Today, Summit Partners announced a €180M investment in Odoo. They acquired shares that belonged to historical investors, like XAnge.
While I am sad that Cyril (XAnge) is leaving the board, I am more than happy to continue the Odoo story with Antony & Han from Summit. They have been a great support to Odoo, since joining the board 18 months ago.
This €180M investment from Summit Partners has been made at an undisclosed, unicorn-sized company valuation. Let me say it again: "One Hundred and Eighty Million EUROS". This is a lot of money. It's great for our ego... but it won't impact the company, or the community, as there will be no cash injected in the company.
Why didn't we do a capital increase? Mostly because we don't need to: Odoo is profitable, and our cash flow allows us to sustain a growth of 60% per year. Also, I intend to keep the majority of the shares to guarantee our long-term commitment to the project and to the open source community.
After all, we wouldn’t be here without our community, and our open source business model.
Open Source: A Key Competitive Advantage
Over the course of the last 15 years, open source software has been a catalyst for growth and change in the IT industry. Companies like Red Hat, MySQL, Docker, or Automattic have had a massive impact on the market, reshaping the way people consume and produce software.
But Odoo is different. Odoo is not a software targeting developers or system administrators. Our users are accountants, cashiers, logisticians, salesmen, purchase managers, marketing officers, inventory workers, project managers, etc.
Our users don't care about the license of the software; for them, open source is not a value. Yet, our open source model proved to be key in disrupting the market owned by giants, like Microsoft, Oracle, and SAP.
There are plenty of advantages to working on an open source product, starting with the fact that we simply love open source, and it feels great to contribute to something useful. From a business point of view, the main advantages we get from our open source model are:
1. Low customer acquisition cost
2. Fast development model (resulting in a better product)
Let's take a closer look at these two competitive advantages.
Low Customer Acquisition Cost
Odoo Community has 7 million users. For a complex product in a B2B market, that is HUGE. By comparison, Oracle only has 18,000 customers on NetSuite.
Those millions of happy Odoo users create the best marketing channel you can possibly get: word of mouth.
That translates to over 100k leads per month (with limited marketing investment), and a network of 4,000 partners all around the world. We wouldn't have been able to build this without our amazing open source community.
Since the cost of marketing in our industry is often above 30% of the revenues, having that many "free quality leads" per month is a major competitive advantage. This allows us to be extremely efficient with our development model, which brings us to our next point.
A Fast Development Model
Odoo is the one platform you will ever need to manage all your business activities. While the scope of our apps is massive, we want our software to be affordable and easy-to-use.
That is a huge technical challenge that no other company has been able to figure out. To put things in perspective, the equipment rate of integrated management software for SMEs is only 18%, despite SAP & Microsoft investing billions to reach this market.
On the market, you can find complete software (SAP, Netsuite, Dynamics), but they are too complex. You can also find simple software (Trello, Mailchimp, Xero, Shopify), but they only cover one need. Nobody succeeded in doing both: creating complete software that was simple and affordable.
So, to crack this challenge in less than two decades, we had to evolve fast. Very fast.
Being open source allowed us to work with communities all around the world. We get tons of feedback and contributions every month, allowing us to evolve even faster. And, in addition to our dozens of official applications, the community built 25,000 more apps, making Odoo the biggest enterprise apps store in the world!
This transaction is nothing more than a strong proof of confidence from the market. Nothing changes for us. Our focus remains on developing a great product, and making it accessible to a large number of companies. That's what matters.
Together, with the community, we built amazing software. But there are still a lot of things we can do to help employees do more, in less time.
This is only the beginning...