Friday, November 14, 2008

WSO2 adjusting to the times

As you have probably seen in various blog posts, every VC is advising their companies to cut back, tighten belts and overall get ready for a rough ride in the immediate future. Smart companies do this pro-actively and decisively, not when its too late.

Paul and I started WSO2 more than 3 years ago. We've seen amazing growth - more than doubling revenue each year, seeing amazing technology adoption, seeing us becoming more and more influential in the industry and growing the company from the original small team to nearly 70 people globally. The net result has been the rock solid revenue growth and the quality and quantity of our customers, ranging from Fortune 100s to SMBs in far flung places in the world.

Despite all the positives, we want to be conservative and ensure that we are around for the long run. While we fully expect to be able to at least double revenue next year too, we can't accurately predict how customer spending may decrease. So we want to be cautious to ensure that no matter what happens we're here for the long run.

In fact, I fully expect that the downturn will be a positive thing for us as customers look for greater value in whatever they're paying for. Is it justifiable to pay $25-50k for an ESB license when you can download ours free and maybe pay us $8k for commercial support, better software and greater productivity?? We're seeing more and more customers come to us with that mindset and commit really fast.

So how are we cutting costs? First thing we've done is reduced all the stuff that we really didn't need to do and were doing because "that's the way things are done." No more of that nonsense. Secondly, we've had to let go of a few people in order to bring the costs down to the level that is right for us.

After having built the company up and after having personally selected every single member of our family, its very difficult to make cuts that involve people. I know we would not be here today if not for the totally incredible team we have built. Despite the tough decision, I know we're doing the right thing looking at the larger picture.

To the people who are leaving us: my personal gratitude for your contribution is unblemished and will never be forgotten.

After the overall operational cost reductions and the few headcount reductions, we feel we're in a rock solid financial position. Overall, WSO2 is incredibly well poised to dominate the markets we play in with our strong team and global structure further favoring our ability to weather the storm.


Jeff Haynie said...

these decisions are always hard. however, they're sometimes necessary and i think the one's that are prudent in tough times are most likely to survive. best of luck through this transition, you guys will be better for it.

fcohen said...

Hi Sanjiva:

Telling someone that they are no longer part of the team is the part of managing a business that I like least. It opens up a package of emotions on top of a difficult business decision. My thoughts are with you and WS02.

It seems to me that WS02 is on the path to success. Your ESB and application development technology is a great alternative to software and services that are perceived to be expense, don't deliver needed new features, or don't deliver satisfactory service/support.

-Frank Cohen

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