OroCRM & OroCommerce on the verge of expansion. An interview with CEO & Co-Founder Yoav Kutner.

Last week Oro announced a first round of funding. Over the last 3 years, the business application platform “Oro” has spawned various open source products such as OroCRM, OroCommerce and indirectly many others such as Akeneo, Marello, Diamante Desk and TimeLap. An interview with CEO Yoav Kutner, who built Magento together with Roy Rubin before Oro.

(Reading time: 5 minutes)

Yoav, last week your company, Oro, announced a 12 million financing round. How do you feel?

Great! We have bootstrapped the company over the last +3 years and invested in our products. It is therefore a great confirmation of what we have already achieved and also a kind of proof for our open source business model.

For those who don’t know the details yet, can you give us some info?

Yes, we have just closed our first investment round of USD 12 million led by Highland Europe.

What do you plan to do with the money?

Before the funding, we could not move forward as quickly as we would have liked. Now with this funding, we are able to take more risk and double our product development efforts to bring products that enable customers to be successful to market faster. We will also use this capital injection to rapidly expand our sales, marketing and partner activities around the world.

B2B eCommerce is hard work. Especially for SMEs. When I clicked through OroCommerce for the first time, I thought “ok, they’re doing it again”. Mainly because many features that are typically very complex to implement are already included in OroCommerce. How big are your ambitions to show the world once again that you can revolutionize eCommerce?

We are enthusiastic about creating a true B2B eCommerce application and platform. From years of experience with thousands of merchants, we know that there were no real options to overcome the B2B eCommerce challenges. The existing platforms simply had little or no B2B functionality and focused on B2C needs, partly because eCommerce has generally received more attention in the last decade.

In reality, however, the B2B customer experience must be able to match the B2C experience. People are used to this from their private shopping. The world is becoming more efficient and phone calls, faxes and face-to-face meetings are not always a good way to go these days, even in B2B.

Building tools that help SMEs stay relevant is in our genes, so to speak. I would therefore say we are very ambitious to build the products with the right features that will lead the B2B world into the modern web age.

Your team made a detailed performance comparison between Magento 1 and Magento 2. The result was, simply put, that Magento 2 was fundamentally slower than Magento 1. This generated quite a lot of fuss and discussion. On the one hand, this is a technical issue. On the other hand, the question also arose as to whether Oro had a “hidden agenda” regarding Magento. The whole thing came to a head when you had to remind Paul Boisvert (current Head Product Management Magento) on LinkedIn who you are. So, what is your relationship to Magento?

As already mentioned, we have bootstrapped our company since the start. For this reason, we make some revenue from the Magento Commerce service business under the MageCore brand (comes from the original space name “Magento” and “Core” – in a way, from the fact that many original Magento developers work for us). As the marketing for Magento 2 intensified, various MageCore customers approached us and wanted to know more about Magento 2. And since the upgrade to Magento 2 is a replatforming project and therefore a big investment, they asked us as their system integrator whether it was worth it and what the benefits of this step would be.

“I think it’s always good as a systems integrator not to just follow the trends without talking to your customers about the real facts behind them.”

So we were tasked with evaluating the risks and benefits of upgrading to Magento 2 and the resulting impact on their business. Many of our MageCore customers are high-traffic/high-order sites. So we were primarily interested in performance and hosting costs. Our findings were not positive and it seems that to achieve the same performance as Magento 1, you have to spend 7 to 8 times more on hosting with Magento 2.

I am glad that this analysis has triggered corresponding discussions in the ecosystem. You know the story ofthe emperor’s new clothes. We welcome any input that would improve or even refute our tests, as this helps everyone in the community.

I think we really are an integral part of the Magento ecosystem and as such have shared a valuable test with the community. We are working on the next steps of testing and should be able to publish more findings soon.

Back to the expansion of Oro. I think one of the biggest mistakes with Magento was that you realized relatively late how important Europe was for you. Do you plan to do better this time?

I agree. Reacting too slowly to European needs was one of our biggest mistakes. Part of the funding in Oro will go towards setting up a local presence in the EU. We already have a few developers and PMs in Europe working with the European customers and we will expand the team. So this time we will not only have “drones” but also “ground troops” in Europe :-).

In my article “The eCommerce stagnation“, I pointed out that we haven’t seen much innovation in eCommerce since you launched Magento. Do you also see OroCommerce as a solution that could also renew the B2C sector in the longer term and thus fill this innovation gap?

I agree with the assessment you make in your article. It’s been a while since we’ve seen much innovation in the B2C sector. I also think that much less has happened in the B2B sector. But the B2C segment is also very fragmented and is becoming quite a crowded field with more and more new players offering platforms.

“With OroCommerce, we are focusing on the needs of B2B eCommerce first!”

Nevertheless, many B2B merchants also have a need for a B2C presence. This could, for example, only be a front-end catalog. But also a fully transactional B2C eCommerce site. Since we develop the multi-website feature in OroCommerce, we support such catalog pages and simpler B2C websites in a single OroCommerce instance.

Nevertheless, we probably won’t be able to match Magento’s range of functions, as most customers don’t need Magento’s bloated feature set anyway.

SMEs usually have great difficulties with product data management, which is crucial for eCommerce. I like what Akeneo does and when I talk to interested parties, I notice that some of them deliberately opt for this integrated product chain – OroCRM/Akeneo/OroCommerce – because they see it as a major advantage. Is this part of your strategy and should it be expanded further?

Absolutely! That was the driving vision behind the Oro platform or BAP. We decided to invest in a platform in order to give other software companies the opportunity to provide their own business applications without the overhead of all the features that such platforms usually require, e.g. ACL, user management, workflow engine, reporting engine, etc. We have seen a few such applications launch now. We have seen a few such applications being launched now. E.g. Akeneo as mentioned, but also Marello, Diamante Desk and TimeLap.

In addition, it enables companies to create very specific in-house developments. We will continue to invest in the platform and applications that run on the same Oro platform version can also be operated in the same environment.

Of course, we are investing a lot in OroCRM and OroCommerce integrations and will have seamless integrations for B2B companies that want to do CRM with B2B eCommerce. I am proud of what Akeneo team is building and one of the priorities is a deep integration between OroCommerce and Akeneo PIM.

Are you looking for people in Europe?

Yes, we are looking for Symfony 2 developers, sales and marketing people for the European market. You can find more information on our website.

What will OroCommerce’s product and pricing strategy be?

Our community version is of course free of charge :-). OroCRM Enterprise costs 59$ per user with at least 5 users. This price is valid for the SaaS offer as well as if you run on premise. We are still working on the pricing for OroCommerce and should be able to announce it at our first Oro event at Momentum in Las Vegas.

I have the feeling that open source as we have known it for years is losing importance. Mainly because some proprietary manufacturers are opening up their code base and also because many open source companies are struggling to sell enterprise editions. How do you see this and do you see other open source models that could work better?

I think it is still a very good model to have an open source version. Oro started with a very small investment in marketing and yet we were able to gain customers and users all over the world in a short time.

This would have been much more expensive the conventional way, with proprietary software and a traditional marketing strategy. Also, the benefit of having thousands of users giving feedback is invaluable. We learn what our community really needs from our products and what they have problems with.

I think the reason why some open source companies struggle to sell Enterprise Editions is because the value and the target audience are not clear. At Oro we approach it a bit differently. Apart from integrations that are expensive to support, the feature set is identical. The main difference is the quality and the scaling features (e.g. job queue if you have a lot of users, enterprise report engine, etc.).

We believe that a business that grows automatically does the cost analysis and spends more on performance and stability. We will also offer a few services so that companies can get a data store from us, for example, instead of having to implement it themselves.

Spryker is currently attracting more and more attention in Germany. Mainly because of its modular concept and the fact that its code base is used by the biggest eCommerce players in Europe. What do you think about the modularized approach, which undoubtedly leads to more flexibility and agility for large companies?

I’m not very familiar with Spryker’s solution. But it seems to me that a modular system is nothing really new. They showed me some of the concepts and ideas and frankly, it reminded me a lot of the big deployments we’ve done with Magento. They say their solution is better than other solutions on the market. But I have no facts to back that up. Nevertheless, this is a great team and I wish them all the luck.

However, I like modularity when it comes to building applications as it allows companies to extend or add the features they need to be successful. Of course, this comes at a price, such as performance or time-to-market.

Yoav, thank you very much for your time!