I want to build a one billion dollar company. [7/22/11]
NOTE: This is the English translation of an article that appeared in Belgium's "De Tijd" publication on July 22, 2011. To read the original article, please click here.
It started eleven years ago in an Antwerp studentenkot. Today Dries Buytaert, Belgium's most primising Internet entrepreneur, has built one of the most promising startups in the U.S.. His company, Acquia, which provides services around free software Drupal, sales quadrupled last year. And the hunger was not appeased. “I want to build one billion company,” said Buytaert.
Buytaert's story bears some resemblance to that of "The Social Network," the film about contemporary generation and Facebook founder Mark Zuckerberg. Smaller, yes. But still. Similar to "Zuck," Buytaert (32) created Drupal eleven years ago in his dorm room as a way to communicate with his fellow students.
Drupal would remain a hobby for 7.5 years. The software is open source and free. In late 2007, the hobby became a profession. Aided by U.S. venture capitalists in Boston Buytaert founded Acquia, a company that offers services around Drupal. Barely three years later the Oerend hard with Acquia. Dries did not reveal much about Acquia revenues, earnings, valuation and stock structures. "But we grow. Fast. Our turnover has quadrupled last year," said Buytaert during a pit stop in his hometown.
To give you an idea: Acquia announced a new round of funding – already the fourth – this week Acquia, $15 million total (10.42 million euros). Since the last round in November last year, the workforce doubled from 70 to 140 people. The management is now owned by an American CEO, Thomas Erickson. Buytaert is Chief Technology Officer at Acquia and Project Lead at Drupal.
Since January, Acquia has also opened its first European office in Oxford, and the search has begun for a sales manager in the UK, around whom a team will be built. “Whether we open an office in Belgium? It depends on the manager.”
Why did you do decide to pick up fresh money?
Dries Buytaert: “We needed the new round of funding. We are growing organically, but we want to grow faster, with a view to expansion in Europe. Purely on gut feeling, we believe our sales in Europe over two years could be as large as in the U.S.. In Asia, the potential may be greater, but it's a great start to get from the U.S. to Europe. ”
“We also want to use the funding to acquire smaller companies for two reasons: interesting products and bring in talent. We are rapidly growing and the conditions are favorable, it is always relatively inexpensive to recruit additional capital.”
With the additional capital round comes a new venture capitalist on board. So this dilutes your share considerably.
Buytaert: “I would rather own a part of a global player than be a one hundred percent shareholder of a small company. Here, I might be different than many other Belgian business leaders. Many entrepreneurs want to be in control of all cost in their start-ups so that they avoid any potential destruction to their businesses by inexperienced people. I totally feel like I control my company. ”
Venture capitalists are aiming at an exit through a sale or IPO of the company.
Buytaert: “That’s still a long way away. The continued development of Acquia is so planned out that any IPO is possible, but in the next two years we do not expect any concrete talks to start negotiations. ”
How do you actually build a commercial business around free software?
Buytaert: “Acquia gets most of its revenue from maintenance, hosting and consultancy. Our main service is intensive technical support to large companies. The Arab news network Al-Jazeera for example works with Drupal, and experienced a tenfold increase in online traffic during the Egyptian revolution. We have helped Al-Jazeera manage site traffic with a dynamic expansion of its site. Once we had the site transferred to our infrastructure, we configured, in a few extra minutes, servers that can support that extra peak of a few million unique visitors. A normal hosting company would take days or weeks time to all those extra servers to each other. Acquia has automated that process.”
“Our technology is comparable to that of Facebook, a huge site with huge traffic, where dozens of pieces of software and servers in a streamlined way to work together. Very few people have practical experience of how it really works on a larger scale. ”
“From a business perspective, Web sites have a great advantage. They are all unique, so there is always a small particle where customization is involved. Ideal for a commercial ecosystem around free software to build. ”
Do you lose a lot of money by way of any external web development shops that offer Drupal services?
Buytaert: “I like to compare open source with the assembly of a car. We give all the parts for free. People can park their cars, the site in our case, by a professional mechanic in a garage to assemble. Acquia does not build websites. We leave that to one of the hundreds of Drupal companies in the world. But every six months, a car is checked and can get upgrades. Companies with a Drupal site can also outsource their maintenance to one of the many small Drupal shops. Typically much larger U.S. companies prefer to work with a counterpart that has sufficient capacity and can provide guarantees. And that’s where Acquia comes into play."
How big can Acquia grow?
Buytaert: “At the start, the intention was to grow Acquia Drupal to be what the open source Red Hat Linux operating system is: a company whose business model built around maintenance. Meanwhile, we have learned to use Drupal in many more ways to earn money, including through platform and software services."
I never started with Drupal to make bucks deal with creating. I still have nothing to deserve. I get a reward, I keep my shares. But now I’m here anyway, I might as well go for it. We want to make Acquia a 'billion dollar company.' I think that a company with a turnover of more than one billion U.S. dollars is possible. ”
Open source is the key to your business. Is it the future for the industry?
Buytaert: “The old, closed alternatives are doomed. It’s now too late to adjust their business model. They can choose their true tomorrow to release source code, but they have no community of developers gathered around. Drupal has an advantage in that area after being developed eleven years ago. They never get that anymore. ”
“Drupal continues to grow and is becoming increasingly popular with external developers in large companies. The technology they use today is five to ten years old. These companies want to replace old technology with our innovative and dynamic system. ”
“Acquia is not so easy to copy. We can have a worldwide community of 10,000 Drupal developers that continually innovates and grows. Our biggest competitors with a closed model to work have a team of 100 IT engineers at most. Drupal wins not only because it is free, but also because the quality of the technology is improving faster than the competition. Acquia, where thousands earn their living by Drupal, is just the power of the system. Everyone stays motivated to make Drupal better and stronger. That creates a huge network and leverage. ”
Boston is your home base. Many young technology companies is based on the West Coast in Silicon Valley.
Buytaert: “I lived in Belgium when I founded Acquia. By distance and time difference, it would have been impossible to base the company in San Francisco when I lived in Belgium. In addition, Jay Batson, who I founded Acquia with, lives in Boston. Therefore, we chose the East Coast. Boston is not a disadvantage. It is the home of top universities in the U.S., including Harvard and MIT. The largest concentration of venture capitalists in the U.S. are in Boston and San Francisco. ”
Did you realize this from Flanders?
Buytaert: “I think not. The market, the talent pool, and access to capital is still much smaller in Belgium. Although it's never been the main reason for my departure. Drupal was the start of an international project, with users around the world. Moreover, the largest and most sites were in the U.S.. Now we come to Europe. The European market is well unified, and member states will continue with their great cultural differences in separate economic islets.”
You will never go back to Belgium?
Buytaert: “On the contrary. It is certainly my intention to return. Our friends and family there. It will be over three years before my oldest son goes to elementary school. We would or might return to Belgium, because my wife and I want our two children grow up in different school systems.
The entrepreneur in you wants to return to Belgium?
Buytaert: “That’s another story. But perhaps I can expand Acquia to Belgium. If the company continues to do so well, sales in Europe a few years, maybe really the same as those in the U.S.. Then there are also plenty of work, sure. ”