Every week, I get asked the "Silicon Valley question". This week alone, it came up at least three times. I had a phone call with a Belgian start-up asking me for my thoughts on whether to start their company in Belgium or in Silicon Valley. This afternoon, iMinds, a Belgian research institute that promotes entrepreneurship, visited me at Acquia to talk about similar topics.
There are advantages and disadvantages to being in Silicon Valley, and we could argue them to death. Not every great technology company is based in Silicon Valley, and there are many successful entrepreneurs who aren't in the valley. However, I bet you that deep inside every one of those entrepreneurs wonders whether it wouldn't be better to be in Silicon Valley. More often than not, it actually would be better.
This morning I got a message from Bart Becks, a well-known Belgian entrepreneur and angel investor. He asked for my thoughts on an article he is writing about whether Europe could replicate the Silicon Valley phenomenon. To me, this is the more interesting "Silicon Valley" question.
Europe has no choice but to reinvent itself to become more like Silicon Valley. Entrepreneurs, not the government, will actually change the world. While the government's role is to foster entrepreneurship, clearly the government on its own isn't capable of changing Europe fast enough.
Silicon Valley is a state of mind. To recreate Silicon Valley in Europe, Europe has to adopt Silicon Valley's culture first. That culture has developed around the desire to continuously reinvent everything, including oneself. That is what keeps Silicon Valley relevant, and what Europe needs to emulate most. Once Europe has established a Silicon Valley-like culture, it can slowly mix in the other ingredients that make Silicon Valley successful: money, smart venture capitalists, better engineering talent, better creative talent, and more. But let's start with the culture.
There are other aspects of the Silicon Valley culture that all of Europe should adopt. The Silicon Valley culture encourages people from all over the world with different cultural backgrounds and diverse skills to physically come together, inspire each other, and try to accomplish something unique and game-changing.
I also believe that Europe should adopt part of the American Dream: the egalitarian belief that everyone is able to succeed through hard work, and that it is acceptable and encouraged to better oneself economically through hard work. It doesn't mean Europe needs to give up its strong communal beliefs and its desire to look out for the greater good. I hope the European financial crisis represent a watershed moment that causes Europe to rethink some of its current models.
America's social history wasn't necessarily pretty, but it has created a culture where multiculturalism, ethnic diversity and thoughtful capitalism are part of the national character. I'm worried it may take Europe a couple generations to truly embrace such a culture. Until that happens, we'll see some regional and national successes, but not the European-wide "Silicon Valley" culture that Europe needs to successfully reinvent itself.
For Acquia, 2012 was a great year. In many ways, it's been our best year.
Last year, we saw more evidence of Drupal continuing to become a growing part of the mainstream. While this trend has been apparent for some time, in 2012 we were being adopted at a faster rate by more and more enterprise businesses and government agencies. Acquia, in many ways, has risen on the tide of this acceptance. Maybe we helped build this momentum. And along the way, as we've grown, we have worked to keep the philosophy of open source as the guiding philosophy of Acquia.
The Open Source Way
The concept of being guided by the philosophy of open source, which I call the Open Source Way, is reflected in Acquia's approach to our products and services. For example, we believe it is important to provide the capability to easily transfer data from one platform or solution to another, and not be shackled to proprietary vendors' platforms. The solutions we offer, whether PaaS or SaaS, allow innovation and agility by following the open source way, eliminating lock-in. We've coined the terms OpenSaaS and OpenPaas to refer to this.
This approach has resonated with enterprise business. This is reflected in our growth metrics for 2012. Our growth was reflected in our sales bookings, which grew at a record rate. We finished the year with 15 consecutive quarters of revenue growth, surpassing even our own aggressive goals.
Acquia grew by more than 160 employees last year, and now totals about 280 staff. In addition to Acquia's base in Burlington (Boston, MA), we have 28 employees in the UK office, 14 in our new Portland office, and 82 working remotely. Success poses many challenges. Hiring so many people is difficult. On one recent Monday, we have about 20 new staff undergoing orientation in our Burlington office. We've met the challenge of hiring, though, and we've assembled a staff of talented, passionate people. They are the reason for Acquia's success.
Our core strength is our ability to accomplish the aggressive goals we set for ourselves. This ability is the result of both the collaboration and the passion the Acquia staff brings to everything we do. Acquia's culture, in which collaboration and passion are key, also reflect the Open Source Way. We bring this passion and collaboration to our customers as well, and we work hard to ensure every customer's success. In 2012, the number of customers renewing with us was up, returning that commitment and loyalty.
Landmarks and trends
As we moved through 2012, we saw the growing acceptance of cloud computing. No longer was it "should we be on the cloud", but businesses asked "how best to move to the cloud". More often, the open, elastic cloud computing offered by Acquia was the answer. Platform as a Service (PaaS) and Software as a Service (SaaS) both continue to gain further acceptance and grow, again providing that ability to react to business needs rapidly, putting a larger portion of resources into building exactly what is needed when it is needed, rather than investing in expensive infrastructure and maintenance. The success of our cloud products means that Acquia will continue to invest and expand in this area in 2013, especially as we saw the trend last year that having many microsites, often one for each product or service, is quickly becoming the rule rather than the exception.
Other landmarks in 2012 were the growing number of health/pharma businesses moving to Drupal and the cloud, joining financial services companies and government agencies also making the move. Until recently, these industries were wary of open source and cloud-based services, fearing that these solutions weren't secure or reliable enough. The reality that the cloud can also be fault-tolerant and highly available, and that security and government compliance requirements can be met with confidence, opened up the cloud to more and more enterprise businesses in 2012. Their move to the cloud in 2012 reinforced the fact that freedom of innovation and agility of open solutions are driving factors for large-scale business as well as smaller organizations.
As the public moves rapidly to mobile platforms of all kinds, including smart phones and tablets, the need to provide a great user experience on these platforms is becoming increasingly important. UX also became important in 2012 as marketing rather than IT became the driving force behind more and more websites. Acquia responded with the creation of our Spark team, which took shape as a five-person team made up of some of the world's best Drupal experts.
Also in 2012, Acquia acquired Mollom, a company I created to address the challenge of managing social spam on websites. With the tremendous growth of user-generated content as part of the social media explosion, unwanted content has become a more important issue to take on. As a SaaS tool, Mollom fits in with Acquia's existing services.
In 2012, Acquia continued to invest in the worldwide Drupal community in a number of important ways. First, we sponsored over 82 Drupal events around the world in 2012. These events brought new people into Drupal and helped existing Drupal users learn new techniques. We employ more than 110 Drupal specialists, most of whom are significant contributors to the larger community. We've sent our Drupalists to more than 30 of these events (as well as hosted sprints ourselves at Acquia) to collaborate with others in the community on important problems for Drupal.
We also grew Acquia's Office of the Chief Technical Officer, or OCTO, in 2012. OCTO includes a dedicated team who work on Drupal full-time, on projects that include:
- Drupal core architecture issues.
- Authoring experience improvements via Spark.
- Spearheading process changes that help the community work better together.
- Forming the Large Scale Drupal program, which helps pool resources of numerous enterprises to provide solutions the benefit the entire community.
This year, like 2012, will be a key year for Acquia as we continue to develop products and services built on the open source philosophy.
Life-cyle management applications will be an increasing focus for Acquia in 2013. These applications will help craft great digital experiences by providing the tools to monitor and optimize digital content.
Of course, we'll continue to nurture and expand our vision of OpenSaaS and OpenPaaS. We'll continue to make the move to PaaS even easier, providing solutions that offer all of the functionality needed, but in a simplified package. We'll accomplish this by combining PaaS, Drupal services and Application Performance Management to produce comprehensive solutions that continue to make Acquia a no brainer when it comes to choosing a PaaS provider. PaaS platforms that embrace an open ecosystem provide faster business value, as many of our customers have discovered. We are working with our growing number of partners to help them build customer solutions on our open cloud platform.
As we start down the road of 2013, we enter the year just having raised $30 million in Series E financing, the single largest financing we have done to date. As we have grown and matured during 2012, these funds will assure sustained growth and success in 2013. No matter how rapidly we grow, or how large the Drupal community becomes, Acquia will put its open source philosophy at the core of all the work it does. In the end, the people of Acquia and the Drupal community, following this philosophy, are building the future of the digital experience. The Open Source way.
For many years now, developers around the world have celebrated and promoted the numerous benefits that open source has to offer IT and business communities. Despite the flare for technology innovation and bringing new offerings to market, the real value of the open source community is the culture of the people that represent it. A shared ethos, coupled with a collaborative working model and mutual respect has delivered and will continue to deliver cutting edge software offerings that are increasingly competing with traditional proprietary vendors.
But open source has moved beyond simply being a novelty or hobby, as its potential for huge cost reductions and delivering significant savings to the bottom line have become recognized by hard pressed businesses around the globe. Implementations of open source projects can also now be found in many countries in the government sector, with the UK, US, and France being notable examples. Only recently, it was announced that Iceland was shifting over to an open source model to help make savings and reduce the deficit.
For those of us working in the community, the only surprise with these headline-grabbing government sector implementations was that they weren’t happening faster.
When making the case for open source, despite the numerous benefits on offer, it’s vital that providers demonstrate they have the same structure and ecosystems you would expect from a major proprietary software vendor. In this context, open source offerings need to be appropriately packaged up with hosting, consultancy and the support network that many IT decision-makers consider to be a necessity for implementation. That’s why I founded Acquia, which serves as a commercial vehicle for enabling Drupal open source adoption into enterprise-size organizations, offering support and service level agreements that enterprise users expect.
But the open source community has recently seen two major developments that have fundamentally changed the perception of everything we have to offer. The first being Red Hat reaching the $1 billion USD revenue mark, which provided a huge confidence boost to open source developers that their business model is profitable and can be successful. This landmark achievement will open the floodgates to more developer-focused organizations achieving unprecedented success and puts further pressure on the traditional proprietary vendors that have dominated the IT landscape for so long.
Another landmark announcement is that Microsoft has chosen to move into the open source space, a signal of just how seriously the value of community development has become. Some expected this news to be met with a negative reaction, but the open source community should celebrate the fact that a large proprietary software organization is investing in open source and extend a warm welcome to Microsoft.
With businesses looking for IT solutions that can deliver both innovation and cost savings, there has never been a more exciting time to be involved in open source. With open source businesses reaching the $1billion dollar revenue mark and leading proprietary firms opening up new subsidiaries to invest in open source, the open source community should feel that the best days are still yet to come. Once a fast growing self-contained community, open source is now recognized as a genuine alternative to proprietary software with a serious offering that will empower businesses across the globe.
2011 was another excellent year for Mollom. We ended the year having blocked 630 million spam messages, up from 352 million spam messages blocked in 2010 -- and that doesn't even count some of our largest customers like Netlog and other large social networks. And, as in 2010, we ended 2011 with a spam classification efficiency of 99.95%, meaning that only 5 in 10,000 spam messages were not caught by Mollom.
The number of active sites protected by Mollom grew from 28,000 at the end of 2010 to almost 45,000 at the end of 2011. Revenues grew by more than 50% with virtually no sales or marketing efforts.
All our revenue is invested back into the company. In 2011, we used those funds to grow our team and to fund development on an entirely new product, which may end up rebooting or repositioning Mollom altogether.
Specifically, we have been worked hard on what will be a "hosted comment moderation interface". That interface will provide an optimized moderation environment that will make it easier to moderate multiple websites, either as an individual or as part of a team of moderators. To do so we introduced a new backend with a REST-based API to replace our original XML-RPC API, we rewrote the Mollom module for Drupal, and started to change our website.
We also faced some new challenges in 2011 -- our support requests increased substantially, mostly due to the variety of sites that are now using Mollom. Based on many of these user requests, we tweaked our classifier performance, which resulted in a dramatic decrease in how often Mollom presents a CAPTCHA challenge, and in doing so, solved a number of real-world issues our clients were having with Mollom performance. Rolling out changes without impacting our up-time statistics was no small challenge -- every change we made on the backend has to be weighed against the impact it has on the effectiveness and responsiveness of Mollom on the client side.
2012 may also bring us some additional competition -- some of the world's best venture capitalists invested $8 million in a company called Impermium. Investments like this validate our belief that the social web needs good anti-spam filtering solutions. Impermium is still building its first product but will definitely be a company to watch.
Regardless of what happens in the social web spam market, we'll be busy in 2012. The first half of 2012, you'll notice some new things popping up on Mollom. Our primary goal for 2012 will be to make the "hosted comment moderation interface" available commercially and to refresh our website. Along with launching a new product, we plan to ramp up our sales and marketing efforts. It is time to do so now the Mollom technology has matured after years of intensive investment. We've also got additional work to do to continue to improve accuracy, maintain our high uptime statistics, and work with other open source developers on improvements to Mollom clients for non-Drupal systems.
In short, 2011 was a great year for Mollom. We're happy doing what we do, and we feel that we're helping to make the web a slightly better place. We wouldn't have made it this far without you -- our customers, users and friends. Without you, we wouldn't be a company at all. Thank you for 2011! We're looking forward to sharing a great 2012 with you.
While 2011 was only Acquia's third full year in business (i.e. revenue-bearing year), 2011 was absolutely jam-packed. Starting with executing on our product strategy and vision, to a trip to the Caribbean for the entire company, to being selected by Forbes magazine as one of America's 100 most promising companies, 2011 was full of amazing successes, both for Drupal and for Acquia.
In this post, I'll provide some more detail on what Acquia accomplished in 2011; I'll discuss our business as a whole, our products, our relation with the Drupal community and my role within the company. I have a separate blog post to reflect on how Drupal fared in 2011.
Acquia business retrospective
In 2011 we saw record bookings and continued momentum. We finished the year with 11 consecutive quarters of revenue growth and beating our plan.
Acquia, along with our partners, had more and more engagements with big and well-known organizations, like Paypal, Twitter, Al Jazeera, World Economic Forum, the U.S. House of Representatives, and many more.
Most importantly, customer satisfaction and renewals continued to climb, and are best in class compared to other companies in our industry. Rapid customer growth has resulted in surging ticket counts, now numbering in thousands each month. Sustaining high levels of satisfaction and servicing these tickets has proven to be challenging at times. As a result, we significantly evolved our customer on-boarding process, customer communication, and account management, and we've continued to invest in hiring many great people.
Because things went so well, we decided to accelerate sales and marketing and raised more money mid-2011. We raised $15 million in a fourth round of funding. Our previous investors affirmed their confidence by participating in this round, and they were joined by Tenaya Capital.
In January 2011, we also launched Acquia Europe and overachieved our goals there. We now have about 20 people in Europe.
We ended up growing the company from 80 full-time employees to 175, and growing our bookings by 230%. Mid-way through 2011, our existing office space simply couldn't contain us any longer, so we burst out at the end of August and moved to a bigger 35,000 square feet (3,250 square meter) office where we have had a lot of fun.
Despite our success in growing our staff, the availability of quality candidates continues to be the number one challenge for our continued growth. We're trying to help change that. Together with our partners, we delivered 200 training classes worldwide and we've launched an internal training program called Acquia U, to provide immersive training to a select group of new entry level employees (recent college graduates and career changers).
We've also grown Acquia through the acquisition of companies started by talented people within the Drupal community. This year, Acquia acquired two Drupal companies: security specialist Growing Venture Solutions and migration expert Cyrve. We wanted to do these acquisitions because they create a win-win-win situation for the Drupal community, our partners, and our customers.
Acquia product retrospective
On the product side, Acquia achieved everything in line with the product strategy and vision that I outlined in early 2011. If you're not already familiar with Acquia's products, it's worth reading that post first for context.
We rebooted the Acquia Network. We added two of our own services to the Acquia Network with the new Insight and SEO Grader tools, which provides active site testing for security, performance, and search engine optimization best practices for all of your sites.
In addition to adding our own services, we also added complimentary services and tools from our partners, including New Relic (performance monitoring), Drupalize.me (over 200 hours of Drupal video training from Lullabot), Blitz.io (load testing), Utest (crowd sourced manual testing), and Mobify (mobile delivery of Drupal sites). Lastly we re-built the Acquia Library, our knowledge base on everything Drupal and Acquia. Everything combined, we made massive improvements to the Acquia Network.
We also launched Dev Cloud, a single-server version of Managed Cloud. We now deliver over 4 billion page views a month and 70 terrabytes of data from our Drupal-tuned cloud platform. Our operations team now manages over 2,500 servers through Amazon EC2, up from 500 servers in 2011 and 100 at the end of 2010.
A major low-light was the famous Amazon outage in April 2011. Even though only two enterprise customers were affected, out of a couple hundred at that time, we made fairly significant changes to our roadmap to limit future outages. We've since added features to Acquia Cloud like multi-datacenter failover (both multi-region and multi-availability zone across continents) to increase the service level agreement (SLA) we provide to levels beyond what Amazon provides directly.
2011 was also the year that we commercially launched Drupal Gardens at DrupalCon Chicago after spending considerable design and engineering time on the new Views 3 user interface. Since then, Drupal Gardens has added many requested features and now is hosting over 75,000 Drupal 7 sites including some really large enterprise customers, though we can't talk about them quite yet.
We also did a lot of other things; from relaunching Acquia.com on Drupal 7, to adding support for Drupal 7 and Drupal 8 to Acquia Dev Desktop, to improving both Acquia Commons and COD.
All in all, 2011 was a very productive year for our engineers and product managers.
Community and Acquia
In everything we do, we try to raise the tide for the Drupal community at large. In 2011, we continued our long track record of giving back to the larger Drupal community.
Roughly 30% of our engineering time flows back to the Drupal community and resulted in numerous improvements, including core bug fixes, contributed module porting, and usability improvements to modules such as Date, Media, and Views. We participated in the University of Minnesota usability testing, in addition to performing more than 20 internal usability tests on Drupal and Drupal Gardens whose results have been fed into the community.
In total, Acquia sponsored over 58 community events in the last 3 months of 2011 alone, and covered travel and accommodation costs for dozens of Acquians to contribute in person to the success of these events around the world. We also took the lead in organizing and running several of them.
Our marketing team contributed great sales and marketing collateral to the Drupal Association (creative commons-licensed), to help others in the community to promote and grow Drupal.
In addition, we also had some struggles …
Acquia is obviously interested in helping to make Drupal the best it can possibly be and we're proud of major contributions we make to the Drupal project. For example, due to concerns about the lack of Drupal marketing, we launched the Drupal Showcase site as a resource to enable the community to help market Drupal. And since the adoption and growth of Drupal is vitally important, I, supported by the rest of the Acquia leadership team, made a decision to fund a major usability initiative during Drupal 7's development.
However, some of these community investment decisions have backfired on us, and caused community backlash and criticism. Sometimes over smaller things that are easily corrected, as in the case of the Drupal Showcase (moving it from an acquia.com sub-domain and adding a field for attribution), and other times because of questions and concerns about Acquia's influence, as in the case of Drupal 7 usability.
Acquia is in a position where not only can we give back, we want to give back. And furthermore, I feel that corporate sponsorship (not just from Acquia) is important to Drupal's continued growth and success. But when major investments into Drupal like these backfire, it definitely gives us pause in continuing to make these kinds of large investments. Nevertheless, I'd love to contribute more and bigger changes to Drupal, particularly Drupal core, in a constructive and healthy way. As Acquia, we'll continue to refine how we work with the community to find the right balance. As a community, we need to figure out how to better embrace corporate sponsorship. Something to brainstorm about together in this new year.
On a more personal note ...
As Acquia and the Drupal community have grown, so have the demands on my time. Acquia's growing at a phenomenal rate; we're creating a product portfolio with multiple product lines; the Drupal Association is undergoing major changes; Drupal 8 development is underway; I'm traveling around the world evangelizing Drupal 7; and more. To meet all of these demands, I needed to create more time. To do so, I created Acquia's Office of the CTO (OCTO).
I made some amazing hires to be part of OCTO. It is kind of a dream team to work with on a daily basis. Together, we've been very focused on accelerating Drupal growth (enabling distributions on drupal.org, streamlining the contribution process), Drupal 8 (launching initiatives) and Acquia (driving the acquisition of GVS and Cyrve, creating recommendations on Drupal and mobile, researching new product ideas, and working with some of the largest Drupal users in the world).
This was definitely a highlight for me, as it has allowed much more velocity around these important aspects of what I do. We hope to extend OCTO in 2012 with additional people.
In summary …
In general, I'm very optimistic about Acquia's future in 2012. The decisions we've made early in the company's life, despite skepticism by some, have proven to be correct. Enterprises want commercial-grade support and cloud computing. Open Source, Software as a Service (SaaS) and Platform as a Services (PaaS) continues to be on the rise. More than ever, I'm convinced that Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) will become the de-facto standard for building and hosting web applications, especially in combination with Open Source web applications. The question is not if it will happen, but when and how fast. When it happens, Acquia will be in a great spot.
We've always been very transparent about our goals and roadmap (Acquia 2009 roadmap, Acquia 2011 product strategy), so in the next month or two, I'll provide more information on Acquia's goals for 2012 and beyond.
Of course, none of this success would be possible without the support of our customers, partners, the Drupal community, and our many friends. Special thanks to all those who helped organize my many visits to India, Brazil, Australia, France, etc. Thank you for your support in 2011, and I look forward to working with you to find out what 2012 will bring!