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Magnolia CMS has practically always been there. It’s overcome and survived the highs and lows of the digital economy. And today it’s stronger and more present than ever. An interview with Boris Kraft, co-founder of Magnolia, about entrepreneurship and bootstrapping, CMS and business platforms and the future challenges of our industry.
Thanks for the possibility to, once again, talk shop for a little bit. To begin with, Magnolia is an extremely international team, distributed across five locations with 80 employees – Europe, Asia and the United States. Our revenue is at the double-digit million level, and more than 80 percent of that consists of licensing income. We ourselves don’t implement projects; this is taken care of by approximately 100 implementation partners. We are growing continuously – ten years ago we were a company of four!
We’re hearing a lot of good things about Magnolia. For starters: What is your situation now and where do you see yourselves?
A few months ago we moved into our new offices – we finally have enough space and infrastructure again to renew the growth of our business in Switzerland, where approximately 45 of our employees are located. Now we have the room to give young talent a chance; after the summer is over, we will be offering a computer science apprentice program.
Our customer base consists of companies and organizations of all sizes and across many different industries. Magnolia is used especially often by customers in the finance- and insurance industries as well as in travel or the media sector. Roughly speaking, our customers can be divided into one of two categories: Either they need a relatively traditional “website” or they’re in the middle of the digital revolution.
The first case is sometimes a door opener for the latter, but generally, we are clearly focused on helping our customers to emerge as winners in the digital transformation game. We therefore position ourselves as the CMS for digital transformation or as the platform for digital business.
We deliver a quality product “Made in Switzerland” for the global market, for companies with the highest standards regarding flexibility, expandability and usability.
Magnolia has been around since 1997, the initial product launch was in 2003. So, you’ve experience the ups and downs as well as the developments of the digital industry firsthand. What were the key experiences for you during this time?
Yes, we’ve survived more than one low and have been able to climb to new highs again and again. First on the list, of course, was the .com collapse at the turn of the millennium – sort of the digital counterpart to the Titanic disaster at the start of the 20th century. As a four-year-old I “experienced” the landing on the moon – at that time watching on a black and white TV, and I don’t mean the color of the television with that comment! For me, this was the start of boundless promises for the future. Star Trek. Perry Rhodan. Star Wars!
Then came the boom of the world wide web until the turn of the millennium. New Economy! Everything will change! Everything will be better! Those were crazy times and Pascal (editor’s note: Co-founder and CEO of Magnolia) and I started working together during this time – just to immediately have cold water poured on our plans. Nevertheless, it was clear to us that digitalization would continue to progress; and we wanted to be a part of it by writing our very own humble success story originating in Switzerland.
There was many a moment where we muddled through, where we had to, on a personal level as well. Building up a company while current operations continue never occurs without bloodshed. The demands placed on an 80-person company are of an entirely different nature than those made of four people sitting together in a room, dreaming of the future.
In my opinion Magnolia was and continues to be an early innovator. How do you do it?
On the one hand, we’ve always been able to inspire outstanding employees to join Magnolia – and have given them as much freedom as possible. At the same time, though, Pascal and I continue to lead operations. Pascal’s main focus in this is determining what has to be present in the immediate future. My job is to ensure that we are still relevant in five years. In this area of conflict between short-term success and long-term vision we’ve repeatedly been able to make the right decisions together, decisions that our team then implemented.
As a businessman you do something because you are dissatisfied with the status quo. And in the past twenty years I have never had a problem creating ideas or anticipating developments that were capable of changing the situation at hand.
The difficulty lies in carrying it out! And this is also the least satisfying aspect of the entire process: Some ideas took five years before we had the time to implement them. Some ideas are even older and are still waiting for us to have the resources to realize them. Magnolia is never as good as we would like, and this drives many employees of the company to scrutinize the status quo again and again, to ask whether something can’t be done even better, even easier and, at the same time, even more flexibly. There’s a lot of passion there for what we do.
What I’ve never really understood is that you’ve always insisted on financing yourself. It’s obvious that you wouldn’t have received any funding in 2003. But later, when the CMS market began to accelerate, it was clear that there was a limited window of opportunity to conquer the market. Drupal leveraged this and, at least at first, emerged as the winner. This could just as easily have been Magnolia. In hindsight, how do your regard this decision?
Maybe you mean Acquia, not Drupal ;-). Were they the winners to start with? Is size everything? The last time I counted, Acquia had received about US$ 100 million in investments. If you consider that relative to their revenue, I don’t think they’ve been particularly successful.
Of course the customer prefers to buy the leader of a not-so-magical quadrant, but this, by itself, doesn’t ensure a successful customer project. Or, to put it another way: A sales-driven organization can’t afford the quality of a Magnolia. The question therefore is: What do you as a businessperson want? Conquer the world? Limitlessly increase revenue for revenue’s sake? Or do you want to make your employees and customers happy?
Developing Magnolia 5 a couple of years ago was a milestone for the entire software industry. There isn’t another product like it on the market, which – on the one hand – astonishes me, as I presumed that our innovations would be quickly copied.
But, if you understand that most manufacturers don’t have an interest in simplifying the lives of their customers, then it becomes less astounding. Magnolia 5 is unbelievably flexible and unbelievably easy to use at the same time. It is, therefore, an excellent basis for digital transformation. As the saying goes: “The only constant is change.”
We were only able develop Magnolia and do what we did with Magnolia 5 because we had no pressure from external funders. Naturally, we’ve now arrived at another point in the life cycle of a company. Magnolia is outstanding, we know what we want to improve next; now the issue is making the product accessible to more people. Funding now makes sense for us, too.
In my opinion you can’t create a good product with money alone. Admittedly, you can’t create it without money either ;-). But the freedom we’ve had until now has been to the benefit of our customers and our employees as well.
In a few pitches at banks and insurers I lost “against” Magnolia. An oft-mentioned argument (simplified): We want Open Source but are on the Java track. Was this strategically extremely clever positioning a conscious decision or did it just develop that way?
Of course it would be nice if one could always maintain that one knew everything from the start and always did everything right. But a strategy develops. After all, we always made relatively small steps. Java, for us, was a given, just because of the employees we had on board at the time. In addition, you really couldn’t seriously consider PHP. And we did Open Source because we had no money at all to market the product, and thus no interest in selling it. We didn’t even introduce a commercial variant of Magnolia until 2006, after the pure Open Source variant almost ruined us.
That being said, I don’t consider Java and Open Source to be our positioning, though. Because of this, both are hardly mentioned on our website. On the contrary, my opinion is that the programming language of a product must be increasingly irrelevant in the future (by contrast, the Java platform is outstanding, of course!). And I think that Open Source still isn’t really understood on the customer side. In my opinion this is becoming less and less important. Yes, access to source code makes the lives of good developers easier, if they want to understand how something works.
At the same time, Open Source shouldn’t be the key driver for decisions. Time and again, during a selection process, we observe that we are the only Open Source system on the shortlist. In other words, our customers primarily think of Magnolia not as an Open Source product, but rather as an excellent one, which just happens to be Open Source.
Apropos Java. I’ve been observing an underlying trend away from PHP to Java for some time now. Do you profit from this in your daily business?
Our segment has always been Java, and for good reason. Our customers are Java shops. Therefore, I think the trend from PHP to Java, if it even exists, is hardly noticeable to us.
If someone bets on Magnolia to digitalize their business, then it is obvious that you need a first-class team of programmers in order to bring the internal infrastructure of a company up to speed. And these programmers have presumably been with the company for quite a long time already, otherwise they wouldn’t know their systems well enough. And, of course, they’ve worked with Java for a very long time, in order to be able to develop their own booking engines or similar applications, for instance.
But, Magnolia has recognized this trend too and offers frontend hipsters a Java-free and almost “CMS-free” option. It’s called “light development”; with it, projects can be developed quickly and with your own tools – while having an Enterprise CMS in the background that isn’t in the way, but is available when the going gets rough. And the going usually does get rough. At the latest, when a page becomes multilingual or access privileges must be managed or third-party systems must be integrated decoupled. Thus, we are well-placed for this power shift from backend to frontend.
Apropos Open Source: Today, I can’t find many references to Open Source on your website anymore. Why is that?
As I’ve already mentioned, I don’t think that Open Source is a USP anymore – thus, in my view, it is increasingly losing relevance. The increasing digitalization of companies means that ever-larger parts of the value chain are being moved to the net, which means we’re leaving the “nice-to-have-a-new-website” CMS and are moving into business-critical infrastructure areas.
This is where Magnolia is right at home, and this is where licensing fees play a subordinate role. This suits us very well, of course, and we have deliberately structured our product management to be the best solution in the market in this segment.
Last year, you wrote many articles about the IoT and some people have asked me what Magnolia has to do with IoT. Can you help me out here?
The whole world has to do with the IoT today. IoT is the future that has already arrived, but is not yet evenly distributed. Magnolia is a platform that makes it easy to integrate data and processes into the user experience, without the user actually noticing.
I can give you a specific example with our customer Virgin America, an award-winning online presence that makes it easier and faster for users to book flights. What the customer doesn’t notice during the booking process is that more than a dozen backend systems are seamlessly integrated into the platform. The user experience is perfect. These integration options are a key feature of Magnolia.
And along comes IoT as the next opportunity and challenge for companies. Initially, for us this is merely another pool of data providers, with which the customer must often interact in an abstract manner.
Can you give us a practical example?
Let’s take, for example, apps (similar to smartphone apps, Magnolia apps are task-oriented user interfaces), already present in Magnolia, that enable you to manage beacons, venues and coupons. In other words, a good foundation for retail, where we have a large number of very big companies in our customer portfolio.
If I get a little less specific, I will assume that we must react to information from the Internet of Things in a lot of areas. For that, we need context, which can come from a CMS.
Four weeks ago it was announced that IBM would acquire the agency group Aperto, a strong Magnolia partner. What opportunities arise for you from this acquisition?
Indeed, Aperto is an important partner for us. I consider it an absolute stroke of good fortune the Aperto has now become a part of IBM iX, the world’s largest digital agency. We already have excellent relationships with IBM; for example, we held our Magnolia Conference in the IBM Innovation Center last year.
We also deliver adapters for some IBM products, especially in the area of E-Commerce, analytics and personalization, and were a partner at the IBM booth at the DMEXCO last year. To make it short: Aperto, as part of IBM, will continue to build on an already excellent foundation and further improve it. We’re looking forward to that!
My article about the consolidation of the CMS Market created an unusual amount of interest. I have the feeling that the market is on the move. How do you see it? Where will we be in three years?
Content management, and the variety of things that we understand and associate with it, is very complex and, at the same time, is still undergoing substantial changes. An end to that change is not in sight. To get back to IoT: What we will be faced with is also something we can’t foresee. There are still new systems constantly flooding the market that are trying to solve sub problems; and there are others that weren’t built for this rapid change and will thus either be shredded or bought up (to then be shredded as well).
I don’t think the CMS world will appear fundamentally different in three years than it does now. The replacement cycles have simply become too long for that in the meantime. After all, as already mentioned, we’re talking about business-critical infrastructure, not pretty corporate websites.
It’s a fact, though, that the pretty and colorful world of the “Customer Experience” has yet to arrive in many companies. That which is actually reality for the majority of customers today could have been implemented with Magnolia as it existed ten years ago. Yes, there are lighthouse projects such as Virgin America or the Airbus Group. But there are also many companies who still have a long way to go to reach a position where they should already be at today. I mean, how difficult is it really to set up a booking process to suit the customer and are there still companies out there that haven’t noticed that the mobile revolution is now the establishment?
When I travel today, I only take my iPhone 6 plus along, no laptop, no iPad. And I book flights and hotels with this device, win auctions or order a Tesla. My customer experiences are very different here. As one would presume, Tesla is fantastic. Other companies deliver hair-raising customer experiences; one must have masochistic inclinations in order to get through the process.
Magnolia has been delivering complete mobile support for years. If other systems are still limping along at the back of the pack, they will probably die out slowly but surely. Taken in this context, the market will consolidate, but the process will surely not be a rapid one. Investments in a new CMS are too big and implementation cycles too long for that.
80 percent of this blog’s readers are from Germany. Germany is an interesting market with a lot of potential. Why don’t you have a bigger presence here, for instance with your own branch office?
Well, our headquarters is located at the German border, with many employees coming from Germany. We have more implementation partners in Germany than anywhere else in the world. Basel has excellent flight- and train connections to every important German location. In short, a branch office wouldn’t change a thing, except add more administrative effort and more costs. This cannot be in the best interest of our customers.
A start-up question at the end: You and your partner Pascal Mangold have an unbelievable corporate backpack. What is your advice to young people who want to found a high-tech company in Switzerland today?
Do it! Seriously, doing your own thing is life-changing. OK, it isn’t everyone’s cup of tea to survive and thrive. One must ask, “What is my motivation?” Money as a motivator isn’t enough, and won’t make you happy in the unlikely event that you are successful.
To want to grow individually is definitely a much better motivation. To make the world a better place (in a large or small context) is a good reason! Motivation is important, because the moment will come where absolutely everything will go wrong.
I started my first company (without success) while still in school. My second (without success) and third (still pretty much a failure) during my university studies. I learned something every time, especially about myself. “To found companies is, in a manner of speaking, ‘agile product development’ of one’s own self.”
I also benefitted by never taking anything for granted. In that sense, the first setbacks were surely formative. And thus, the journey remains its own reward. And as I learned during my first day at the university: even the journey of a thousand miles begins with a single step. Have fun getting started!
Boris, thank you very much for your time.
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