If you are living in any metro in India, you can’t miss Odoo billboards and ads. In Mumbai, they have gone all out, with entire metro trains painted with their brand colours and billboards on several iconic junctions, including one that Mr Ambani can’t miss at Peddar Road. (Spoiler alert, that probably won’t work).
In many ways, this is not surprising. Odoo has raised close to $500M in Venture Capital, and a bunch of that capital is bound to go to a marketing blitz. I have been following Odoo for several years, since the days they were OpenERP and have seen their evolution. Fabien Pinckaers, the intrepid founder, has worn ambition on his sleeve. When they renamed to “Odoo”, he wrote in a post that companies with more “o”s are likely to be valued higher. Earlier he had picked fight with SAP by creating a campaign called SorrySAP.
While I have admired Fabien’s ambition, the product Odoo has never inspired me as much. There was time when they were clearly inspired by what we do at ERPNext, but then once they had capital, they raised their product game as well. While the Odoo conferences have become bigger money spinners with partying and free beer, the messaging has been focussed on the core product.
The biggest flip-flop on Odoo’s part was their commitment to open source. Odoo changed their license to LGPL (Lesser General Public Licence) with proprietary modules. Fabien has repeatedly said that he is able to contribute more to open source, because he has a licensed version which he can earn for. The reality is that Fabien must have found it hard to raise capital with 100% open source as the service is less defensible.
In my view, values must be followed specially when they are inconvenient, otherwise they are just for signalling. By switching to a licensed model, while keeping a basic product free, Fabien has shown that while he likes signalling open source, for him commercial success is more important.
The “expansionist” mind-set does not only show up in their marketing, but also in the business model. Odoo has over the years cannibalised its partner ecosystem by investing heavily in a services business, which is mostly run by its Indian subsidiary. Odoo partners are frustrated by this and most of them will privately complain about it. This brings us to the question why Odoo is so interested in the Indian market.
Over the past year, Fabien has been living in India and investing heavily in the Indian business. He plans to hire several thousand people and he believes in the Indian growth story. Several “influencers” have invited (or more likely, have been paid to invite) him to their podcasts, where he has been happy to stoke the egos of Indians who are hungry to hear of any success story. Fabien’s thesis is that the future belongs to India and he hopes this is where future growth for Odoo will come from. I just wished that he had a chat with Intuit, who recently shut shop in India for Quickbooks or with Mr Vembu of Zoho, who also did a blitz marketing for their accounting app. People who have been selling software products in India have always found the market to be shallow and price sensitive.
We have been watching the impact of Odoo’s marketing on the ERPNext ecosystem very closely. The impact is minimal, if any so far. ERP is not something people buy by looking at a billboard. ERPs require a big organisational shift, a rethinking of the company’s operations and a whole lot of consultants to help in the journey. I am sure a lot of people would have tried Odoo, but it is unlikely they are going to stay. People don’t just buy a product, they buy an ecosystem.
A company that is spending millions of dollars in marketing will have to recover the money from its customers, sooner or later. Companies selling software to small businesses have learnt through the years that they are extremely cost sensitive. This is why we believe that the story is yet to play out. Our focus on ERPNext is to focus on profitable and sustainable growth, keeping our costs low so that our customers can benefit in the end. Unlike capital intensive businesses, there is not a lot of capital that goes into making software so the idea of “economies of scale” does not have a lot of impact.
One of the downsides of Odoo’s bait-and-switch to proprietary software is that people often ask us at Frappe if we will also do the same. On principle I think this is a wrong question to ask. While we have no intention of going proprietary or becoming a “unicorn”, I tell people that this is our prerogative. To pre-empt any such decision, we have shared our copyright with all our contributors, so even if there is a decision like this, we will have to get consent from everyone.
As a competitor, I am not afraid of Odoo at all. The more cash they burn, the bigger hole they are going to find themselves in. Our strategy is going to be to beat them at product and ecosystem. Be the proverbial tortoise to Odoo's hare. Since we have zeroed in on Frappe Cloud as our business model, we have found a good fit with our partners and we are committed to grow our partner ecosystem. Our customers don’t have to pay per-user license fees and partners get a solid and reliable hosting platform for their customers.
In my opinion, Fabien would have been better off using India as a development back-office rather than trying to win the market. In either case, we are more than ready for the competition and welcome it, as any competition benefits the consumer. When people ask me “Odoo is ramping up marketing in India, what are you guys doing?”. My immediate answer is “So did Byju’s, let’s wait and watch”
