Sacha Labourey is the co-founder and CEO of CloudBees which develops an end-to-end automated software delivery system that allows companies to balance governance and developer freedom. The company has raised over $100 million from investors like Lightspeed Venture Partners, Matrix Partners, Verizon Ventures, HSBC, Delta-v Capital, Blue Cloud Ventures, Unusual Ventures, and Golub Capital to name a few.
In this episode you will learn:
- The importance of integrations after an acquisition
- The impact of strong cultures
- Sacha’s 2025 predictions
- The future of Oracle
- His top two pieces of business advice for new founders
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About Sacha Labourey:
A native of Switzerland, Sacha graduated from EPFL in 1999.
At EPFL, Sacha Labourey started Cogito Informatique, an IT consulting business. In 2001, Sacha Labourey joined Marc Fleury’s JBoss project as a core contributor, implementing JBoss’ original clustering features.
Sacha Labourey went on to become a general manager for JBoss Europe, leading strategy and helping to recruit partners that fueled JBoss’ growth.
In 2005, Sacha Labourey became CTO, overseeing all of JBoss engineering. When Red Hat acquired JBoss in 2006, Sacha Labourey played a crucial role in integrating and productizing the JBoss software with Red Hat offerings.
Sacha Labourey went on to become co-general manager of Red Hat’s middleware division. He left Red Hat in 2009 and founded CloudBees in March 2010.
Connect with Sacha Labourey:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a very exciting founder. A founder from Europe. So, obviously, it gives me flashbacks from when I was born and raised there. We’re going to learn a lot about the ecosystem there, about how you build, and how you scale. Also, he was involved in pre-launch acquisitions as well, especially from the engineering point of view. It’s going to be very interesting to hear his thoughts. Without further ado, let’s welcome our guest today. Sacha Labourey, welcome to the show.
Sacha Labourey: That’s great. Thank you for having me, Alejandro.
Alejandro: Originally from Switzerland. How was life growing up there?
Sacha Labourey: Everybody thinks I’m actually in Switzerland because I’m hiding money or something shady like that, but I was actually born in Switzerland, and I never lived anywhere else. That’s where I live. That’s where I am.
Alejandro: Very cool. How was life growing up there? I’m sure it’s different from what people hear in the U.S. You are also experiencing technology, and it’s at a different pace.
Sacha Labourey: Yeah, it is. I live not only in Switzerland but in a relatively small town. I think it makes you grow up in a very protective-type of environment. I had lots of desires, passions, and so on, but I think it also made me a bit naïve, in some ways, about the way things work in business. I had a lot of unlearning and relearning to do when I started a business. But the life is very, very good here.
Alejandro: How did you get into this world of computers, Sacha?
Sacha Labourey: Very early on as a kid, I had a passion for computers, unlike some of my friends, not so much for games. Yeah, I was playing games, but more interestingly, I was focused on trying to do more stuff. I’m a bit jealous of kids nowadays because you just go on the internet, and you can learn any language and anything. Back then, I remember my VIC-20 and Commodore 64. I was reading books on how to do Basic, but they were for mainframes, so that was never working. Or I would buy a magazine in France, but France was using things like Thompson or Amstrad, which was not working either. You learn the way you can, but there was a lack of training and education. I struggled with that, but I really, really loved it.
Alejandro: Then you did your computer science degrees, and then you started with your own consulting gig. Tell us about this.
Sacha Labourey: I always wanted to be an entrepreneur. I went to a business school for college. After that, I decided to change to go and do an engineering school at École Polytechnique Fédérale de Lausanne. It was a drastic change. I was lucky to do that because I did an internship where my father was working, and they had engineers and physicists all over the place. I was like, “This is what I love. I don’t want to just do business. I want to do tech and business.” I went to do that, and during my studies, I wanted to become independent and start paying for my own studies. It felt fair to me. So I started my company at the end of my second year. That was a great passion with four friends. We were all trying to find gigs and developing software solutions of enterprises. I did quite a bit of networking, firewalls. It was the best school ever, and I ended up meeting some of my teachers at school for the first time during the oral exam. I had never seen them before. It took me off the college track, and I just loved it.
Alejandro: How did you get this entrepreneurial mindset. I’m also from Europe. Obviously, I’m now in the U.S., but I know that there, the mentality is: you finish school and you either go to a law firm or a bank.
Sacha Labourey: Yes, that’s true. You can imagine that when I graduated in ’99, banks were hiring like crazy. Just for a little story, you would have banks where you would not get 12 or 13 salaries a year. But come Christmas, with your 12 salaries, you would get 18 to 20 salaries. They would almost double your yearly salary when Christmas would come. The idea to do something else and struggle in life because, frankly, it’s a lot of struggle was—I think in every entrepreneur, at some point, there is a slight problem with authority. You want to do things on your own and be independent. I think there was some of that in me. I wanted to succeed. I have to say it looks like it was all brilliant, and I was an entrepreneur. The word is a bit too strong. I was consulting, I was doing a bunch of gigs, but I was really bad at business. I think I was very good at what I was doing from an engineering standpoint and from a computing standpoint. But to find new customers and to scale, that was very hard. When I finished my studies, I tried to scale my consulting company. Why, even in the first place, do consulting? That’s a business that doesn’t scale. I tried to do it. I tried to find a way to be both sales and do the work. It was a bad show, and I was not able to scale. It was only because I ended up joining JBoss, which was my real education. It was not something I was able to figure out on my own.
Alejandro: Let’s talk about JBoss because I know that JBoss, for you, played a very critical role in your career, and perhaps that was another MBA that you did with this business. So tell us about the experience here.
Sacha Labourey: Yes, exactly. It’s the best way to say things; it was an MBA. I remember as I was a consultant, as an independent, I felt, “What do I do to get more visibility?” I found this project called JBoss, and I thought, “If I can contribute to an open-source and be visible thanks to that, I can find more business, which was a very wrong thing to think. But, anyway, I did it, and I joined the project. I started contributing things to clustering, and I got to know Marc Fleury, the founder of the project. Marc Fleury was in the middle of a transition. He started the JBoss project. I’ll give a few stories on the JBoss. Marc started just last week, a new company, Cryptospace, and he’s a very smart person, and he also has some interesting instincts as well. The project started in ’99, which was called EJBoss, back then. He received a letter from Sun Microsystems saying that EJB was a trademark. He said, “Okay. I’ll remove the E. It’s JBoss.” He wasn’t going very far to solve problems. He was very pragmatic. He tried to raise money at that time. He was in California. One of the well-known investors in California, from which he was not able to raise money, told him, “Marc, this is not a bad business plan. This is a horrible business plan.” So he got back to Atlanta with his wife and his first kid to live with his in-laws. He would later say that he didn’t create his first company in his garage. He created his first company in his in-law’s garage.
Alejandro: All the pressure.
Sacha Labourey: Well, that’s a problem. He was not saying the pressure. He was enjoying it. He was living with his inlaws; he was having fun. No need to work. No need to make food or whatever, so it was the father that would come to see him and say, “Marc, it must be hard for you not to have your own home. Don’t you think so?” He was like, “No, it’s cool.” So, it took him a bit of time to get the memo. Marc was in that transition, and I started chatting with Marc. Business was not great at that point and time, so I actually paid my last cash that I had in the bank to go to London to take the trainings that Marc had just created. Marc was struggling and trying to rebound by creating a training. I was struggling, and I decided to put my last money to go and add in that training. It was love at first sight between Marc and me, and we decided to move forward and build the business and try to figure out how to make money with free software.
Alejandro: That’s amazing. Obviously, you were part of the building and scaling of this from 2001, where you join all the way to 2005, where you became the CTO and also overseeing the operations in Europe. You also helped with the acquisition by Red Hat. I’m sure that being able to see the full cycle here really provided you full visibility on what that journey may look like initially to the successful exit. How was this full cycle for you, and what were some of the key insights that you took away with you?
Sacha Labourey: Yes, that was my best MBA to see a true execs in motion and learn from them and become less naïve from different fundraising with it to raising debts to receiving the first exits, M&A proposal from vendors, signing some term sheets, and maybe I can tell it now. It’s 14 years after, but I remember. We had a term sheet we had signed with a big company for the even larger amounts. We had done our entire due diligence. We had negotiated everything. I had renegotiated even the compensation of all of engineers. So, we had gone through a lot of the details that were amazing. We had pre-briefed press and analysts and so on. It was the Friday before the announcement that was taking place on Monday. I was still in Europe, and I was on the board of JBoss. I had to stay up late to be on those calls. I woke up on Saturday morning, and the deal was off, or more specifically, there was another deal on the table, a very different and very bad deal. I’m not sure what happened or how much we were the mouse, and the big company was the cat, but it went down the toilet in just a few hours. That’s pretty tough to go through in mental terms because it’s a lot of energy, a lot of effort to go through in those processes. You have to keep them confidential, and it blows up at the last minute. So, that was a tough one.
Alejandro: Wow. The business ended up getting acquired by Red Hat for about 350 million, so the outcome was good. People talk a lot about acquisitions. I think the toughest part is integration, and integration is a beast. Most acquisitions fail. In the integration, you actually played a critical role. Why would you say that integrations are so tough, and what was your lesson as to how you can optimize so that integration becomes something very successful?
Sacha Labourey: I think all integrations are bound to be hard. There is a lot of brain rewiring that needs to take place. You’re used to doing things one way, and then suddenly, you’re not home anymore, and you need to learn a new way. It’s actually tough for both sides. It’s not just tough for the company being acquired. It’s mostly tough for the company being acquired, but it’s actually tough for both entities. I’ve learned a few things. First, trying to shield people from acquisitions to tell them, “Don’t bother. I’ll shield you,” is not a good approach. You need to shield people, but you need to expose them while shielding them. It’s a bit bizarre what I’m saying, but you need to make sure they get rewired, they go with the flow and the new flow. And you protect them from anything that doesn’t make sense because the acquiring company is likely going to come with fine processes or HR things, and that might not make sense just because of a different situation. That can be very tough on people because they care about their families. They care about their salary, and anything that touches on those subjects can be very sensitive, so you need to shield them. But you can’t lie to them. It’s never going to be the same thing again. That’s especially true for any company that had a strong culture. JBoss had a hugely strong culture. When you join another company, and Red Hat had a strong culture as well, it’s a bit like comparing, “My culture is better than yours,” and both sides try to—I don’t know. We’re in some kind of silly war, and you need to stop that and tell people that it’s not going to be an entirely Red Hat culture. It’s certainly not going to be the JBoss culture. It’s going to be something new, but it’s certainly going to be closer to the Red Hat culture than JBoss. And it takes time. I also think that we want the problem to be fixed too quickly. We tell people, “Yeah, we’re going to solve those. We’re going to work on those to help make things happen. My whole thought is hoping that anything will get better before six months is just crazy. You can fix a bunch of things in a very short term, but just for your brain to be used to the new way, to start appreciating people, to start understanding who they are and that they don’t want to be bad with you or they’re not silly, they’re not stupid. It’s just that they come from a different place. It just takes time, and you cannot compress that. I think six months is the bare minimum. Knowing this, I think it’s great if you get to tell people, “You know what? Stick with it and don’t expect magical things to take place before six months because we’re just going to lie to ourselves.” That would help set an objective for people.
Alejandro: Understood. In your case, Sacha, you were at JBoss and Red Hat for quite a bit. You had a senior role, as well. Why did you decide to take the leap of faith? What happened for you to say, “CloudBees is going to be my next phase in my journey”?
Sacha Labourey: It was two things. The first one for me was that it was a two-step process. It was: I want to leave Red Hat, and I want to create something. It was a two-step process. First, the decision to leave Red Hat was because, at some point, I had the feeling that I was part of the furniture. What that means is that I was well-paid. I had good stock options. I had a team I really liked and loved. But it was not exciting anymore. At that point in time, I knew I had to make a decision. Either I was living, or I was diving in again and put a revolution or find the next big thing. But it was way too comfortable. It was not great for me because I was bored, but it was also dangerous for Red Hat, as well. Red Hat needed new blood. Red Hat needed new energy, new ideas. So either I felt I was able to create that new stimulus or hire the people or be a change agent, but if it was to be a static agent, then I was doing a big disservice to myself and to Red Hat. That started to be depressing to me, knowing that I was actually not a change agent. So, I decided to leave.
Alejandro: What happened next?
Sacha Labourey: What happened next is that I always wanted to do my own company. Obviously, JBoss was an amazing story, but the problem with JBoss is that I was on the passenger seat. I had full visibility on everything, and Marc was very, very nice, and a great mentor for me because he was very transparent, was asking my opinion for a lot of decisions. But I was still on the passenger seat. In the end, he had to make the call. In the end, he was the one on the phone with people, negotiating, and doing the hard thing. I was very much aware that being on the passenger seat was not the same thing as driving the vehicle. I knew I wanted to start something. I wanted to ideally to stay peaceful for six months to a year, but very quickly, you feel like you’re going to be legacy, that you’re going to lose your network, which candidly is not true. It’s stickier than you think. I ended up being an a** at home. My wife was telling me, “Go, do your thing.” I was not agreeable to live with at that time. That’s when I started having discussions with my co-founder, François Déchery, who was still at Red Hat. We decided to create CloudBees.
Alejandro: Very nice. What ended up being the business model of CloudBees?
Sacha Labourey: We didn’t go very far, actually. We knew that the Cloud was very appealing even though I have to admit that initially, I thought the Cloud was boring because I was looking at it mostly as a new datacenter. It took me time to absorb why it was so magical. My background was Enterprise Java. I felt it was way too complicated. It was way too hard for developers to have an impact, and there should be a better way. We realized that if we were doing the right things, we could leverage the Cloud to make it much easier for developers to have an impact, to deploy an application, and to go from an ID to something that scales in production with no friction. So, no operation, no nothing, just go. That was, obviously, requiring a slightly different approach because, unlike some of the one-man-type of companies, Java developers tend to have to follow a process. We wanted to focus more on enterprises. That’s when we decided to have a Jenkins part of what we’re doing to have the complete lifecycle in the cloud. Not just the deployment target because back then, with [Roku 0:22:13] and Engine Yard, the Platform-as-a-Service that we had back then, it was just about deployment. It was not a full lifecycle. So we were the first company to actually build that.
Alejandro: During those early days, what would you say was the biggest challenge for you guys?
Sacha Labourey: Initially, it was a series of challenges. It was to find the initial people to join the company because—it’s funny. When I was at Red Hat, I would talk to people, and they would tell me, “I’m upset. I want to leave. I want to do something else. I want to make a revolution.” Then you create your company, and you’re like, “Okay. So you joined to make the revolution with me?” “Well, you know. I kind of appreciate the salary, and what would I get in terms of health insurance?” “Okay, well, you’re not ready for that, obviously.” So finding the right talent was the first one. Then I think it’s executing with the first minimum viable product that you think is—you know, you always think, especially as an engineer, that it’s not going to be big enough. So forcing yourself to do something that’s relatively small was my first challenge. On the whole of my career, I think I’m still very much an engineer at heart. So I need to force myself to think more as a product manager or as a salesperson or a marketing person, but I always go back to my old habits of being an engineer. That tends to be my main weakness.
Alejandro: It’s interesting that before, you mentioned that when you were doing your consulting gig, you were lacking some of those skill sets, perhaps around business and around sales. So, how did you correct those?
Sacha Labourey: Now, I know what I need, and I know I can do a bit of everything, so I tend to be a pretty good generalist, which means that I tend to s**k at all of them, as well. There are a bunch of works for which I don’t even try anymore. I’m looking for people with the passion and talent to do marketing, sales, and so on. So instead of trying a one-man-trick that can do it all, I just don’t think it’s possible. When people are good at many things, you typically hear about them because they would be on TV or they would be very famous, but most people are actually good at just a very few things, and they should stick to it.
Alejandro: Yeah. You guys have raised quite a bit. How much money have you guys raised?
Sacha Labourey: We’ve raised a bit more than 100 million, but part of that is debt. Some of that is equity. So I would say pure equity around 80 million.
Alejandro: Typically, for a business of the nature of yours, what is that pattern of expectations that investors typically have at every stage. You guys have done your A round, your B round, your C round, your D. You’ve even done an E round. What are the typical expectations that you encounter from financing cycle to financing cycle?
Sacha Labourey: It’s very hard to hear you list all of the rounds we’ve done. I don’t have any specific pride, by the way, in raising money. Sometimes, there is a bit of pride to raising a lot of money or raising frequently. That’s not my case. You can find companies that didn’t raise much and have been extremely successful. Salesforce, I just read recently only burned 5 million cash before being profitable. I’m usually impressed by that, not by the opposite.
Sacha Labourey: It’s true. The more you move forward, the more the expectations become financial expectations. Show me your metrics. Show me your EBITDA. It becomes a lot more financial. However, you also find along the way different types of investors. You can still find even at the C, D, and E rounds investors that are very much market/strategy focused. They care about financials. I would say that the spread is much wider. If you do seed or Series A, pretty much everybody will focus on the market, the strategy, what’s the opportunity, and so on. They’re thorough on financial because there is very little to discuss. As you move forward, the span of investors will tend to grow more toward financials, but you can still get a widespread attitude.
Alejandro: It’s interesting what you mentioned on Salesforce, and also on raising capital. I agree with you. I don’t think that people—and you read this in the press. To a certain degree, we’ve lost the direction on how you really are able to measure the success of a company. I don’t think it’s on how much money you raised or how many employees you have. More than anything, I think it’s on the revenue that you’re able to generate per employee.
Sacha Labourey: Yes. Absolutely. You need to build a real business. I feel like I’m already in many ways because when I started raising in 2010, it was a very different environment from where we are today. Now, we’re talking about seed rounds at 4, 8, 10 million sometimes. That’s bigger than my Series A. So everything has changed. I don’t want to draw too many comparisons. That would not be reasonable to draw too many comparisons because the ecosystem is very different. However, I think that anytime you have like an Instagram or those kinds of companies where very early on, with pretty much no revenue, very small entities were able to sell for a billion. Each created a next generation of companies that wanted to get to a billion in exit, not by building a real business, but by making a [0:28:53] or getting that many users or some trick. I found a series of entrepreneurs that were very focused on how to look good to an investor or an M&A. Again, it’s silly Sacha, the naïve Swiss guy who is too much of an engineer talking because maybe they’re right. Who am I to say they shouldn’t do that? But I’m still traditional in thinking that what I love about the job of entrepreneur is about creating a real company with strong foundations and growth revenue with positive margins and have happy employees. That, to me, is a big pleasure in growing a company. Sometimes, I have some regrets, and I felt it shaped some of us sometimes.
Alejandro: You’ve been at it now for almost ten years with CloudBees. As we all know, there’s no such thing as a straight line as an entrepreneur, so as you’re looking back through all the different experiences that you’ve had, what is one experience that you’re proud of. Maybe one experience that was like a near-death experience like a serious breakdown that ended up becoming a breakthrough for the business and for you?
Sacha Labourey: Yeah. 2013 was a tough one. Imagine the context. We raised our Series A approximately six months after we started, after the seed money. Let’s put that in the context of what that was before. Four million felt huge back then and now feel less huge. Then Series B, we raised at less than six to eight months after that with Lightspeed, 10.5 million. It felt huge, as well. It went very fast. When that happens, you don’t necessarily learn through the steps of what you should be doing. It just comes for free a bit. Anything that comes for free, you end up paying the price at some point. We were very happy about the platform as a service we were building from a product/engineering standpoint. It was great. But, truthfully, from a market standpoint, OpenShift and Cloud Foundry, we had emerged as big competitors, and there was a complete lack of standards on the market. Companies were a bit worried to invest too early on something that would just need to be rewritten or redeployed. We were growing nicely, but not enough to justify to be a VC-funded company. When we thought about raising the Series C, we thought it would be done in a month. I’m not lying. We were so high. I remember that even one of the partners at the VC firm that wanted to invest in the Series B was not able to do it because it was not a senior partner, and was so upset, that person left the VC firm he was working at to join CloudBees as business development. That’s a veil of happiness and comfort we had. So I was thinking between that ex-partner as a VC firm and myself, we’re going to raised money in 60 hours, and it took us a year. Not only did it take us a year, but we had to take bridge money from our investors. Nobody wanted to put money in CloudBees because the past was getting past, and I felt like we could die when we started taking the bridge money. We got saved thanks to Verizon Ventures because Verizon really liked our past and admitted as part of the Verizon Cloud. We all forgot about Verizon Cloud by now, but it was a thing in 2013. They had invested an amazing amount of money. They had acquired companies. So it was a good thing. They said, “Yes, we’re going to invest in CloudBees, and we believe in what you’re doing.” That was amazing. I’ll never thank them enough for making this possible. A couple of months after, we decided to change the focus of the company to not be a platform as a service anymore in ’14, but to be focused on Jenkins on continued integration and [0:33:52]. So you can imagine the type of discussion you’re having with Verizon a couple of months after when you go and tell them, “This past thing, if you want it, you can get it, but we’re not going to do that anymore.” It was a tough one, but it’s going to be great to end up for Verizon.
Alejandro: Understood. Really amazing, Sacha. I know that you’re a guy of predictions. I know that you’ve even published blog posts about what’s going to happen in 2025. So let’s do a little exercise here together. Let’s say you go to sleep tonight, and you wake up in the morning, and it’s five years after, how would you see CloudBees or the world in which CloudBees is living in wants that vision and that vision has been realized. Let’s say you wake up, and then all of a sudden, this vision that you guys are pushing for is all of a sudden there. What does that world look like?
Sacha Labourey: That world is going to be immensely cloud-based and publicly cloud-based. I’m not making a big prediction here, but we’re seeing this space constantly accelerate. Cloud will be massive. I think companies like Oracle will have been bought by a PE firm, and there will just be revenue streams. I don’t think those companies have what it takes to exist anymore. I truly think that software will have become a business concept. Today, we’re still in that transition where software tries to be better in terms of hooking with the rest of the business, but by then, I think developers will all be very connected to the business. And everything they do, when we say that developers want to have an impact, they actually will want to have a business impact, and they will understand very well through the tools they can use, what they’re coding right now is having an impact tomorrow and the week after. That’s going to be an amazing place to live. If you can visualize and measure the impact that you have on developers, it’s going to be a lot of fun. That’s where we’re going to be. As for CloudBees, where it’s going to be, I don’t know. I care very much about the vision that we have for the market in terms of building. We’ve created this software delivery management category. Essentially, the equivalent of CRM, but for software delivery. We think that’s what the market needs and is lacking today, so that’s what we’re building. I think this will be a reality. As to whether CloudBees will be an independent company or will have joined one of the [0:36:43]. I’m a strong believer that any market goes through phases of consolidation and innovation. It’s quite likely that a lot of the companies implemented today will not be independent tomorrow.
Alejandro: Absolutely. One of the questions that I typically ask the guests that come on the show, Sacha, is—you’ve been at this for ten years. You started in 2010; now, it’s 2020. Obviously, there are many lessons. It’s been a tremendous run. If you had the opportunity to have a chat with your younger self, with that younger Sacha, what would be that one piece of business advice that you would give to yourself before launching a business, and why knowing what you know now?
Sacha Labourey: I think I would tell myself, first, take care of yourself. It’s a marathon. It’s not a sprint. So, always be persistent. Look at the big picture and the long term. Don’t rush. That’s the first one. Then I would tell myself to let people go faster. That’s a weakness I clearly have because I need to create relationships with the people I work with. I have to feel close; I have to have this sensitivity to my relationships. But the problem with that is once people are not a fit anymore, you need to let them go. I’ve never been in a situation where I felt, “Oh, you’ve been too quick to let that person go.” I’m always too late. That would be my main advice.
Alejandro: Very cool. Sacha, for the folks that are listening, what is the best way for them to reach out and say hi?
Sacha Labourey: The simplest is either on Twitter @sachalabourey or my email address: [email protected] Feel free to send me a note. I’m always happy to interact with other entrepreneurs.
Alejandro: Wonderful. Sacha, thank you so much for being on the DealMakers show today.
Sacha Labourey: Thank you for having me, Alejandro.
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