she can help train or support your technical staff on the changes coming down the pipe, can help your sales team answer customer questions, and can help your marketing team with blog posts and presentations to establish you as a thought-leader on Drupal. I believe these things take less than 20% of a Drupal core contributor's time, which leaves more than 80% of time to contribute to Drupal.
But perhaps most importantly, it is a crucial contribution that helps ensure the future of the Drupal project itself and help us all avoid falling into the tragedy of the commons. While some core contributors have some amount of funding — ranging from 10% time from their employers to full-time employment (for example, most of Acquia's Office of the CTO are full-time core contributors) — most core contribution happens thanks to great personal sacrifice of the individuals involved. As the complexity and adoption of Drupal grows, there is a growing need for full-time Drupal contributors. Additionally, distributing employment of core contributors across multiple Drupal organizations can be healthy for Drupal; it ensures institutional independence, diversified innovation and resilience.
Measuring the impact of a Drupal core contributor on your business
While that sounds nice, the proof is in the numbers. So when I heard about Chapter Three hiring Alex Pott, I immediately called Chapter Three to congratulate them, but I also asked them to track Alex's impact on Chapter Three in terms of sales. If we can actually prove that hiring a Drupal core contributor is a great business investment, it could provide a really important breakthrough in making Drupal core development scalable.
I asked my team at Acquia to start tracking the impact of the Drupal core contributors on sales. Below, I'll share some data of how Acquia tracked this and why I'm bullish on there being a business case.
For Acquia, high quality content is the number one way to generate new sales leads. Marketers know that the key to doing online business is to become publishers. It is something that Acquia's Drupal developers all help with; developers putting out great content can turn your website into a magnet. And with the help of a well-oiled sales and marketing organization, you can turn visitors into customers.
Back in December, Angie "webchick" Byron did a Drupal 8 preview webinar for Acquia. The webinar attracted over 1,000+ attendees. We were able to track that this single piece of content generated $4.5MM in influenced pipeline #2, of which we've managed to close $1.5MM in business so far.
Even more impressive, Kevin O'Leary has done four webinars on Drupal's newest authoring experience improvements. In total, Kevin's webinars helped generate $9MM in influenced pipeline of which almost $4MM closed. And importantly, Kevin had not worked on Drupal prior to joining Acquia! It goes to show that you don't necessarily have to hire from the community; existing employees can be made core contributors and add value to the company.
Gábor Hojtsy regularly spends some of his time on sales calls and helped close several $500k+ deals. Moshe Weitzman occasionally travels to customers and helped renew several large deals. Moshe also wrote a blog post around Drupal 8's improved upgrade process using Migrate module. We aren't able to track all the details yet (working on it), but I'm sure some of the more than 3,200 unique viewers translated in to sales for us.
Conclusion: investment returned, and then some
Obviously, your results may vary. Acquia has an amazing sales and marketing engine behind these core contributor, driving the results. I hope Chapter Three tracks the impact of hiring Alex Pott and that they share the results publicly so we can continue to build the business case for employing full-time Drupal contributors. If we can show that is not just good for Drupal, but also good for business, we can scale Drupal development to new highs. I hope more Drupal companies will start to think this way.
#1 I assumed that of the 30 people, 25 are billable and 5 are non-billable. I also assumed an average fully-loaded cost per employee of $125k per head and gross revenue per head of around $180k. The basic math works out as follows: (25 employees x $180k) - (30 employees x $125k) = $750k in profit.
There are 365 days per year and about 104 weekend days. This means there are 260 business days. If you subtract 10 legal bank holidays you have 250 days remaining. If you subtract another 15 business days for vacations, conferences, medical leave and others, you have 230 business days left. With a blended hourly rate of $130 per hour and 75% utilization, you arrive at ~$180k gross revenue per billable head.
I confirmed these numbers with several Drupal companies in the US. Best in class digital agencies actually do better; they assume there are 2,000 billable hours in a year per head and maintain at least a 85% chargeability rate (i.e. 1,700 billable hours per head). Many companies do less because the maturity of their business, the market they are in, their geographic location, their ambitions, etc. It's not about what is "good" or "bad", but about what is possible.
#2 "Influenced pipeline" means that the content in question was one factor or touch point in what ultimately lead potential customers to become qualified sales leads and contacted by Acquia. On average, Acquia has 6 touch points for every qualified sales lead.
In a world where innovation is only accelerating, shackling employees with non-competes doesn't make sense anymore. At Acquia, we believe that innovation is about openness and collaboration, and that working together is based on trust and loyalty, something that was born out of our Open Source background. It's been a long time coming but we decided to kill our non-competes. It is the right thing to do. Here is what we just sent to all Acquia employees:
From: Tom Erickson <email@example.com> To: Everybody at Acquia Date: Friday, May 2, 2014 Acquians, We have an amazing team, it's the thing I am personally proudest about. When asked by others what's the best thing about our company, I don't hesitate to answer "our team". There are many things to value in each of you, from your commitment, your integrity and certainly your passion! The goal that Dries and I have always set was to have a company where everyone is challenged, has the opportunity to grow and has some fun along the way. Most of the time we're successful at that as a company, though sometimes we fail. Yet even when we fail, we want everyone to continue to do the right thing and sustain mutual respect. To this end, the exec team has decided to eliminate non-competes from our employment agreements. We believe its the right thing for our team members, for the company and for the industry. There are many reasons why companies have used non-competes in the past, but we believe that times have changed and individuals today value the companies who value them. This may seem contradictory .. "value me, but let me go to a competitor" .. but we believe that a company who respects our team members in this way will actually be a better magnet for talent. While we are getting rid of non-competes, we are not eliminating other terms, notably the non-disclosure. So while we do not want to restrict free movement of talent, it's important that company confidential information remains just that, confidential. We do not plan to change existing employment agreements, as that would be an administrative burden, and we have many other issues to deal with. This email should suffice as an assurance that existing non competes below the executive leadership level will not be enforced. All new hires, with certain exceptions at the executive level, will not have non-competes. Viva Acquia! Tom
Background in business is a 'nice to have', not a 'must have' for an aspiring entrepreneur. I had no solid business background when I founded Mollom or Acquia (I launched them roughly at the same time).
Other than the standard things (an idea, passion and the willingness to act), the most important thing that aspiring entrepreneurs need is the understanding that 80% of entrepreneurship is sales and marketing. If as a founder, you're not obsessed with sales and marketing, you're a liability rather than an asset.
You don't have to be the best sales and marketing guy (I am far from that), but you better enjoy getting other people excited about your project, company or product. It will help you not only with finding customers, but also with recruiting a world-class team, raising venture capital, and more. So if there is one thing you should learn before starting a company, it is "sales and marketing" (in the broad sense) — and you better be passionate about it, because you'll invest years of your life to selling and evangelizing to make your company a success. Without customers or a team, you won't need any other skills, because you'll be out of business.
You need to be talking about your idea all the time. Too many entrepreneurs believe that if they build a killer product, customers will come. It almost never works like that. Smart entrepreneurs do it backwards; they find customers first and build their product only when they have customers ready to start paying. Not testing the market by selling from day one can lead to months, if not years, of wasted time and money. So stop being so secretive about your idea. You will never find your product-market fit by keeping your idea secret until it is perfect. If you're afraid of people telling you that your idea is stupid, chances are you may not be ready to be an entrepreneur.
This blog post is on purpose, Open Source, profit and pie. This week I had an opportunity to meet Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. I was inspired by the following comment he made (not his exact words):
"Because companies strive to have a positive balance sheet, they take more in, than they give out. However, as individuals, we define success as giving more than you take. Given that many of us are leaders as individuals *and* also leaders in our businesses, we often wrestle with these opposing forces. Therein lies the leadership challenge."
I’ve seen many Open Source developers struggle with this as they are inherently wired to give back more than they take. Open Source developers often distrust businesses, sometimes including their own employer, because they take more than they give back. They believe businesses just act out of greed and self-interest.
This kind of corporate distrust comes from the “fixed-pie concept"; that there is only so much work or resources to go around, and as pieces of the pie are taken by some, there is less left for everyone else. The reality is that businesses are often focused on expanding the pie. As the pie grows, there is more for everyone. It is those who believe in the "expanding-pie concept" who can balance the opposing forces. It is those who believe in the "fixed-pie concept" who worry about their own self-interests and distrust businesses.
Imagine a business that is born out of a desire to improve the world, that delivers real value to everyone it touches. A business that makes employees proud and where team members are passionate and committed. A business that aspires to do more than just turn a profit. A business that wants to help fuel a force of good. That is Acquia for me. That should be your employer for you (whoever your employer is).
The myth that profit maximization is the sole purpose of business is outdated, yet so many people seem to hold on to it. I started Acquia because I believed in the potential and transformative nature of Drupal and Open Source. The purpose of business is to improve our lives and create value for all stakeholders.
Acquia's growth and capital position has given me power and responsibility. Power and responsibility that has enabled me to give back more and grow the pie. I have seen the power that businesses have to improve the world by accelerating the power of good, even if they have to take more than they give. It's a story worth telling because business is not a zero-sum game with one winner. I believe Open Source companies are in a prime position to balance the opposing forces. We can do well and do good.
I'm proud to share that Acquia announced its certification program today. You can now get "Acquia certified in Drupal", something I'm pretty excited about.
This is something I've been hoping to see in the community. While there have been other experiments around certification, we as a community have lacked a way to ensure professional standards across Drupal. Over the years, I've heard the demand coming from partners and clients who need a way to evaluate the skills of people on their teams. More and more, that demand has drowned out any perceived criticisms of a certification for Drupal.
A good certification is not just a rubber stamp, but a way for people to evaluate their own abilities, and make plans for improving their knowledge. In some countries, certification is really important to create a career path (something I learned when visiting India). For these reasons, I feel Drupal's growth and development has been hindered without a formal certification in place.
The certification we've built is based on the combined years of experience among Acquia staff who oversee and manage thousands of Drupal sites. We've observed patterns in errors and mistakes; we know what works and what doesn't.
People have debated the pros and cons of software certifications for years (including myself), especially where it involves evaluating candidates for hire. Certainly no certification can be used in isolation; it cannot be used to evaluate a candidate's ability to perform a job well, to work in teams or to learn quickly. Certification can, however, provide a valuable data point for recruiters, and a way for developers to demonstrate their knowledge and stand out. It is undeniably valuable for people who are early in their Drupal career; being certified increases their chance to find a great Drupal job opportunity.
One of the biggest challenges for Drupal adoption has been the struggle to find qualified staff to join projects. Certification will be helpful to recruiters who require that job candidates have a good understanding of Drupal. There are many other aspects to recruitment for which certification does not provide a substitute; it is only one piece of the puzzle. However, It will provide organizations added confidence when hiring Drupal talent. This will encourage the adoption of Drupal, which in turn will grow the Drupal project.
The community has been talking about this need for a long time. One approach, Certified to Rock, evaluated an individual's participation and contribution in the Drupal community. Acquia's certification is different because we're assessing Drupal problem-solving skills. But the community needs more assessments and qualifications. I hope to see other providers come into this space.
Today, the web is not just about publishing content anymore. As the web evolves from content management to digital experience management, it's about understanding visitors' interests and preferences, and figuring out how to deliver them an optimal personalized experience. Many organizations are exploring ways to more effectively create and deliver valuable content to site visitors to increase traffic, conversions and revenue. Great content is still gold, but delivering the right content to the right user at the right moment in the right format is platinum.
Today's personalization tools aren't great and put marketers at a disadvantage. This is why I'm excited to announce that we're rolling out Acquia Lift, a solution that equips the site owners with powerful website testing and content targeting tools to optimize content for each visitor. Acquia Lift learns about a visitor's interests and, based on these insights, uses machine learning algorithms to automate the delivery of personalized content. Marketers and site builders can test content, for example using A/B or multivariate testing, and even add rules about the types of user profiles that get specific content. There is implicit learning that takes place as well that continuously helps Acquia Lift provide increasingly more appropriate content to individuals. Attributes of the user, such as location, and even what the current weather is, can be taken into account in providing the right content. Check out this short Acquia Lift video if you want to learn more or see Acquia Lift in action:
As I talked and wrote about earlier, I believe personalization and contextualization will be a critical building block of the future of the web, and I'm excited to help make that a reality.
As is now a tradition, here is my annual Acquia retrospective. Time to look back at 2013. In your life, you only get an opportunity to do so many things, so you have to focus on doing things that matter. I'm fortunate that Drupal and Acquia are remarkable stories. I take time to write these retrospectives for you and for me. I write them for you, because you might benefit from my experiences or from analyzing the information provided. But I also write them for myself so I don't forget this incredible journey. If you want, you can read previous retrospectives: 2009, 2010, 2011 and 2012.
For Acquia, 2013 was another excellent year. It was our fifth full year in business (i.e. revenue-generating year), and we finished the year with 19 consecutive quarters of revenue growth. In short, 2013 was a year of continued momentum, record bookings and great customer success. With five-year sales growth of more than 84,100 percent, Acquia was identified as the second fastest-growing company on Deloitte's Technology Fast 500 in North America. Acquia was also listed among North America's fastest growing software companies in 2013's Inc. 500. We're all very proud of that.
We hired 208 people this year and ended the year with 412 employees, up from 280 employees at the end of last year. 337 employees are based in the US, with 197 in Burlington, 27 in Portland, and 113 remote employees. We employ 75 people outside of the US, 53 of which are based in our office in Reading, UK. In 2013, we almost doubled our headcount in the Reading and Portland offices. Additionally, we hired 31 interns in 2013.
Acquia grew its customer base to more than 4,000 organizations. Some of the brands we've added as customers include Intel Corporation, Polycom, News Corp Australia, Timex, the National Association of Realtors, the X PRIZE Foundation, Columbia University, McGraw Hill Financial, Bart.gov and the Red Cross.
In 2013, Acquia continued to be focused on providing Drupal support to our customers. We reached the milestone of 100,000 support requests received and resolved during our company lifespan. In 2013 alone, we resolved almost 32,000 customer service requests, up 30 percent from 2012. We invested a lot in scaling our support team and on improving overall customer satisfaction and responsiveness. For example, we created a dedicated customer onboarding team. The result is that we spent more time with our customers to better understand their needs and help solve their Drupal questions. In 2014, we'll continue to keep customer success front and center. It's something we are very passionate about.
With regards to Acquia's software products, it was certainly our busiest year. Not only did we continue to invest heavily in Acquia Cloud and Acquia Network, we also launched some new products. Acquia Commerce Cloud was unveiled last quarter, providing a platform for creating content-rich, socially enabled shopping experiences. Acquia Cloud Site Factory was also released, providing a platform for launching and managing hundreds of websites. We unveiled Drupal Commons 3.0, our Drupal-based community platform, that was identified a Social Platform leader by Forrester Research. And we delivered the general availability release of the Mollom Content Moderation Platform, a content moderation platform built for the enterprise.
The cloud continues to prove to be a great way for organizations to save money, manage websites more efficiently and bring them to market faster. And Drupal is no exception to this trend -- in 2013, many organizations decided to standardize on Drupal in a big way, moving away from the variety of different systems -- exactly the vision we laid out in 2010.
And the proof is in the numbers: Acquia Cloud grew from 4,300 AWS instances at the end of 2012 to 7,300 AWS instances at the end of 2013. In aggregate, we're now serving more than 22 billion hits a month or 319 TB of bandwidth. I believe that makes Acquia the largest Drupal infrastructure provider in the world. Some of the Acquia Cloud achievements I'm most proud of include hosting the Grammy Awards (462 million visits) and hosting Red Nose Day during their largest fundraising event ever (£75 million/$113 million raised in one night).
Drupal community and Acquia
In 2013, we continued our long track record of giving back to the larger Drupal community.
- We sponsored 77 Drupal events in 2013, helping thousands of Drupal developers connect and collaborate together.
- Our product teams sponsored work on numerous important community modules, such as Media, Organic Groups, and more …
- The authoring experience work for Drupal 8 that we started last year landed in core this year, including WYSIWYG and in-place editing. We also sponsored work on redesigned content creation page and an improved blocks UI for Drupal 8.
- Also on Drupal 8, we sponsored work on the Web Services and Migrate in Core initiatives, donating the Migrate module authors' time.
- We helped set up numerous process improvements to help streamline Drupal 8 core development, including various "hard problems" discussions at DrupalCons to work through complex issues, releasing monthly alpha releases for user and developer feedback, and laying out the criteria for beta 1. We've also helped establish communication channels to help promote what is happening in Drupal 8: the This Week In Core series, and the Drupal 8.0 landing page.
- We helped the Drupal Association to establish Drupal.org Working Groups to provide better leadership and transparency to the Drupal website. Some of our team also helped assist on Drupal.org upgrade and security issues.
I'm particularly proud of Acquia's contributions to Drupal. It's part of our philosophy to give back, and we work hard to do our part by contributing to the Drupal community -- the reason why we exist. I'm proud of this because it is not trivial to give back as much as we do.
What I'm most proud of is that we have accomplished all of this "the open source way". Since Acquia's interests are so aligned with Drupal's, we try to raise the tide for the Drupal community at large.
At the end of the day, we're not selling Drupal or cloud hosting. We're selling what can be done with Drupal. The belief in the limitless. No matter what you dream, you can do it, and Drupal will get you there -- and Acquia is here to help you succeed. Thank you for 2013, and we're looking forward to working with more customers that are changing the world.