 Okay, it's the top of the hour. I'm a punctual person and I suspect they want the same here. Welcome, thanks for coming in late on the first full day of this part of the conference, right? Four o'clock, I appreciate you all coming in. My name's Anne Schlemmer, in a minute. I'll do a little bit of an intro on myself, but a few of you are here. Anybody here, an entrepreneur or a founder? Okay, awesome. Anybody wanting to be a founder? But I am not, so we'll just get that off the table. I'm not a founder, but here we go. Here we go, okay. So again, my name is Anne Schlemmer. I just wanted to quickly, before I dive in, just let you all know who I am, what I'm about. I have a good fortune currently that I live in Hood River, Oregon, which is a beautiful little town in our east of Portland in the United States. I feel super fortunate to call it home, similar to here, lots of beauty, some beautiful mountains that we can see. We're having equally nice weather right now, which is not a given in the Pacific Northwest in May, for any of you who live around here. It's a picture of my family. Where I've been, just a brief journey of, I have an undergrad in finance. I have a master's in entrepreneurial studies. Again, I'm not an entrepreneur, but I like working with y'all. I had a career in banking. I took a break, and then I came into open source. I originally interviewed with MySQL AB, and after the first interview, they got bought by Sun. So I didn't get hired by MySQL AB. I just worked with one of those groups. I worked for Sun, and then they got purchased by Oracle, and then the company I'm with now, Percona. I've been with them for 10 years. So we'll go for that. What drives me? Open source, love open source. I really love connecting with people. I love mentoring and being coached by others. Learning from others, basically, is really what I like in the exchange of ideas. So that's a little bit about me. Find out a little bit more. Topic of this talk is how to have a successful business that's customer-funded, which isn't really what's in the headlines very much, right? It's always talked about VC or PE, and the big exit, and the unicorns. Is there another path? There is. There's another path, and so I'm gonna talk to you all about today. So I'm gonna do, as I just mentioned, I'm not a founder. I took over for our founder, Peter Zaitsev, back in October of 22 as CEO, but this is a bit of his story. All of you should be familiar, obviously, with open source. I'm coming at it from the database space is where Percona plays. And you're thinking about, okay, when minus QL, very before they came into being, right? There's old school software, and then open source. And you have to admit, a lot of people think that open source is free love, hippies, all that kind of, all that kind of good stuff, right? And the big difference is, is it you pay for it or is it free, right? There's seems to be no in between for a lot of folks. Open source, it's gotta be free, right? Not exactly, not exactly, but we know that that's the space. When my SQL came on, the space, and when they came into databases, they were a major disruptor. Databases were really hard. They, Monty, when he put it out there, created it in such a way that had the web in mind, right? Now we talk about cloud native. Back then, it was talking about the internet and the web. And when, like I said, they were a big disruptor, but as time went on in the journey for my SQL, they started to realize it's kind of hard to make money on free, on free software. And so now all of us in the open source space understand the term of open core. They, my SQL went into that open core model. When they did that, again, the founder of Percona, Peter Zaitsev, that really bugged him. He's a colorful character. He's not here today. I don't use the same language he does. So I'll just say that on the behalf of the customers, he was pretty upset with what that change was. So around that time as well, this was before Oracle owned my SQL, Oracle bought NODB, which is the storage engine used in my SQL. So the my SQL team and their community didn't want any more development in NODB. Oracle was hanging onto it. Peter and the team were like, hmm, we see an opportunity. We see an opportunity that we can take advantage of. So in 2006 is when Peter started Percona. And specifically at the time going after my SQL. So building upon, building upon what was open source there. We at that time were able to do things that Oracle and my SQL just weren't paying attention to. That was where we put ourselves out into the market. We put our, we built upon the open source, the community version of my SQL. We put services around that. But we also put out features, enterprise level features. And we didn't put them behind the paywall. Because again, Peter's mind was customers were getting ripped off. You shouldn't have to pay for a core functionality of a database if it was open source base. So that was his mindset when he started. But the topic of this conversation is how, why are we not funded by a VC? Why did we, why have we so far? We're almost 17 years old. Why haven't we taken any outside funding? Well, some of that starts with a founder and some of you in the room said, you're founders making the decision. I'm gonna use the lords that are in a Harvard business review that'll flip to in a minute. Ooh, do you wanna be king or do you wanna be rich? Do you want control or are you willing to give up control for having funding coming in? So everybody needs to be bootstrapped. You gotta start off with some money to start a business, obviously. But how does that look? So this Harvard business review study back from 2009 talked about the trade-off that entrepreneurs ultimately make of it really comes down to control. So when you're starting a business and at various stages how do you want to fund your growth? Where is that coming from? There's rarefied air that you can be king, be completely in control and also be rich. I would, you know, a whole other conversation is how do you define rich? I'm not gonna get into that, but we see in the headlines right now of multiples like exits. This is this whole language of what's your multiple? What did you exit at? That's dominating, that dominates the tech space quite frankly. So when you look at ownership and the choice that was made at Percona was to, there's ownership for staff, but again, Peter as the founder made the decision that he didn't want to bring in outside funding. He didn't want to give up that control really at the end of the day. So you look at your ownership and what does that mean? There's a lot of advantages, I will talk to you about them, of keeping that control within the company itself and not having the outside influences. There's some challenges as well, but you have ownership and it shores. So you get to make those decisions that you want to make and aren't being forced. All of us, I would think everybody in the room was gonna say, what's first and foremost in your mind, your customers, right? Of course, we would all say that we think about our customers first. We all have a boss, I will say, we all have a boss. So even if you're the owner of a company and you say I'm doing it because I want control because I don't want a boss, you have a boss, it's the market, it's your customers, you answer to them. It's different than having investors on your board who are having you answer to their bottom line or your bottom line, you really have to be answering to your customers always. So ownership is a big part of why you make the decision to be customer funded. Also control. What is that control that you wanna have in the decision making? For those that are entrepreneurs and I admire all of you, that the risks that you take, the ideas that you have, the creativity and the innovation that you bring, by not having outside investors, you have control over a lot of those ideas and how they get implemented and how you grow your business and how that happens. So again, by being customer funded, it allows you to maintain those things. Then you also have to look at the risk management. I had mentioned that there's advantages and disadvantages. Some of the advantages that come with not having the outside funding is you get to determine your management team. You keep that in house and you guys get to make the decisions that drive the business forward and stay true to what your purpose is. It's another big part of the business is what is your purpose and what is driving your business and your beliefs and being able to stay true to them. So as I mentioned, when Peter started Percona, he felt that my SQL in his opinion wasn't staying true to their mission. They weren't staying true to how he defines open source. That was really important to him. It continues to be very important to all of us at Percona still, our beliefs on customer first and what that means by open source. So we have to manage that value, that purpose with the risk that we have as well. Because we have chosen to remain customer funded, we have to have profitable growth. That we just have to. So all of us go through the budgetary process. I will say as I read in other businesses and look and I didn't put any of those stats in this particular presentation. But if you look at public companies that are open source, that have been funded, you'll see that their top line, their revenues are awesome. And then you see on the other side, they haven't made any money. It's all, they're in a loss. So what's your cost for growth? We don't have that option. We don't have that option to have growth at all costs. We always have to be profitable. We also have to have sustainable growth. That's key. When your customer funded and if there's any finance people in the room, I'm thinking of my CFO and she would be remiss if she would not be happy with me if I didn't mention that her number one key metric is cash. Where's cash? So she actually manages us to cash. I'll say that I wanna make sure we have an operating profit and what's our operating profit at. Eileen will say cash, I'm doing the cash projections. When are they coming in and when are they coming out? So we'll get to that in a minute. Like how do you manage, how do you manage that? What are some tactics that you can do having an open source company? Again, we are profitable by design. They're having, as we have had success over multiple years in building up our cash. We have had years where we will say where this is gonna be an investment year. So we might burn through a little bit of cash, we might be break even on the bottom line or maybe a slight loss, but that's because we have the cash there and we're managing to do that. And that's always a key part. Our founder Peter likes to talk to the company and say, again, his colorful language. We don't have a sugar daddy at Procona. It's on us. It's on us to be really smart with our money and the decisions that we're making. So if we're gonna experiment on something, we need to be a little bit scrappy on how we do it and we need to be really smart on when we gotta call it and fail fast. I'm here to say, I'm not always great at making those calls. Sometimes you kinda, we're almost there, a little more investment. Can we afford that or not? We have to be really keen on that. Those others do too. So when it comes to managing cash, what have we done that has allowed us to be successful? Well, as very typical with open source, we monetize on services first. So we have software, we don't charge for our software. The solutions that we put out have our software as part of it, but it's heavy on the services. And because of that model, or like I said, almost 17 years now, we have been able to do a billing that we bill annual contracts and we bill upfront and we ask for payment upfront from our customers. And we also will do multi-year deals where it has that gentleman over on the wall there. One of our top sales guys or our top sales person, I should say, Jordan, we have people who will pay a multi-year upfront as well. Not all of them. They negotiate hard, particularly in this environment, but we've built our reputation. They know us well enough. They know that we're solid, a going concern, and they believe in their partnership with us that they'll pay us upfront. When it comes to managing your cash, you have to be very careful. We have to be very careful that those multi-year payments, I don't consider those in my current budget. Those are out of years. That's money. That's our out of year money that we need to be mindful of. We also need, we also have taken advantage of the remote workforce since the day we started. So when Peter started the company in 2006, he did model it off of MySQL AB. We've been fully remote for our entire history. We had a brief time where we did have physical headquarters that a handful of people worked at, so we don't have that any longer. That helps in managing costs. It also goes to our culture, which is we don't believe that borders or boundaries should limit the talent that you get. So we take advantage of global talent. The whole world's figured that out thanks to the COVID-19 breakout. So people are figuring out, hey, you can have talent all over the world and still work effectively. But it goes back again to being a purpose-driven company and what culture do you cultivate in order to manage that effectively? Having a fully diverse distributed team takes a lot of effort, takes a lot of communication and takes a lot of intention in terms of what your culture and what you believe in. And if managed well, it can also help with the bottom line. We also are believers in open source, so we use other open source. And sometimes we, no apologies, use it as a total cost of ownership, right? We know how good open source software is. We believe in it. We also use it, and that's something that we look for when we look for tools. We tend to go open source first. We like to be contributing back, but we also want to be supporting it that way. It's also another great way to manage your bottom line because you do look at total cost of ownership. And I will say we have some die-hard zealots on open source that they won't use any systems unless they are, unless they're open source. It gets a little troubling at times, but we work through it. But it's an option to look at. And we have the philosophy that we call frugal smart. So our values say we're not the big flashy company. We don't have a lot of perks. We have the personality of our original founder, Peter, who is frugal. He's also really smart. But we, I will say I've worked for, I've worked, I've been at the company for 10 years. I've worked for Peter for five. Peter doesn't believe that the execs get any perks at all, none. Some companies, that's important. And there could be reasons to reward staff and employees and all of that. But again, choosing on your funding structure, we've chosen that we want the control within Precona. We don't want that outside funding. And so that looks a little different. That looks a little different in how we spend our money. How do we prioritize? Where do we put our funds? What do we look at? We try to prioritize team meetings where we can, smart with our advertising dollars. And full disclosure, it's not always easy, right? There are times fairly often that people will come to me and say, Ian, can't we go get funding? Can we have a little more money to go do this? I'm looking at it. I'm really considering what does growth capital look like? But we also know that if we keep our ambitions right-sized and our focus narrow, we can have a successful business without that outside funding and continue for it to be our customers. It goes without saying we're at open source. Another way to help leverage our work that we're doing is building the open source community. So it's not in a way of let's take advantage of free labor, but it's more, this is a community that we build upon and there's a trade-off. We know that by being with an open source community, we go back and forth. Some of what we put out there is absolutely a project and we are clear that it's a project. And then we tip over and when does it become a product? I'm not gonna get into open core. That's not this talk. But that's something that we look at and we also understand that we make a decision as we go out into the community and we want people using our software for all kinds of reasons, we know that part of our commitment to the community is that is adoption, right? The risk is that when we get really excited about adoption and you're like, yeah, adoption, adoption, adoption. Well, users don't pay and there's some users that will never pay and we are actually okay with that to a degree. I would like to see that people see more value that they could have with us, but part of our open source community that in commitment to that community is that we're happy that we have the users that we have and we have a lot of users. We choose not to do the open core model at this point in time. And we're still running profitably. Again, it's with our values, it's with the solutions that we've put out. That's a choice we've made. That's not the right choice for everybody. It's not, I understand that. So how do we grow our business and how have we grown our business? Being as old as we are, we have gone through evolutions during this time. When we first started out, pretty famously, that's what I put in highlights. Peter was really clear. And again, in some pretty colorful language, I will say that he's thought that he may have even be on record as saying that it's really stupid to ever pay for support. You'd be really stupid if you ever paid for a support contract. Guess who has support contracts? He ate those words after a while because if we want to have profitable growth, we want to have sustainable growth. You understand that you can't just do what we did. So initially what we did is, I would call it incident based support. So 24 by seven emergency consulting is how we called it. But we realized that really to build a business, you can't build a business on that. It's not predictable. It's not recurring. We wisened up as we grew up and we kept going and we're like, okay, the name of the game is recurring revenue. And how do you have recurring revenue? All of you that are software developers right now and look at this too, people are looking at product led growth. We have been using our software really as a lead into our solutions that are services based is how we're doing that. We're in a world that's always evolving, right? So there's an old way and a new way. Within Open Source, as I mentioned, we've seen a big evolution. We've seen the evolution of just putting out the software and only monetizing with services. It's definitely a path that we've done. We're seeing more and more that folks are using it as open core. We're also seeing more and more that people are doing it as product led growth. And what does that mean? So if your traditional entry is, your traditional marketing funnel, where you do the traditional marketing funnel, you get your MQLs and your SQLs, you turn them over, you have an awesome sales team that has the conversations and does the solution sell. That's great. The way that the market is evolving and moving and just expectations, you're looking at product led growth more and more. That goes to, I think, all of us have experienced in our lives, I will say, the Amazon effect, maybe the Google effect. We expect to be able to do everything ourselves. If we have a question on something, type it out, try to get your answer and I'll even faster maybe with chat GBT, I don't know. But the verb is now Googling it, right? You look at that. When we put products out to the market, we have to think the same way. People expect their software to work. The product led growth is that the product is selling it for you. It's right there, people can do that. That's an evolution that Percona's still working on. And I think that I would imagine in this room, everyone's a different journeys on there. If it's a brand new startup, I would imagine that you're jumping right in on the product led growth. And what does that look like and how do you do that? And how do you fund that, right? That could be a more challenging model to go customer funded because in a lot of those cases, you're doing consumption based billing and you're not going to bill upfront a year in advance, two years in advance like we've been able to take advantage of. You have a funding model that's different. Frankly, at Percona, we've looked at that and we said, okay, if we change any of our business and we go to that consumption based bump model, how are we going to bridge that cash difference? Likely we would do it with a bank loan at this point in time. We would look to have a working capital line as we just get accustomed to that shift of how the dollars come through. But something to be mindful as you're creating your business as well. Again, cash, whatever it looks like, euros, dollars, pesos, cash, cash, cash, cash is what you want to be looking for. I'll highlight a little bit more some of the challenges by us choosing to be customer funded or you choosing to be customer funded that happen. You already know starting a business, these are facts and figures that I'm sure are well versed and this isn't discriminating by your funding source. Having a successful business basically is just hard. Any startup, it's hard to do regardless of what your funding looks like. So it's something to be mindful of. Whose money do you want in there, right? What's the belief in getting back to on the control? So thinking about that as you're starting your business. It pulled up these signs or these headlines. I hope nobody else in this room was affected by the Silicon Valley Bank or others. I know I had a really stressful weekend a couple months ago. But interesting for me sitting back and watching and hearing like oh, oh by the way venture capitalists now are starting to care about profitability. Where it was top line, valuation, valuation, valuation not looking at profitability saying we're in an interesting time, right? What does it look like to go out and get funding right now? Whether it's from VCs or private equity or even the banks, right? With inflation and banking issues. What do you put out there? How do you show that you have a path to profitability? What does that look like and how can you do that? And how can you do that with your customers? Helping you fund. What we don't get to take advantage of by Percona is there are a lot of good things that can come from having an outside investor. They wanna be on your board. They're gonna bring maybe skills gaps and expertise that you don't have. Maybe they have expertise on product led growth that you haven't figured out yet in your business. Those are advantages that come along with the money and it's worthwhile, right? To consider and how do you leverage that? So there are obviously pluses. We get challenged on if we have a growth idea, again, it's all on our backs, on our customer money that we've raised or that we've gotten from our sales, that if we wanna do a play, if we wanna do a pivot, there's a little bit more risk involved for us. So that is a disadvantage that we have by not using growth capital. Something to be mindful as well in running the business, particularly if you go customer funded, your users, what they value and what they want is not necessarily what either you as the business wants or if you have outside funders, what they want as well. So your stakeholders, you have various stakeholders and they aren't always aligned in what they value. So being concerned about that and yeah, the states are there again. Open source stakeholders, they're different, right? And that's competing. And I will tell you that there are challenges that we have at Percona on serving our community and serving our shareholders and our stakeholders as well because there's a little bit of a conflict there. The way we solve it is really going back to what our mission and purpose is and what our values are and what does that look like. So trying to pull that all together and where does that leave you? I wouldn't say there's a right or a wrong on do you go customer funded, do you take outside? I will say it's a viable business option to not have funding, to not go for a series A and series B in all those rounds but it all goes back to that beginning where I stated why are you going into the business or why did the founder start it? Is it a control or is it to be rich? And what is that? Are you going in automatically with a short-term exit in mind and you probably wanna get some outside funding? If you're looking to do a long sustainable business and it's something you know that you believe in and you wanna be at for the long term then I'd say you probably wanna look and be sure that you go customer funded. So why did you get involved in open source? Why are you here because of open source? Is it all those reasons listed? You have to then ask yourself that same question on the business, why did you start the business? What's it for? And I think that that then helps guide the decision on how you wanna run it and how you wanna get it for being customer funded. We know the advantages and the joys of being a part of the open source community allows for innovation, it allows for great ideas and sharing. The equity in the community are key and there's also a very viable way to make a business out of it. That's what I have and I have a few minutes which unlike last time, for questions if anybody has questions and if so I have to get the microphone because anybody have any questions? Sure, okay. With this. Oh, thank you. Thank you, Ronald. You showed a chart, I think that was your 1.0 of how you guys did things. Do you have a 2.0 or 1.1 of things that you changed? Sure, yeah, I can tell you, I don't have the slide but we went from the emergency consulting and then one Monday morning, Peter said we're now offering support and everybody has to take a shift. So we went and we added support and doing support contracts and we offered 24 by seven support. Then after we did the support, then we started and we added what we call, at the time we called it remote DBA, but managed services. So when we first added support, the concern was oh my gosh, we're gonna pilfer from our consulting business. Nope, it was additive because it was what the customers wanted. Then when we did managed services, again we're like oh, this is gonna take away from our other business. Nope, it was additive. So those were additive and then in another iteration, we went into additional spaces. So after MySQL, we've also added MongoDB, which for any of you that are in that space might be a little controversial because some people say Mongo isn't open source so why are you doing Mongo? But we believe that obviously we still have a community version of it, but we are in that space. And then our next iteration was we added Postgres. Again, we are known for deep expertise with MySQL, so we've added other technologies. Our current iteration that we're working through is we always believe in meeting the customers where they're at and then taking them where they need to go. So our next iteration that we need to be putting out to the market is a DBAS because that's how the market consumes databases at this point in time. It's really not the database administrators that are determining what your database is. It's the developers and the developers expect the infrastructure to just work. So we're looking to be putting out an open source, a true open source alternative for that as well. So different iterations along the way where we had a mindset of oh, this is the way to do it. And as should be, you listen to the customers and see what the market is and be willing to admit where you might have been wrong and get it right or try to. Yeah, thanks. Is it that gentleman over there? Hi, thanks. I was wondering if you'd be willing to say anything about how you structure sales. I mean, you know, on the enterprise side, commissions and money, money, money. Money, money, money. You know, you need sales to close the deal, but I just wonder if there's anything you've done there that's different. Long ago, I talked with, you know, Mike Olson from Sleepy Cat. And, you know, in his view, it was closing a sale, right? The open source would do the marketing. And so you had people who were, I guess, in a more administrative role than the traditional sales role for sales. So just interested in anything you could tell us about that. So we, I would say we have a traditional sales model. I am looking over here because Jordan is, again, one of my sales leaders. We have field sales that work for enterprise, they go after the enterprise customer. We have inside sales. We also have a BDRSDR function. Yeah, which in terms of, I don't think we do anything unique in the fact of it's a solution sale. So we set quotas, we look at, we break it out by our, we break it out by our business lines and driving where I had put that, you know, recurring revenue was where it was at. We did make a pivot, probably about five or six years ago that we were specifically targeting. We still have professional services and consulting and it's an important part of our business. But it's reduced in size because we want it all to be leading to the recurring revenue. So we make sure that the sales, the sales compensation and the plan is aligned with that goal that we have. Did that answer your question? Yeah. Thank you for the talk. You're welcome. You seem to have a more nuanced view on open core than I guess maybe the, your predecessor. And so I was wondering if you could elaborate on that. You know Peter. No, I just, just from your. Oh, okay. I was gonna say, oh, you know, Peter and I are, I mentioned in another talk, Peter and I work really well together. If you do any assessment, we are the exact opposites like our Colby, our predictive index and disk. We've done all three where he's high on low or I'm high, he's low. That's why we've, that's why we've worked so well together. Peter and I are aligned on the open core in terms of looking at open source and really what open source means. I unapologetically, however, I'm a capitalist, I will say. And I don't, I have no concerns about wealth creation by choosing not to do open core. We don't create as much wealth within Percona as is a market opportunity that could be there. But that's again, being purpose driven. That said, I know that we have a ton of value that we put out into the market and that we offer to our customers, which is, we have so much opportunity. The space is huge, what we offer and our solutions are huge that I don't believe that open core is necessarily the way to go about it because it, yeah. I'll just stop there so we can't really controversial on that and the numbers. So I'm like, oh wait, I'll stop. But yeah, but that's, it's a choice, but a lot of it goes back to our values and philosophical and the commitments that we believe that we've put out to the community. Yeah. I have one minute, I'll talk to you later. They told me I'm on camera, it's on film. I was like, oh. So I wonder, thanks for putting all this together. I wonder if you could talk a little bit about the opportunity for partnerships, sort of other companies in an ecosystem, kind of they do what they do and monetize it in their way, you do what you do. Is there kind of more opportunity or does it, do you have more flexibility in that? Kind of an ecosystem, kind of partnerships with other companies, big or small. So we do, I might not get your question exactly. So if I don't, we can go after if time runs out, but we do do partnerships and we have opportunities to do that. We also though have a limitation that we build upon upstream. So we have a big dependence on upstream products and projects like we have a big dependence on MySQL and Mongo and then the Postgres is the community different, we are, we have that. We do have opportunities to partner. We aren't, if I think about partner on the channel side, or we're a little bit different because we don't charge for our software and because we don't have that open core, a partner can't act as a reseller in the same way because they would wanna be doing services and that's our expertise. So that is a challenge in a great way, right? People know to be able to expand on your sales force is to have channels and have partners. We've done that but because of our structure, it doesn't fit in in a traditional model that works as well for some of the partners. So we have some but it isn't as lucrative I would say because of our choice to not be on an open core. Did that answer get to the heart of the question? Ish? Yes. We can talk later. But I'm at my time. So I say thank you. Thank you for the engagement. Thanks for being here. Let's go look at those mountains and I'll be right back.