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 <firstname.lastname@example.org> 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.
Happy 13th birthday Drupal! It’s hard to believe so much has happened with Drupal when it really just started as a little hobby project. I'm super proud of what we accomplished. After all these years, it continues to be a passion and labor of love to grow, maintain and sustain the larger community.
A birthday presents us with a great time to look back and reflect. Though there are many things we could reflect on, I'd like to use this post to look at the bigger picture and share my perspective on the market. This means this blog post mainly offers a business perspective rather than a technical perspective.
From web to digital
Drupal was grown out of my own interest in the web. Today, it is a critical component of many organizations’ operations. For most organizations, having an online presence -- like a website or mobile application -- is an essential part of running their business, and it only continues to grow in importance. The rise of mobile and social media means we no longer talk about having a “website” or having a “web application;” instead we talk about the totality of the “digital experience.” Providing visitors or customers with a great digital experience is no longer a nice-to-have; it is a make-or-break point.
From content to experiences
For Acquia, creating high quality content and driving traffic to our site was the #1 way to generate new leads in 2013. This is true for the vast majority of organizations; high-quality, valuable content remains important. Five years ago, this meant if you had a business, and you didn't have a blog, it was time to start one. Today, it involves so much more than creating pages or cranking out new sites; you create and manage your content, and find ways to promote and reuse it across multiple channels to generate awareness and reach more people. You track and measure all of your efforts and try to optimize the content for different users. Content is gold, but delivering the right content to the right user at the right moment in the right format is platinum. It's no longer just about publishing content; it’s about managing the entire experience of a site visitor or user over time.
From mobile to context
Just like in the last half decade or so, "mobile" has completely redefined the internet, in the next half decade or so, "contextualization" will redefine it once again. The next big challenge, and opportunity, for Drupal, is figuring out how to make it a platform not just for content creators to deliver essentially the same content to users in their preferred language on their preferred device, but a platform for content creators to deliver the most appropriate content to each individual user.
Digital experience platform
As the Drupal community, we need to stop thinking of Drupal as a "content management platform" and start looking at it as a "digital experience platform" used to create ideal visitor experiences. This means publishing content that is easily accessible on multiple devices, and ensuring the site can be easily integrated with other tools, such as social media sites and customer relationship, e-mail and campaign management systems. We've been doing this for many years but it doesn't hurt to recognize the trend, double down on it and evolve our vocabulary.
You may have heard me talk about Web Experience Management (WEM) in the past, but we should move away from that term. The fact is that “web” doesn’t capture all the possible touch-points for Drupal, be it a website, mobile device, game console, wearable device, or something else.
Creating better interfaces to develop structured content, and delivering that content to a variety of devices and channels, is an important part of creating ideal customer experiences. Another important part is the ability to personalize what content to present to a user. Though it will be interesting to see how CMSs facilitate this direction, it seems imperative that CMSs deliver tools to empower content creators to not only create great content, but to also help them make decisions about what content to deliver to whom, when and in what format. Over time, these content decisions will become more data-driven and automated, and less opinion-based and manual.
Few CMSs are actually growing in market share; our industry will continue to consolidate further in 2014. The fact most CMSs become less and less relevant isn’t a surprise since CMSs are becoming more complicated. The CMSs that will survive are those that (1) are able to keep up with the speed of the Internet and (2) offer the least amount of friction to adopt. Open source CMSs that foster a healthy community are well positioned to win in the long run. Drupal's biggest challenge going forward is to create a user experience that gets out of a user's way and lets them do their business regardless of how simple or complex their task is. This is why I'm so passionate about in-place editing, and usability in general, but also creating a great developer experience. It's important that we continue to focus on those goals in 2014 and beyond.
For a long time, there has been somewhat of a misconception about Drupal’s viability for the largest, most complex deployments. Analysts, technology decision makers and proprietary competitors such as Sitecore and Adobe will claim that Drupal is great for simple sites but lacks the scale and depth of features needed for enterprise deployments. They're wrong! They only have to look at how GE, White House, MSNBC and many others are using Drupal. Drupal 8 is in a great position to take this "digital experience management" to the next level and to further cement Drupal's reputation; from the mobile improvements, to the authoring experience improvements, to APIs, to getting even better at structured content, Drupal 8 is set up for growth.
We've come a long way in the past 13 years. I'm immensely proud of our community for making this awesome contribution to the betterment of the internet for everyone. But we also have a lot of work ahead as the internet, just like the drop, is always moving. Drupal 8 will continue to help democratize web publishing and digital experience management. This is exciting since we can bring these tools to the masses (including individuals, small and large organizations) rather than only being available to those that can afford the million dollar license fees sold by proprietary software vendors. Happy birthday, Drupal!