May 8th, 2009 by Joshua Weinberger

More on this next week over at destinationCRM.com, but SugarCRM cofounder John Roberts has resigned his post as chief executive officer of the open-source CRM pioneer, effective Thursday, May 7. SugarCRM board member Larry Augustin “stepped into the role of interim CEO at the company,” according to his blogpost dated the same day 7.

This press release is, so far, the only official statement from the company. It begins:

SugarCRM, the world’s leading provider of commercial open source customer relationship management (CRM) software, today announced that, effective today, John Roberts has resigned as the company’s Chief Executive Officer, and as a member of the Board of Directors, to pursue other opportunities. The Board of Directors has appointed Larry M. Augustin, who is currently a member of the Board of Directors, to serve as the interim Chief Executive Officer while the Board conducts a search for a new CEO.

“As the founding CEO, John Roberts has been an outstanding leader at SugarCRM and we thank him for the vision and dedication he brought to the company,” said Augustin. “It is a small circle of people who can take a company from concept to market leadership like John has at SugarCRM.”

[More after the jump.]

Sugar, as you might expect, has already updated its exec page.  Here’s the image of Augustin:

Larry Augustin's listing on SugarCRM.com

Larry Augustin's listing on SugarCRM.com

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And here’s the Google Cache version of that page, stamped May 2, 2009, with Roberts still on top:

SugarCRM cofounder (and former CEO) John Roberts, from a Google Cache version of the company's Web site

SugarCRM cofounder (and former CEO) John Roberts, from a Google Cache version of the company's Web site

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Several news outlets are reporting various aspects of the story. Here are PC World and Internetnews.com.

Matt Asay, over at CNET News — and, not incidentally, an adviser to SugarCRM — posted a story Thursday afternoon.

As Augustin notes of Roberts, “Few people have taken a company from concept to major growth the way John did at Sugar.” I agree. Roberts will be missed. Fortunately, his legacy should live on at SugarCRM, one of the pioneers of commercial open source.

Here at CRM, we tended to agree. Over the years, we’ve written about Roberts and SugarCRM quite often. In fact, Roberts was named one of the industry’s Influential Leaders by the magazine as far back as 2005, a crown he took home again in 2007. Sugar itself was named the winner of the 2008 CRM Market Leader Award for Open-Source CRM when we introduced that category last year.

We don’t yet know what sent Roberts out the door — though the corporate cliche of “pursuing other interests” has the ring of acrimony to it. It’s possible that there were conflicts regarding Sugar’s future, and friction over the timeline for its long-planned public offering. Sugar also had a spate of news releases and launches lately — [UPDATE, Friday, May 8, 4.28pET: here’s a May 5th press release on the GetSocial Twitter Module, and our own coverage (on April 30th) of the SMB-targeted Sugar Express] — and it’s possible the company (or Roberts himself) waited until the dust settled to make the change.

[UPDATE, Friday, May 8, 4.16p ET: Denis Pombriant, cofounder and principal at CRM consultancy Beagle Research Group, says via email that

Sugar has been doing well on products and customer acquisition. When there’s an abrupt change coming out of a board meeting like this—with no successor and no reasons—it strikes me that there might have been a long simmering antipathy between Roberts and one or more members. Boards tend to stick together in these situations so I am not surprised if that was the case by the outcome.]

Last August, Christopher Musico covered SugarCRM’s “CRM Acceleration” event for us, and there were some telling excerpts:

Roberts admitted he would also like to see SugarCRM become a public company. Roberts told the crowd that after four years of build-up — the company now has 165 employees and 4,000 customers — he believes “[SugarCRM] can become a public company in the next one to two years.”

Why? Because Roberts says he and the other cofounders, Clint Oram and Jacob Taylor, asked themselves one question back in 2004: Is it possible for the best ideas and engineering to win over the best sales-and-marketing strategies? “The last 20 years, the problem for smaller companies [was] that success was largely based on marketing spend,” Roberts recalled. “They had trouble getting market share over the big companies, and that really bothered me. There were days that those types of vendors were in total control, and now I reject that notion.”

Thanks to the Internet, Roberts says engineering can finally beat companies that spend most of their money on sales-and-marketing initiatives. “The infrastructure to really take on the big giants wasn’t possible until a few years ago when the Internet exploded in popularity,” he said. “For the first time in history, the environment is here in which the best technology can win.” Roberts stressed that vendors using proprietary technology are locking companies in — something that hardly benefits the customers themselves.

He added that vendors that try to place customers in a locked-in basis are not strong in engineering. “For them, the technology just had to be ‘good enough,’ ” he said. “What are companies afraid of? Earning your business year in and year out?”

Roberts said that there are five main trends shaping technology today that lead him to believe that SugarCRM’s approach — providing commercial open-source software that companies can examine and configure for their own lines of business — will pay dividends. [emphasis added] Those trends are:

  • ideas, willpower, and the Internet;
  • belief in the intelligence of crowds;
  • consumerization of IT;
  • cloud computing; and
  • global language of sharing.

Roberts told attendees that he is excited about the benefits his company could potentially draw from this cornucopia of evolution and technology. “One day, we will be a billion-dollar company,” he said, just a day after Marc Benioff, the cofounder, chairman, and CEO of Salesforce.com, announced that Salesforce.com had officially hit a billion-dollar run rate. [emphasis added]

Roberts may one day be proved correct, and SugarCRM may hit that level of success.

But if so, it’ll happen without him at the helm.

We’ll add more as it comes in.

[UPDATE, Friday, May 8, 3.51p ET: Just heard back via email from Paul Greenberg, of The 56 Group, author of CRM at the Speed of Light, CRM columnist, prolific blogger, frequent twitterer, chair of our upcoming conference in August, and an occasional speaker at SugarCon and other SugarCRM events. Here’s his take on the shift:

“John Roberts was and is a good CEO and has been a good fit for SugarCRM from the very beginning. I’ve been unequivocal in my support for him. According to reports that I’ve read, the mutual agreement to make a change – as they always seem to call it – came when the investors got antsy about why SugarCRM isn’t Salesforce.com when it comes to revenue. While I can’t speak for anything behind the scenes since I wasn’t there – what I can say is that I wonder why VCers are that antsy in the midst of a recession and in the midst of what I presume was an agreed-upon change in sales model. SugarCRM is not only a viable product, but it is a good and innovative product that, with their changes in the pricing in April, are well positioned for growth. Larry Augustin is a good guy who knows what he’s doing so I’m sure that everyone will be comfortable with what seems to be an interim succession.

“I think that my concern is rather about those nervous investors worrying about Salesforce.com-like numbers in a recession when they should be seeing a bit more long-term what SugarCRM has done to improve their model over the past few months. John is someone who will succeed wherever he ends up – as he did at SugarCRM. I have zero worries about him. Larry is a fine choice for the interim. SugarCRM is a good product and platform with good pricing so I’m sure it will weather the storm.”

Paul did have one other pressing curiosity worth noting:

“Hmmm. I wonder if Larry is going to sing in the SugarCRM rock band next year?”]

j.

[By the way — In the interests of full disclosure, it’s worth noting that (as many of you already know) two current SugarCRM employees are former CRM staffers. (Martin Schneider and Colin Beasty, also write the CRM Outsiders blog, which, strangely, has posted several times in the last two days, and made no mention of Roberts’ departure.) ]

[UPDATE, Friday, May 8, 4.22p ET: A few other tidbits from around the Web. Dana Blankenhorn, of ZDnet, had an interesting take on the state of open-source software in general, and the pressures the sector faces that may have contributed to the change at SugarCRM:

Open-source advocates, as opposed to businessmen, did once have a bone to pick with Roberts. The controversy over “badgeware” was eventually finessed through approval of the Common Public Attribution License, but for a while some were wondering whether SugarCRM was open-source at all. That is all water under the bridge now, but the question remains, how big can open source enterprise outfits get? It’s unlikely that more than a few will be able to brave the current headwinds and scale their support operations to where big customers need them to be. Will the rest of the pack then simply fade away? That’s what happens in the real world of business. There is only room for a few big businesses at the top of the mountain.

And here’s Christopher Musico’s destinationCRM.com coverage of SugarCRM’s most recent SugarCon, back in February:

SugarCon ’09: New CRM features, connectors, and learning programs were all on display this week.
SugarCon ’09: Angel.com, an interactive voice response specialist, teams with the open-source CRM pioneer to phone-enable SugarCRM accounts.]


There’s no question that John Roberts helped to put SugarCRM and the open-source CRM concept on the map. So it’s a little jarring to see him leave so abruptly without a publicly stated reason. An explanation from the company, a departing quote from him, or any indication that he plans to help find his replacement would have undoubtedly been appreciated by partners and customers. Without any of these messages, people are left to ask, “What’s going on at Sugar?” and are forced to jump to their own conclusions.

David Myron
Editorial Director
CRM magazine
Speech Technology magazine

Comment by David Myron — May 8, 2009 @ 4:55 pm

I don’t have any particular knowledge of the situation, but I do have the highest opinion of John and the company, team, community, and brand he was able to build at Sugar.

It wouldn’t be the first time that a VC-heavy board decided that they knew better than the entrepreneur(s) that founded a company. Time will tell whether that’s the case here – but I wish John all the best, and can’t help but think that Sugar will be poorer for his absence.

Comment by Ned Lilly — — May 8, 2009 @ 5:18 pm

SugarCRM’s CEO, John Robert’s exit is probably a good thing. When we started SplendidCRM, we thought that the folks at SugarCRM would be open to suggestions. Our path has always been to cater to the developers that only want a Microsoft-based solution, so we really did not see SplendidCRM as competition to SugarCRM, but more as a complement to SugarCRM. Apparently, John Roberts did not see it the same way. Instead of embracing the whole open-source mantra, he threatened us with a lawsuit. Such threats are empty because the whole point of open-source is to encourage others to build upon the platform; in fact, the accompanying license specifically encourages this.

Comment by SplendidCRM — — May 10, 2009 @ 12:26 am

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