The following is a guest post from Sramana Mitra, the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond. This interview originally appeared on her blog SramanaMitra.com.
Miguel Valdés-Faura is the CEO and co-founder of BonitaSoft, a software company with the mission of democratizing the Business Process Management. Miguel founded the Bonita project in 2001, with the vision that BPM would become mainstream in every company’s IT portfolio. Prior to Bonitasoft, Miguel led R&D, pre-sales and support for the BPM division of Bull Information Systems, a major European systems provider. Miguel holds a degree in computer science from the URV and a master’s degree from Nancy and Metz universities.
Where are you from? Where were you raised? What is the story of BonitaSoft?
I am from Barcelona, Spain. Most of the story behind the company and the open source software that we push at BonitaSoft was initially built in France. Everything started in 2001 when I was moving from Barcelona to northern France. I was just finishing my degree in computer science, and I was working in a research center in Europe that is pretty well respected. I was working with people who were very specialized in building collaboration solutions.
As we worked through our various research efforts, we talked about collaboration, which inevitably leads to discussions about workflow and process. That was the origin of our technology as well as the company. In 2001 I joined the research lab, and a few years later it became an open source project called Bonita as a workflow and business process management solution. Between 2001 and 2003, I pushed hard on our management to promote the technology.
Did you come up with the technology while working for the lab?
Yes. My job there was to build this new BPM technology to be more collaborative. I was pushing hard for open source capabilities. I told them if they wanted to get huge visibility for all the work their PhDs had been doing for the past year that open source was the way to go. My day-to-day job was to get the open source community to start contributing to this project. I was the driver behind the first version of this technology called Bonita. I was also the guy that was coding this version of the software.
Did the lab give you resources to take this technology further?
Everyone thought the open source concept was a good idea. We were seeing the beginning of the open source enterprise software movement in 2001. That was just after the big success of Linux. Other people were working on application servers for business intelligence, databases, content management (including companies and projects such as well as groups like Red Hat and MySQL). They were all building enterprise software in the open source community. It seemed like a good idea at that time to push business process management software into the open source space because there was not really anyone else doing it there.
At that time was Bonita owned by the research lab?
Yes. Bonita was software that was owned by the lab, but it was using an open source licensing model. We would allow it to be embedded in commercial solutions as well.
After two years, I thought it was the right time to transfer the technology to industry. When you are working in a research facility, sometimes you can get a bit far away from industry requirements. We had different companies interested in implementing Bonita into real projects.
One of those companies was a French integrator, Bull, that was a hardware manufacturer and services company. They had specialized in implementing open source solutions into customers. I decided to move to Bull, and the lab was very happy because transferring technology to industry was part of their mission. I stayed at Bull from 2003 to 2009 until I founded BonitaSoft.
During my time at Bull, I learned everything about this market. Initially I was the head of the open source BPM department and later I was head of the BPM division. I ultimately took responsibility of the entire BPM business. During this time I kept a close eye on what other people were doing in the BPM space. I watched Oracle, IBM, and Tibco, along with others. I am thankful to Bull because they taught me how to do everything that I have put into practice today.
You essentially worked in the lab to build Bonita and then followed the software to a position in Bull. After that you ended up founding a new company, BonitaSoft, based on the original work you started at the research lab and had continued through your time at Bull.
Exactly. I moved from the lab to Bull, and that was easy because it was an open source technology. At that time some of the IP was owned by Bull and some was owned by the research lab, but the core pieces were open source.
How did you make the transition from Bull to BonitaSoft?
My role at Bull was not only to deploy Bonita. As the director of the BPM division I was there to help Bull services worldwide. At times we implemented solutions that were competitors of Bonita. We have had projects in South America and in the U.S. with Oracle and other systems. I helped with those implementations. We pushed Bonita, but the customer ultimately wanted a different solution. It was important that I was, first and foremost, and expert in the BMP space regardless of the technology used.
What happened in 2009?
To be honest, I was thinking about creating a company out of Bonita out of the very beginning. I saw a good opportunity. I am from the generation that saw MySQL and other open source projects turn into companies. In 2009 I decided that the community was there, and the right team was in place. The other co-founders of BonitaSoft were working with my at Bull. We had the technology, we had the team, and we had knowledge of our competitors.
In early 2008 I met the CEO of Talend. They are a major provider of data transformation technologies and they have 600 employees. They are second to Red Hat in terms of open source vendors. He was a big believer in BonitaSoft and he helped us raise money to create BonitaSoft.
Can you talk about the structure of creating BonitaSoft? It was open source technology that various people had contributed to. What was the premise of what you were going to do on top of that technology to justify a new company?
The timing was right to leave Bull. They were not a software company. We did not have to pay anything to Bull, and they are not part of BonitaSoft aside from being one of our partners. What we pitched in terms of building the company was to take the technology forward. In 2009 our technology was primarily oriented towards developers. It was mostly about a framework to build BPM applications at a low level. There were no GUIs. Our pitch was to provide an open source solution that was complete with a GUI, not just a framework. We wanted to bring BPM to the masses.
Was the technology you were selling marketed as open source or as regular software built on an open source framework?
We sell subscriptions. In our market most of our competitors are selling perpetual licenses. Those subscriptions include maintenance on the software as well as additional features that are not open source. At the end of the day, when you purchase the subscription you get access to additional capabilities that are not part of the open source bundle. You also get support and maintenance included in the annual subscription.
We built new capabilities for the open source edition. We also spent time building exclusive capabilities. We look at what Forrester and Gartner say are the required modules of a BPM solution to be considered complete. Gartner defines 10 major modules, and in 2009 Bonita only met requirements for the engine and the framework. At BonitaSoft we decided that everything that could make it a true BPM solution in the eyes of the analysts was a no-brainer, and we developed those and made it part of the core open source. What we add on top of those 10 major components are what you can get access to via the subscription.
As you were coming out of Bull and setting BonitaSoft up as a separate company, how did you handle branding? Was BonitaSoft the original brand, or was the brand originally Bonita?
Bonita was the name of the project. Nobody had the Bonita trademark in the first eight years, so this brand is owned by BonitaSoft. The guys behind the Bonita project are now behind the company as well. That can be tricky in the open source community, but I think that we have messaged properly. We have positioned ourselves as adding value on top of the project with the same personnel.
How is the company financed?
We have venture capital that joined from the very beginning. Bootstrapping was not a good option for us. BPM is a mature market, and we were just bringing innovation to this market. We built a global business. In the past four years we had raised $30 million with French venture capital firms. Our first round in 2009 was for $6 million. Since then we have raised additional funds.
When you went out to raise $6 million from French venture capitalist you had experience with the team. What about customers? Did you have a set of customers ready to buy your solution?
That is one of the difficult aspects of having an open source company. We had deployed 40 major implementations during out time at Bull. We could hope that some of them would become BonitaSoft customers. However, we built our pitch on the promise of the technology and our knowledge of the market. We referenced those 40 customers as validation, but not paying customers. We positioned ourselves as capable of changing the market globally. We were able to get good traction with investors based on the community that we were able to show and we had a solid business plan with clear monetization.
How has your business plan played out in the real marketplace?
Our first year was focused on building out key features. We added a marketing team. They did a lot of social and viral marketing. We got a lot of people coming to our site to download the software. We were able to start engaging with a lot of people because they were downloading our software.
You said you were starting with a community of 100,000 people and did further viral marketing. Did you have a sense as to what part of that community was going to monetize?
We made it very clear up front that the individuals who were going to manage the community would be different than the group of people that were monetizing for BonitaSoft. We created a community management team dedicated to support the open source community. That remains their role today.
We know what kind of people will monetize. We see a lot of freelancers, system integrators, and people who work in large organizations. We saw all of those people in the community. Since the software was available for free without contact info required. When you needed resources for the software, you could subscribe to that information from the corporate site. The sales funnel starts when someone fills out a form requesting more details.
What type of sales infrastructure do you need for a global sales process?
That is one of the most difficult aspects of scaling an open source company. We have sales people dedicated to geographies. We started in Europe, then we moved to the US and South America. We also have priority two and three geographies and we have dedicated teams for those geographies.
China is a new geography for us. When we go there the first question we ask is if we have enough open source adoptions to look at that region. Then we look to see if the number of leads is sustainable. We hire a young sales guy, usually an inside sales guy. Most of our sales are done remotely so we typically do not meet our customers. We have a very defined process when it comes to opening a geography.
We use GoToMeeting or WebEx to do demos of the software. We start with young guys and then as we scale we start to add more senior people. We have found that if you try to hire experienced people from Oracle or other places they are not going to be successful. They don’t know how to sell small and grow. They target large deals up front and that is hard to do without a lot of reference accounts in similar industries. Regions need to be established before we can go after accounts like that. Our approach is to hire people and let them grow with us.
What is the extent of your U.S. operations? To date, all of your VC money has come from French venture capitalists.
We have taken funds from four different French VC firms. In our last round we did have some discussions with some of the U.S. VC firms, but for us the timing was still better to use French VCs.
Why are you living in San Francisco? What is the U.S. strategy and how are you steering that?
When I pitched BonitaSoft in 2009, part of my pitch was the need to come to the U.S. as soon as possible. It is difficult to build a global company from France. First adoption can happen from anywhere, but at some point you need to establish a presence in the U.S. to have the right technical partners. In terms of the commitment, I felt that it was best for me to move to the U.S. I want to be attributed to being a U.S. software company. That has had a good impact in Europe. It has increased our credibility in Europe and in Latin America.
The U.S. market is a huge market. We felt that we could start selling remotely to the U.S. from France but that we would have better luck with a solid establishment here. We feel that our biggest growth will be from the U.S. We now have a dedicated sales and marketing team here in the U.S. and it is already our second-largest country in terms of sales. We expect a lot more here as well.
How many people do you have in San Francisco versus France?
In France we have our headquarters and engineering based in one location, and our sales and marketing based in Paris. We have 70 people in our headquarters and 30 people in Paris. We have 25 people in the US, most of them in San Francisco. We also have some consultants that are based around the country. In total there are 125 people.
What is your impression of the startup environment in France right now?
It is better than you would expect it to be if you read the news. In the US people are saying that everything is terrible in France. In France I have personally met the Minister of Innovation who takes time to meet with entrepreneurs. I can tell you that for me France is still one of the top two countries in Europe for innovation along with Germany and the UK. No doubt about that.
The Government is still helping a lot. They are helping people create companies and innovate. There has been some news in the past 6 to 8 months that the Government has made decisions that could impact innovation in France. I am happy because I am seeing signs from the Government that they are changing their positions. They are spending time with investors and entrepreneurs. It is not as good for companies as it was four years ago because of the difficulty with the economy, but I am seeing positive signs. There are some good moves being made to allow investors from around the world to invest in French startups.
How many French technology companies are getting some level of traction?
I am seeing a lot of them, such as Neolane. The investor in Neolane is also an investor in BonitaSoft. I am seeing different people and the good thing is I am seeing a lot of young people building companies around big data. I am seeing a lot of know how in France. Some of them are coming to the US to create companies here.
That has been the case for a long time. There is a very significant French entrepreneurial tradition. I know many of them quite well. I think that phenomena has been very prevalent in the Valley.
That is true. We cannot compare the French economy with the US economy. It is difficult to become the worldwide leader in the software industry if you are outside of the US. If you look at the case of BonitaSoft, it may be hard to believe that there is a software company that got 30 million dollars from French investors. Even if I am not French by birth, I have spent most of my life outside of Spain. I work with investors and the Government to make this investment pattern a habit. I am happy that the Government is working with people like me. It is one of the top three countries in Europe to curate innovation.
Sramana: Thank you for your time and willingness to share your story. Best of luck as you press forward.