All posts by Tyler Jewell

You Do Not Want to Miss WSO2Con North America, July 16–18 in San Francisco

“This year is going to be the biggest, baddest, most monstrous year yet for our conference. Do not miss out!”

Each year, vendors around the world who host their own conferences make identical claims. With promises of special locations, intriguing speakers, and networking with food (and delightfully intoxicating substances), commercial events turn into rigmarole.

Not this year. Not this conference.

WSO2’s North American conference is going to be a doozy. If you are a developer, architect, integration specialist, partner, CIO, CTO, or CDO, we want to see you at this event as we unveil the next phase of our company, our technology, and our growth.

For the first time, we are hosting three events:

  1. WSO2Con: see us unveil our vision for how digital transformation is evolving and how we will help every organization become integration agile.
  2. WSO2Con Partner Day: our partner ranks have ballooned and our partners generate nearly $250M annually as part of the WSO2 ecosystem. We are hosting a business day dedicated to exploring collaborative opportunities to build markets together. We’ll be unveiling new channel programs, how resellers will shape future integration sales, introduce the global channel team that joined this year, and our investment plan that will help you build annuity and profit streams from our field collaboration.
  3. BallerinaCon: Ballerina is a programming language that makes it ridiculously easy to write microservices that integrate APIs. We are lucky and excited to co-host this first-time event with the language designers and the San Francisco Ballet. Ballerina is gaining global adoption and your experience will have you agree with why Google’s Kelsey Hightower called it “the dopest thing” and Redmonk’s James Governor declared Ballerina “the belle of the Kubecon ball. ”

These events are happening at a time where WSO2 has become the largest open source integration vendor. Integration is suddenly the hottest thing in enterprise software, and that is propelling tremendous growth for us. We are reinvesting all of our gains back into the business, and at the conference we’ll be announcing important software, services and solutions designed to make it easier for any organization to become integration agile.

We’ve become increasingly concerned that as architectures continue to disaggregate due to the drive to scale to support customer demand, those architectures have required organizations to support center-of-excellence integration approaches which impose waterfall constraints and limited agility. We will make sure that this doesn’t happen to you, and in my keynote we’ll be unveiling:

  1. Our agility strategy for organizations of any size, through the presentation of a new reference architecture for agility and agility methodology, including the introduction of cell-based architectures and philosophies to make the composable enterprise as agile as a microservice.
  2. How microservices will pervade all of our products giving you new forms of micro deployments, management and runtimes so that enterprise architecture can increasingly be delegated and crowd sourced.
  3. Our serverless strategy, including how a special collaboration between our engineers and the Apache OpenWhisk community is going to give enterprises an agile approach to event-driven architecture without fearing data or platform lock-in from the megaclouds.
  4. Our commitment and commercial strategy unveiling for Ballerina, a cloud native programming language, which can augment your Java,.NET and JavaScript development by making agile development of microservices accessible to any enterprise.
  5. Substantial new business programs, including microservices-based pricing / packaging and Technical Account Management.
  6. Our territory and local influence expansion plans including our plans for new offices in Mexico, Germany, and other MEAP locations.
  7. New partner programs designed so that WSO2 can make substantial investments into our global partners so that they can create annuity and profit streams.

This is going to be an amazing event and an experience that should not be missed. Come join us and learn about why we believe that WSO2 is going to become the world’s largest integration vendor. Let our passion, excitement, and experience help guide you on your own integration journey. And let’s hope I don’t screw up my very important keynote.

WSO2’s Growth Story and Why Open Source is the Only Way to Solve Your Integration Challenges

Last week, Ken Oestreich, WSO2’s VP Product Marketing, and I were at the AGC Growth Conference, where we discussed WSO2’s growth story. WSO2 continues to be relatively unknown in business development circles, and this was a wonderful opportunity to report on our traction and understand how the broader ecosystem views integration.

Here is that presentation in full.

WSO2 is the largest open source integration vendor by revenue and customers.

WSO2 is the largest open source integration vendor by revenue and customers. We are EBIT and cash flow positive, with subscription growth approaching 60%.

Integration turns out to be the hottest market even though it’s the uncoolest thing.

Integration is everywhere, and it’s $30 billion annually dominated by three types of integration. All three segments will have billion dollar growth in the next decade. While iPaaS gets significant market attention, it’s not sufficient for most kinds of integration. iPaaS is a metaphor for the line of business, which is departmental-driven, repeatable forms of integration. There are 150 competitors in this space and is prime for a shakeout. iPaaS vendors template-based approaches are not well suited to app integration as they cannot expand to reach the breadth and depth of integrations required—they only work in templated formats where the same integration can be repeatedly done, which is ideal for some types of SaaS to SaaS workflows.

In app integration, old vendors like Tibco, Software AG, and Oracle will suffer as the rotational movement to microservices and open source accelerates. In order to meet significant demand, software vendors are disaggregating their architecture in order to scale. The approaches to integration that service highly disaggregated architectures are shifting, and pure open source vendors have modern architectures to address this.

For the past 5 years, WSO2 has been engineering our approach to integration, with a focus on highly disaggregated architectures due to the rise of APIs and microservices.

WSO2 uniquely offers a suite of technologies because point solutions do not address the full integration problem.

Integration historically is the movement of data between two points, for which we do exceedingly well with our WSO2 Enterprise Integrator solution, but integrations complexity has increased because:

  1. every integration is an API—so WSO2 API Manager required,
  2. every integration must be governed—so federated WSO2 Identity Server required,
  3. data is moving from at rest to real time in-motion—so WSO2 Stream Processor required,
  4. as industries understand the power of becoming a digital native enterprise, vertical API solutions for compliance and regulation appear such as WSO2 for GDPR, WSO2 for Open Banking, and WSO2 for Telco.

If software is eating the world, then you can no longer be a software organization with also being an integration organization.

Our integration opportunity increases as 50 billion integratable endpoints grows to 1 trillion over the next decade. Everything will become an endpoint, and when those endpoints are exposed as APIs they will become programmable. Integration becomes a problem for all software integrations as its the discipline for resiliently communicating between these endpoints.

Integration is the unspoken challenge of the cloud, AI, data, and cyber security future.

If you follow Marc Andreesen’s hypothesis of software is eating the world, then you can no longer be a software organization without also becoming an integration org.

Closed source, open core, and iPaaS vendors do not have the community reach or contributions to address the full scope of integration problems.

The protocols, data formats, and APIs of endpoints change frequently. A centralized approach to integration, such as those offered by proprietary or open core vendors, are limited to the support they can provide by the resources they fund themselves. This is limiting and cannot address the full breadth of differences that must be addressed.

Community, collaboration, and shared experiences, such as what we provide with WSO2 open source, are the only way to integrate every type of endpoint that is coming.

WSO2 is one of the largest open source companies. We have received more than 1 million contributions that have lead to improvements in our open source integration runtimes and into connectors and adapters used to integrate the rest of the community.

WSO2 contributes to more than 100 open source projects, which reciprocate by contributing back, making WSO2 the 69th largest contributor to GitHub.

Integration is still waterfall, so we are investing into Ballerina to make integration agile.

Integration technology forces development teams to follow waterfall lifecycle practices. This doesn’t scale, so we are also investing in Ballerina—a cloud native programming language for integration—to give developers quick, agile development for integration. With Ballerina, every developer can integrate anything, with a learning curve in hours, unlike the months required for Java / Spring or JavaScript / Node.

Ballerina represents a unique, new, and improved approach from typical EI and iPaaS products. Their either agile or integration simple, but never both. A programming language and platform whose syntax is integration simple, but works with a developer’s favorite tool chain in an iterative flow creates true agility. This makes it impossible for developers to integrate at scale to adapt to changing requirements and deal with increasingly disaggregated architectures.

Open source is the best defense for mega-cloud and proprietary vendor lock-in.

Open source is the best defense for addressing lock-in that comes from data lock-in of clouds, API lock-in of mega-clouds, and vendor lock-in from proprietary licenses. Almost 90% of operators are focused on avoiding lock-in. Open source solutions offer a great way to provide try-before-you-buy and substitution options to those that adopt it. WSO2’s solutions also deploy in any environment, and we deliver WSO2 on any public, hybrid, and private cloud infrastructure.

Wherever you may be on your digital native journey, WSO2’s subscriptions include the practices, methodologies, & technologies to transform you from integration waterfall to integration agile.

Companies and governments engage us through our consulting and subscriptions that accelerate the evolution of any digital native initiative.

We have 450 enterprise customers reflecting the world’s best brands that already process more than 5 trillion transactions through us each year.

Open source is more efficient than closed-source—with growth, net retention, and NPS rates equal to MuleSoft, but higher profitability and employee efficiency.

We have a unique open source software business model that has fueled our growth. We release our code with an Apache license. However, we package and ship support patch binaries with a WSO2 license to those who maintain a subscription. This offers a balance between the best freedoms of open source and measurable added value.

And, wonderfully, our internal teams do not compromise productivity by perpetually wrestling with where the “for free/for pay” line must be drawn. It is expensive for an enterprise vendor to determine the best model of where for-fee options reside. Not only does the vendor have to develop a strategy, but they must communicate this to all their employees and then justify it to the open market. These costs are passed along to customers and require significantly higher forms of capital from investors. This line does not stay static, either. The nature of open source is that is erodes and impedes upon the areas where a vendor is selling their proprietary extensions. This means the “for free/for pay” line must be rethought. This is a continual process, and this is time where inefficiencies are introduced.

  1. Many companies take credit for open source, but only a few, like WSO2, have all their published software as open source, which allows any company to consume or use the software without first having a relationship with the vendor.
  2. WSO2’s open source software business model is innovative and unique because of the IP we have built around patch distribution and support engagement. This consequently encourages customers to get and maintain a long term subscription. Customers only maintain a subscription with us through the period where we provide immense value, forcing WSO2 to create business practices that embrace a customer’s needs more wholly.
  3. The proof of this is that WSO2’s net retention rates are identical to MuleSoft’s, which is an open core vendor, effectively only selling proprietary solutions, while having much higher profitability.

We take our offerings to market with a territory and inbound sales model that combines channel partners, resellers, distributors, and our customer success team.

We take our offerings to market with a sales model that combines channel partners, resellers, distributors, and our territory-based customer success teams to engage, win, expand, and satisfy every customer.

  • By swarming the customer throughout their lifecycle, we reduce the chance of churn and help derisk the customer’s initiative. This is why we can maintain a 40 Net Promoter Score (NPS).
  • We now have 550 people in Mountain View, Colombo, Manhattan, Sao Paolo, and London. We are opening offices in Australia, Mexico, and Europe this year.
  • The forces shifting the sector rotation from proprietary software to open source are strongest in emerging economies, which is why we shortly anticipate opening offices throughout eastern Europe, the middle east, Africa, LATAM, and APAC.

This is an impressive set of financials…

The market has rewarded us with 52% subscription growth, which has been accelerating, and also a dollar-based customer retention rate which is equal to MuleSoft’s, but with a community and business operating model that is more efficient letting us have EBITDA profitability and positive cash flow. If you are an investor, we will be a 58 this year on the rule of 40.

Our success has largely been organic, with a minimum of outbound marketing and a small sales channel. This is going to change as we step on the accelerator in the coming years.

Our growth story is not ours alone, we can work together with you to growth faster, together.

We communicate our growth story to our customers, employees, investors, partners and ecosystem to help us discover ways to have a bigger impact, and potentially grow faster. Our growth story is not ours alone to be had. We can work together with you to grow faster, together.

We are building relationships that more aggressively expand our territory and technology partnerships, while also building upon our strategic initiatives with Ballerina and connectors.

If you are interested in learning more about WSO2 or to potentially become a partner, you can reach me at tyler@wso2.com.

WSO2’s New Approach To Performance Reviews

This morning, WSO2 rolled out a new approach to performance reviews for our employees.

Since software is a creative business, the performance review process for a software company must be a system that furthers the creative careers of the professionals employed by us.

WSO2’s leadership has 250 years of enterprise software experience. We’ve worked at numerous software companies, both large and small, including Oracle, Dell, Quest, IBM, venture capital software startups, and system integration providers. We’ve experienced performance appraisals of many different varieties, but they all emphasize numerical ratings and normalization of individuals into a bell curve. This is fundamentally wrong and a fast way to weaken the creative intelligence that is essential to making a software company great.

We believe our approach better aligns the interests of our employees with the company’s objectives.

Performance Ratings Sabotage Productivity

For the past five years, WSO2 has gone through significant growth. With this growth came an expansion of the employee ranks, and we are now striving to be close to 560 employees by the end of 2018. At one point, WSO2 hired more than 150 people in a single year.

To compensate for this growth-and being engineers-we developed systems to more fairly rate people across the company, especially two people who are performing the same function reporting into different leaders in different departments. Bonuses were tied to the rating achieved. The rating was a numerical rating on a 100-point scale with a unification process to ensure fairness. This was done quarterly. It was fair and balanced.

But we found that numerical performance reviews will ultimately sabotage productivity. In a numerical system, there is usually a bonus leap or compensation jump for those that rate above a certain threshold, in our case 60 and 80. In any system with a high degree of refinement, there will be people that are on the bubble of a numerical threshold. These numerical ratings were the composition of sub-ratings across a wide range of behavioral criteria that were weight averaged into a total score, so minute interpretations of sub-ratings could have big implications to perceived compensation.

When a performance review threshold is numerical, human nature causes everyone to analyze elements to gamify their score.

This opens the door to culture-sapping. Individuals on the bubble between one rating and another will formulate arguments to their benefit. People compare their ratings among one another with subjectivity (while ratings are intended to be private, reality demonstrates that everything is shared through the grapevine). The team leaders who are responsible for ensuring fairness subjectively applied the criteria to their team. Senior executives responsible for 100s of people will strive to develop systems to help measure and unify the ratings leading to a subconscious sense of bureaucracy and big brotherness.

After a couple quarters, savvy employees will learn the nuances of a numerical system and search for ways to gamify it to their advantage. People will change their operating point of view to obtain stronger ratings, even if these actions were not the most constructive to their own or the company’s interests.

We do a quarterly employee survey that asks a variety of questions about culture. Fundamentally, the most important question around whether people would recommend WSO2 as a place to work declined over a couple quarters from a world class rating to something that was in decline.

We felt that we were seeing the early signs of performance gamification that can be caused by numerical performance ratings.

Even though we only introduced the 100 point rating system last year, it was time for a change.

Creative People Need Creative Performance Reviews

Everyone in a software company is a creative individual.

This is not only our software engineers, but also our marketing professionals, lawyers, account managers, solution architects, accountants, and admin staff. Creativity trumps any skill set because the entire business of software is one where problems must be encountered and solutions proposed. Everyone within the company is a problem solver. And every time we release a new piece of software, we must rethink how our business must improve to better embrace that software for our customers. In essence, our company is in a constant state of improvement, and we can only address the problems that we encounter if everyone recognizes that they are on a journey of problem solving. During this journey, the nature, size, and complexity of the problems we must solve constantly shift. Your seniority, experience, and role within the company gives you opportunity to work on increasingly harder problems, making everyone’s journey, my own included, fulfilling and rewarding.

Creative individuals are on a career journey. It is the culmination of software experiences that define a career and create new opportunities for advancement. In exchange for committing to spending time to help the company or their team achieve their goals, the individual is rewarded with experiences that contribute to their career and a reciprocal commitment by the company to provide new, more challenging experiences.

An employment arrangement between a software company and its employees is a shared commitment to participate in and create new experiences that reward one another.

Why then do most companies provide a performance evaluation that attempts to quantify and sometimes monetize skills or tactical results instead of discussing the broader issues tailored to how each individual is on a creative journey?

The WSO2 Performance Evaluation

The performance evaluation is intended to facilitate a career conversation between an individual and the company. We also use the results of the performance evaluation to determine an individuals participation in the company bonus pool.

We want to know three things:

  1. How have you demonstrated your commitment to the company’s mission?
  2. How have you demonstrated your commitment to your team’s objectives?
  3. How have you demonstrated a commitment to your career and self?

Each individual is asked quarterly to self evaluate themselves by answering these three questions. These answers are then melded with a similar assessment from a Team Leader to enable and facilitate a discussion about each individuals software journey.

If each individual is true to themselves and make contributions that play to where they are at on their software journey, then they will have numerous examples of how they have and continue to demonstrate their commitment. The discussion with their Team Leader is then a focus on how to amplify their experiences and help each person better achieve results for themselves, their team, or the company.

We have three resulting ratings:

  1. Exceptional. You are demonstrating a commitment and everyone around you agrees.
  2. Successful. You are demonstrating commitment, but not everyone is aware.
  3. Needs Improvement. You are not demonstrating commitment, and perhaps this job or career is not yet your cup of tea.

Everyone who receives an Exceptional or Successful rating receives a prorata portion of the company’s bonus.

We are excited for and would love it if everyone in the company receives the bonus. There is no concept of unification. We would rather our employees and Team Leaders invest their time in aiding everyone to improve the experiences they have on their software journey.

While rare, and since we have a big commitment to continually hiring entry level talent, some people are not able to demonstrate the commitment to self or the corporate mission. In these situations, we place people on a performance plan and have an open dialogue about their reasons for being in the software industry. More often than nought, people leave WSO2 under these circumstances to pursue new careers having gained an increased awareness of their personal desires.

Demonstrating Commitment

Every creative individual demonstrates their commitment in different ways.

Demonstrating commitment is a reflection of:

  1. Are you engaged and excited by the work that you do?
  2. Are you striving to make the people, products, and systems that you work with better?
  3. Is your attention to detail improving along with identifying ways you, your team, or the company can better itself?
  4. Are you contributing to industry peer group in work groups, standards bodies, open source projects, conferences, networking, and career advancement bodies?

This broad definition of commitment allows each person a wide range of freedom to define how they are contributing to the company and furthering their software career journey.

This definition also allows Team Leaders to have an open dialogue to identify people who are not a great fit for the type of software that we build and sell at WSO2. When an individual’s self assessment is filled with contributions and commitments in areas that fall too far outside the core of our corporate direction, it becomes easy to discuss and relate.

The CEO Self-Assessment

As CEO, I am not above or beyond self-assessment against these ideals.

I have day-to-day responsibilities:

  1. Setting strategy and direction
  2. Modeling and setting the company’s culture, values, and behavior
  3. Building and leading the senior executive team and board of directors
  4. Allocating capital to the company’s priorities

But beyond these items, I demonstrate my commitment in other ways.

Company Commitment

Given my unique historical experiences in product management and DevOps, I personally am taking PM responsibility for Ballerina’s package management registry technology lines. Much of the success of our Ballerina initiative is tied to collaboration among developers and we need a package management system designed that exploits our unique integration qualities of Ballerina married to the best attributes of what other package systems prior to us have created. My background with package managers and connection to other industry contacts offered me a chance to apply my experiences to this domain to the company’s benefit. Delegating this to another PM who was new to the package management discipline might have been a disservice to the company.

Team Commitment

For my executive leadership team, I am working to retain executive coaches that can interact with each member in private 1:1 sessions. These coaches have experience in high growth software startups or within publicly traded companies.

For my board team, I am working to improve involvement in strategic decisions and to deepen their access to business analytics. I would like WSO2’s board reporting to become real time and dynamic, so that management and the board can maintain a concise, unified, and current view of the business lowering the frequency of briefing meetings and allowing us to interact more frequently on high impact strategic matters.

Individual Commitment

I am a strong proponent of self-learning and industry networking.

To advance my understanding of technology, I am committed to obtaining committer status on at least one container or serverless related open source project. I continue to contribute lightly to Eclipse Che, a cloud IDE project, and I am working towards committer status rights on Ballerina. Obtaining committers status requires a focused contribution to the project itself, which requires hands-on study, learning, and skill acquisition that allows me to advance my broader understanding of technology.

To advance my understanding of the software industry, I am an avid daily reader of news, analysis, deals, and investments within the enterprise software segment. This is a 1–2 hour / day commitment to overview the day’s activities and proactively discuss with peer groups online (whether on Medium, HackerNews, or in private email groups). It is often these email discussions where insights and true learning develops.
Additionally, I commit to attend at least 1 industry networking event each quarter (outside the dozens of customer meetings, technology conferences, and meetups that we do as part of our day to day). I’m particularly excited about attending the Open Source Software Leadership Conference in a couple weeks.

Be Creative—Enjoy Your Career

We are excited to be releasing this improved performance review system at WSO2. We hope that it will allow creative people to operate creatively in an environment that maximizes their career enjoyment and productivity.
If you are thinking about a career in software, and want to be in an environment surrounded by talented, intelligent professionals passionate about working on large scale problems for open source and enterprise software, you should write me at tyler@wso2.com as we are growing and hiring.

WSO2: The 8th Largest OSS Company – 2017 Results and 2018 Plan

I joined WSO2 because of Open Source Software (OSS)’ potential.

Open source enables a transparent innovation and business model. Intellectual property published with an open source license can be consumed with freedoms not available with commercial licenses. Customers buy WSO2 subscriptions with clarity that our business goal is their successful deployment of open source to address their digital challenges.

Can IBM or Oracle say the same?

We align WSO2’s interests with customers by IP transparency through open source and the Apache-way.

In public markets, a company discloses business and financial information regularly to the public with disclosures to protect investor, facilitate capital formation, and to maintain fair, orderly and efficient markets. Additionally, our customers, by purchasing our subscriptions, are making a dependency upon us. Their awareness and confidence in our business and financial health is necessary to establish an equitable engagement.

To further the alignment we have with customers, WSO2 will now annually report key business and financial results.

We are pleased to share that WSO2 is financially sound.

WSO2 is comprised of two businesses: OSS subscriptions and professional services. Subscriptions are renewable and we use SaaS metrics for tracking KPIs in pro forma financials. The ARR and customer metrics reflect our subscription business and our EBITDA is for the company.

In 2017, we will exit our Annualized Recurring Revenue (ARR) between $24.5 – $25.5M, a growth of 52%, up from 46% growth the previous year. Our gross margin for the recurring business is 88% and will increase in coming years. In 2017, we will turn our first profit with $603K EBITDA and generate $2.7M cash from operations.

We acquired 150 new customers in 2017 and more than 80 new subscription customers. Our new customers start with professional services during their technology evaluation and either continue consuming WSO2 open source or transition to a WSO2 subscription for access to patches, security updates and incident support.

We use dollar-based net retention rate to measure our ability to retain customers and expand their use of our subscriptions. Historically, customers have expanded their use of our IP and subscriptions over time as they realize the benefits of speed and innovation that come with engaging WSO2.

To support growth, we began significantly hiring in support, sales and marketing in Q3 finishing the year with a 482 headcount.

2017, by all accounts, is a successful year for WSO2.

We attribute the results to:

  1. The passion and commitment of the employees and partners that put customer needs ahead of their own. We track our NPS at 25. We are striving for a 50 NPS, which is rare for enterprise software given the spectrum of customer needs.
  2. Product and intellectual property expansion to service cloud-native architectures, which are, along with microservices, dominating customers’ future deployment expectations. This advanced architecture lets us process 5 trillion transactions, 40 million identities, and 200,000 APIs across our customers. We estimate that 25% of our customers are cloud deployments across our public cloud or within megaclouds.
  3. The continued rotation within IT from proprietary to open source software. We have seen a dramatic rise in the number of organizations which have open source mandates, especially in emerging market territories, public sector, and system integrators.
  4. Maturity and continuity of operations. We have 69 employees with >5 years service and 23 with >10 years. More than 2/3 of employees with us five years ago are with us today. Our employee mix is 33:67 for female:male creating a vibrant culture of diversity. Also, other than myself, the WSO2 management team has not changed since 2013. This has allowed a long-term open source vision to nurture in equal measures across the company.

WSO2 is the 8th largest OSS company and largest integration OSS company. An OSS company derives more than 50% of its revenues from OSS support subscriptions. The top OSS companies are:

  1. RedHat
  2. Pivotal
  3. Mozilla
  4. Canonical
  5. Hortonworks
  6. Suse
  7. MongoDB
  8. WSO2

Acquia, MuleSoft, Cloudera, Alfresco, Actian, Sophos, Forgerock, and Datastax were not included due to their open core model and dependency upon proprietary licensing.

We expect the coming year to continue playing to our strengths. Trends tied to growth in programmable endpoints across devices, identities, apps, APIs, and data will increase. Integration is now central to digitization. Every program is an integration and every developer an integration specialist. This compounds the challenges to creating and governing integration endpoints that is the emphasis of our business.

Our 2018 operating plans include:

  1. Continue investing into Ballerina, and relaunch it with a developer GTM that focuses on solving integration problems for the next 20 years.
  2. Expand sales and marketing by opening offices in new territories, establish our first resellers and distributors, and growing our sales, marketing and channel organizations.
  3. Continue our investment in cloud-native architectures with the generational release of API Manager 3 and Enterprise Integrator 7 along with investing into cloud infrastructure installers.
  4. Invest into broadening the value of our subscriptions: launching a Technical Account Manager program, expanding our Long Term Support policies, bundling cloud-native operations tools within our subscriptions, broadening the scope of our managed cloud services, expand test grid coverage to incorporate ecosystem technologies, and exploring the inclusion of a security scanning service.
  5. Launch research initiatives into open source blockchain, AI, machine learning, and General Data Protection Regulation.
  6. Formalize the CTO office. Our co-founder, Paul Fremantle, will return full time as our CTO January 1st after completing his PhD in Computer Science. The CTO office will receive investment to formalize the production of our Corporate Reference Architecture, Corporate Reference Methodology, Global Technology Outlook, and Global Market Outlook.
  7. More than doubling our investments into marketing, enablement, and market education programs.
  8. Renewed focus on open source governance to better engage the community and their involvement in the evolution of our projects.
  9. Expanding our sales territories from 4 to 9 and separating our OEM ISV business.

We expect our ARR growth rate, EBITDA, and cash generation to increase in 2018. We’ll exit the year with approximately 560 employees.

All this means we can – and will – create a lot more open source that helps IT digitize assets.

We will be working to turn WSO2 into an IT-household brand, bringing our form of integration into every application and service you are building. If you are new to WSO2 or open source, 2018 will be a great year for you to learn more about how we can help you solve your digitization challenges. Get in touch with me directly: tyler@wso2.com.

Since this blog post includes future operating plans, predictions, estimates, and forecasts, this is a good time to point out that we have lawyers, and that our lawyers want you to know that this information represents our current judgment on what the future holds and it is subject to risks, uncertainties, and other nightmares. In other words, don’t be crazy by drawing conclusions that have undue reliance on this blog post and understand that we may revise anything.

The WSO2 Impact

Last week in London at the Royal Garden Hotel, 330 professionals gathered for WSO2’s EU Conference. It was our 12th conference, 5th to be held in Europe, and my 4th. We hold this conference to help our customers, partners, and employees better understand how to create an agile approach to shaping their digital business.

Preparing for microservice API gateways

In my opening keynote, we discussed the nature of WSO2’s impact on digital transformation over the past decade. With 485 employees and 6 global offices, we are finding new ways to help people get regulated financial services through PSD2 compliance and API management (Deutsche Bank, Societe Generale), get better health care by managing patient info and drug usage (Prime Therapeutics), get convenient shopping experiences (Far Fetched), getting to places faster through tube digitization (Transport for London), get efficient public services with digitized taxation (Her Majesty’s Revenue and Customs), or become more productive through integration (Travis Perkins).

WSO2 touches billions of people, identities, systems, and data daily

As part of this impact, 40 million identities login through our identity server. And given current projects underway with public sector and telco projects in Latin America and the EU, this will grow to more than 250 million in a few years. Dimuthu Leelarathne’s presentation on how IAM is a catalyst for digital transformation explains how identity has become the quiet backbone of nearly every transformation project.

In a couple years, 3 out of every 100 people will authenticate with WSO2

Increasingly, APIs are now the leading driver of digital transformation initiatives. APIs provide a common way for partners, developers and customers to access digital assets. WSO2 API Manager has become our fastest growing product, managing more than 20,000 APIs which in turn reach another 200,000 organizations. Engineers from WSO2 held sessions on how APIs are impacting microservice architecture, crafting API strategies with marketplaces, cloud-native API management, API gateways for microservices, building an integration platform strategy, and container-native digital transformation architecture.

In breakout sessions, WSO2 engineers discussed a future of micro gateways with billions of APIs…

APIs will have an even bigger impact on our future. As developers become comfortable with authoring microservices managed through orchestration, services will become recursive, both consuming from endpoints and becoming an endpoint themselves. The very act of writing small units of code generate new APIs. Centralized API management may not be sustainable forcing governance down into the services built by developers. Micro gateways, registries, and storefronts are emerging, embedding observability and control on the edge within each API into a topology of interconnected API managers.

If you are curious how APIs are altering the course of 6000 banks throughout the EU, see Seshika Fernando’s session on PSD2 and Open Banking.

WSO2’s Future Impact

Over the past few years, we have seen a new tension emerge:

  1. Rapidly changing developer consumption models
  2. Explosion of IT assets required for digital transformation

Did you know that there are now 286,000 SaaS applications and the average knowledge worker connects to 84 systems? These systems are now considered IT assets which must be integrated so that they become appreciating assets. But our range of IT assets has increased, where we must treat the billions of devices, millions of APIs, exabytes of data, billions of events, and billions of identities all as assets that are essential participants in our digital experiences.

In a few years, there will be trillions of endpoints participating in digital transformation

IT managers are facing new challenges.

  1. How do you increase agility across legacy assets and emerging technologies?
  2. How do you enable developer choice while increasing release velocity?
  3. How do you build and deploy services with Google SLAs when you have 3rd party dependencies?

Digital transformation starts with unlocking your IT assets. But with so many different assets to be managed, there is growth in 3rd party providers, which has lead to significant infrastructure specialization to achieve hyper-scale, which leads to a large number of specialized development frameworks required to program these IT assets.

It’s no wonder that according to IDG and the Cloud Native Computing Foundation that IT managers now report a 60% skill gap that is expected to increase in future years. The breadth and volume of technologies that a developer must understand has grown faster than our industry’s ability to absorb those technologies. With developers gaining bargaining power to choose their programming language, development methodology, and tool chain, IT managers are stuck in the middle choosing between recruiting available talent that brings unique development standards versus standardizing their IT stack for group-wise productivity.

At WSO2, we view APIs, events, and streams as technologies that allow IT managers to standardize how all of their IT assets are made available to developers. These technologies are a standard language that allow developers to unlock any consumption model, programming language, and tool chain.

More than just technology, these assets are the foundation of the serverless IT operating model. Today, most digital transformation projects are still server-based which has your services deployed as servers with reserved capacity, upfront commitments, and weak task isolation that creates an economic incentive for architectural bundling of tasks together. IT seeks out an optimal bundling of tasks to avoid overpayment for idle server time. However, APIs, events, and streams offer a simplification of IT architecture that allows for individuals requests to be aligned with microservices. This creates a potentially new type of operating model where costs are allocated per request, payments are made in arrears, and there is strong task isolation leading to economic behaviors that encourage us to split tasks instead of bundling them.

Build APIs, events, and streams to prepare for the world you are imagining…

Serverless programming models, still in their infancy, offer the promise of altering the IT cost structure to align costs with transactions. We heard from dozens of customers and partners that they are beginning their serverless journeys with WSO2.

Whatever your destination may be, APIs, events and streams are a way where you can advance your digital transformation journey. They unlock different programming models including servers, VMs, microservices, and FaaS; allows your services to be authored in different programming languages; creates composable “digital building blocks” with recursive consumption built-in; and modernizes your distributed architecture without disrupting bi-modal IT.

If you haven’t already, I’d encourage you to consider WSO2 for your digital agility and transformation initiatives. We are the only provider that can connect all of your IT assets into APIs, events, and streams and then also provide a comprehensive governance. Our open source licensing model makes it easy to get started with WSO2 and forces us to align our subscription value to your project’s success.

WSO2 is the only provider that connects all IT assets into APIs, events, and streams

In Paul Fremantle’s keynote, he dove deeper into the concepts of APIs, events, and streams on how they are shaping an adaptive future for all of us. I wonder if we should be scared that he titled his session, “Darwin Ate My App”.

In Sanjiva Weerawarana’s keynote, he discussed the role of Ballerina, a new programming language designed to make it simple to program cross-cloud distributed transactions.

After my keynote, I was able to take private meetings with dozens of our customers and partners, and network with speakers and attendees. This group, collectively, makes up our ecosystem.

220 delivery partners, 50 technology partners, and 100 open source projects make an incredible ecosystem

I’ve never attended a conference where so many people were grappling with digital projects of such complexity and scale before. It’s incredible that we see WSO2 at the heart of all these projects and the excitement the community feels for how we can contribute even more significantly in the future. I’m eager to participate in our next conference and to further this vision, together.

I’d like to send a special thank you to the more than 100 WSO2 employees who participated in conference planning, logistics, organizing and speaking. Such an event is not possible without all of your passion and commitment.

Why I Joined WSO2

On Tuesday, it was announced that I joined WSO2 as its CEO. This is an exciting and proud moment as it creates an opportunity to work with the (almost 500) geniuses employed by WSO2 and to engage our customers, partners, and competitors that are collectively contributing to making the massive and growing middleware segment better.

I joined WSO2 because I was inspired by the challenge to help us become a #1 provider in a competitive and technically challenging market.

My first experience with middleware was in the 90s while working at BEA, now owned by Oracle. It was an amazing experience to witness BEA’s transformation from C-based platform (Tuxedo) into the Internet, Java and JavaEE leader with Weblogic. Scott Dietzen, then the BEA CTO and recently the CEO that put Pure Storage (NYSE: PSTG) through its IPO, lead BEA’s transformational efforts to create a strategy that leapfrogged BEA ahead of alternatives.

Due to:

  1. The rapid rise of cloud, and;
  2. Rapidly changing consumption models for developers with containers, microservices, serverless, and APIs, and;
  3. The rising complexity from streaming and analytics of real-time event-driven architectures attached to exabyte architectures connected to millions of systems, and;
  4. Corporate core competencies tied to an ability to transform data into insights with machine learning,

we are on the precipice of witnessing a new wave of cloud-scale, cloud-native middleware emerging that will be as significant as the C to JavaEE transformation we witnessed in the 90s. Scott’s achievements are personally inspiring and have no small influence on my choice to undertake this mission.

Leading WSO2 through this transformation is an ambitious, challenging, and exciting opportunity that is something worthy and respectful to the ridiculous talent we have already assembled.

I led Toba Capital’s first investment into WSO2 in 2011 and have been on its board since. Through that time, it became apparent that WSO2’s innovation engine was world class and repetitively produced intellectual property that was faster, easier, and safer superior to alternatives. These advancements are a reflection of WSO2’s internal culture of constant improvement combined with its advanced talent development with university rotations where we now have 132 people (27%) that have or are currently pursuing multiple degrees, master’s degrees, or PhDs.

The rate of innovation combined with an open source business model, customer-first experience, and all delivery functions (support, consulting, training) delivered directly by our engineers has let us establish meaningful relationships with 400 world-class enterprises that represent amazing cross-sections of the global economy managing 5 trillion transactions each year with our technology. Impressively, 25% of our customers come from financial services like BNY Mellon, Credit Agricole, HSBC, and BNP Paribas who have stressed our technology stack to meet expectations imposed by a dizzying array of regulations, security, and performance requirements.

In spite of these achievements, we are the lesser known vendor. While we have near zero churn with our customers who shout our praise and have us as their strategic platform, most describe WSO2 as ‘unknown’, which is a polite way to imply ‘misunderstood’. WSO2 has not conformed to mainstream positioning, go to market, and delivery and most regard us different.
This non-conformance creates tremendous advantages WSO2 passes along to our customers, but not fully appreciated by the rest of the market:

  1. Our team-based, non-commission approach to sales ensures that our customers are always first placed ahead of compensation or the company’s bottom line;
  2. Our 100% open source platform ensures broad community participation leading to better performance, stability, and advancement;
  3. Our delivery through our engineers ensures that customers engage with experts that can fix anything instead of working through layers of management and support abstractions delaying resolution and satisfaction;
  4. We have an efficient operating model that does not depend upon cash from investors, debtors, or the public markets giving us freedom to grow in ways beneficial to our customer’s interests;
  5. Our no-politics and open culture have lead to an industry low employee turnover and rich diversity with 33% female employees and 34% of our leadership positions are held by women.

My most recent venture was Codenvy, which we sold to Red Hat in June. The people at Codenvy made it special and transformed us to the #1 vendor in a highly competitive cloud IDE space. The Codenvy journey was one where we rode the container and cloud-native wave, as the marriage between container-services and hosted developer workspaces were a combination that allowed the growth of cloud IDEs to effectively compete with desktop alternatives pushed by JetBrains and Microsoft.

Containers and cloud-native concepts are redefining the consumption models for how developers work with and deploy middleware. These technologies are causing a middleware rethink, especially in a world where orchestrators like Kubernetes and chaos monkeys scale and destroy unpredictably while the system maintains constant resiliency. For many vendors, talking cloud-native is great marketing fodder, but overlook the reality that their platform will require a reset. Our competitors with proprietary licenses and huge cash burn will struggle to demonstrate true innovation in this space.

With WSO2, we’ve been building a new cloud-native technology stack. Our open source projects include Ballerina (a programming language for integration), MSF4J (a low RAM microservice framework), Carbon (an instant boot server framework), and Siddhi (a streaming SQL framework). Collectively, they are compelling building blocks to create cloud-native middleware for integration, API management, analytics, identity and access management, and IoT.

If you are container-first, serverless, microservices, cloud-native, or developer-first … or you are an enemy to mega cloud lock-in and proprietary business models, then we will demonstrate to you middleware services that can run in any cloud, outperform any vendor, provide rock-solid stability, and backed by our customer-first, engineer-delivered business model. Please engage our team and discover why we are a hidden gem in middleware.

With the amazing people at WSO2 as the backbone, we can and will do with WSO2’s transformation that BEA did with Java.
And for those reasons?—?the people, the challenge, the technology, and the fun?—?is why I joined WSO2.