Unicorn CFO Alessandro Mazzochetti shares success secrets of Odoo
You don't build a unicorn by following well-trodden paths. Belgium's largest unicorn Odoo proves that. With a valuation of now 4 billion euros, Odoo is Belgium's most valuable private tech company. CFO Alessandro Mazzochetti, gives insight into how differently they do business. His growth lessons!
What does Odoo do differently than other scale-ups? Why did the Walloon software company transform from loss-making company to first and largest Belgian unicorn in less than a decade? CFO Alessandro Mazzochetti throws all his cards on the table during a keynote and interview at Fortino Capital's CFO Summit at The Hotel in Brussels.
In short, Odoo business software gathers the various tools a modern company needs in one package. Their proprietary open source applications work just like Notion, Slack, CRM, Wordpress, SAP, Shopify, Hubspot,... The built-in integration between the tools is the major asset and one of the reasons why success is knocking at the door of the Belgian software company.
Since 2014, the Annual Run Rate (ARR), or annualized monthly recurring revenue, climbed 55% per year, to 420 million euros in 2023. The hypergrowth propels Odoo to a valuation of 4 billion euros. This puts the scale-up well above the minimum criteria of a unicorn.
Their success criteria? Be obsessed about the product, fight complexity, trust people, think as a founder and focus.
Change your business model until success follows
Odoo founder Fabien Pinckaers didn't just become the so called Bill Gates of Wallonia. At age 12, he wrote his first software. At 25 in 2005, Fabien founded Odoo. But the start-up, based on a small farm in Grand-Rosière, didn't break any ground. Odoo ran at a loss for years. The consulting business model with free open source software did not catch on.
A total of 10 million euros were raised in 2010 and 2014. Twice the model was completely overturned. "Changing the business model turned out to be the best method to stop burning money," CFO Alessandro Mazzochetti clarified. "Are you making losses? Then change. Be prepared, anyway, to always change everything." This change mentality also reflects in the most important question the CFO of the Year 2023 candidate asks himself every day: "How can I go faster than yesterday?"
Keep in mind all acquisition costs
Since Odoo built a premium layer on top of open source in 2015, its revenue, customer and employee charts have exploded. Remarkably, the hypergrowth occurred without a single acquisition. "Purchasing a business model is the only good reason to buy another company. But we have a rock-solid business model ourselves. Besides, you can't underestimate the large integration costs of time and money in an acquisition. And the probability of failure is higher than 60 percent." In contrast, Odoo invests its resources in its own product, its own people and the purest possible execution.
Give your people autonomy
Today, Odoo has 50 million euros in its bank account. By 2023, it will generate 20 million euros of ebitda on top of that. "We are going to invest this amount in people in the coming years. Our 2830 people will gain 600 colleagues in Belgium this year, 1000 worldwide," Alessandro reveals the plans. "Training them, giving them confidence and initiating them into our way of working, requires big investments."
That the corporate culture at Odoo is completely different from elsewhere does not make onboarding easy. Central to the culture are: autonomy, responsibility and evolution: "Don't command and control, but trust your people. Give responsibilities, not tasks. When they ask for validation, answer: 'you decide'. Many companies say they act this way. But we really do."
Recruit by IQ and competencies
Even during recruitment, Odoo acts according to its culture. Alessandro: "I don't look at resumes. Experience doesn't count. I do select according to IQ (at least 110), real tasks and competences. This means that I already give 25-year-olds responsibilities that they would never get elsewhere at that age. They decide on budgets and projects themselves. I train them to make decisions. For example, they don't have to ask me for permission, which leaves me time for the things I have an impact on."
Odoo has an extremely light corporate structure with only two layers of management. The CFO has only his team managers and team members. "The fewer management layers, the more efficient. My main role is to take people to the next level."
As a result, the entire company runs with far fewer people than a similar software company: "We recruit a thousand people a year with 25 HR people. Our finance team has 30 people. We manage this because we focus on pure execution."
Manage like a founder
Founders are molded into managers in growing companies. Odoo does it the other way around. Alessandro looks back: "I didn't manage to work with our founder Fabien for the first few years. He said 'no' to just about every proposal and looked at me like an accountant. Everything changed when I focused on his strategy and discovered my CEO's hot buttons."
Trading his own thinking and Solvay training as a manager, Alessandro traded in the founders mentality. "Founders are unreasonable, unashamed and don't compromise, David Kellogg's three un's of founders. They do what the company needs because they know they will be the only ones to go under if they don't. That's why they make every decision in the best interest of the company."
Therefore, the final advice for CFOs and fellow managers is clear: "List your CEO's needs, align the business process and KPIs accordingly and get them under control."