14. Challenge Accepted. with Gabriel Engel, founder and CEO of Rocket.Chat

"Rocket.Chat is not an "Open Source Slack". It's much more than that. With companies like Audi, Deutsche Bahn and the US Department of Defence using it we're discussing all set of different use cases. I've asked Gabriel about their business model and what the Slack acquisition by Salesforce actually means (and it's apparently a great news!)"- Piotr Karwatka, Podcast Host

Questions Discussed in the Episode:

·      What’s Rocket.Chat?

·      How did you found the company?

·      What’s the Rocket.Chat USP? 

·      Who’s using Rocket.Chat?

·      What are the most popular Use Cases?

·      You’ve got an amazing API and development documentation. Can you share some inspirations - the most interesting cases of using Rocket.Chat you’ve seen so far?

·      What’s your business model?

·      To commercialize the open source product: Do you find it challenging? Why should I pay and not just use an open source free version?

·      Why is Open Source important for Rocket.Chat?

·      How many % of the users are on Open Source vs. paidvs. cloud?

·      Is it true that you wanted to build an International Company from ground up?

·      Brazil is a huge market. How did you avoid thetemptation of local-success?

·      What other tech-companies from Brazil should wefollow?

·      How about the community? You’ve got almost 30k starsand growing. What’s the recipe for success?

·      What are your future plans?

·      Next big thing in the team's communication?

·      Slack acquisition by Salesforce: will it change anything for your business?

 

Transcript:

Piotr Karwatka: My guest is Gabriel Engel, founder of Rocket Chat. At first glance, it looks like the open source version of Slack. However, the variety of use cases is far wider, including customized deployments, Audi, ViaSat, Alpha Bank, and other huge enterprises. I can't wait to talk about the unique features and business model of Rocket Chat.
Hello Gabriel! Thank you for accepting my invitation.

Gabriel Engel: Hello! Thank you for the opportunity and thank you for the invitation. Glad to be here! 

Piotr Karwatka: Awesome! How is the weather in Brazil? 

Gabriel Engel: It's very sunny today, but rather windy.

Piotr Karwatka: Awesome. We had the first snow actually here in Wrocław, Poland, which makes perfect context for our discussion. We'll be discussing commercial versus Open Source, Slack versus Rocket.Chat and all the other topics. So maybe we're going to start with a short explanation  of what actually Rocket.Chat is all about.

Gabriel Engel: Rocket.Chat is a... we call it the ultimate communication platform. It's an open source project that allows you out of the box to have all the features from Slack or Microsoft Teams, private channels, public channels, but also incorporates all the features from Omni Channel and call center solutions. So then you can connect it to a website or like a live chat widget. You can connect your Facebook page or WhatsApp official profile. And also that's what affected open source rather than having to run on our cloud, you can run on a managed environment. So a lot of people run on their own private deployments on Amazon or a Digital Ocean or in any way you want really are even on prem. So it gives you full control and ownership of their data on their conversations. 

Piotr Karwatka: Gotcha. That's interesting. So the variety of use cases I can, as a developer or enterprise use Rocket.Chat for is very wide. We're gonna get into this in a second. I have a few questions about the unique selling proposition and, and SDK’s and other features, but I'm wondering how you founded the company. What was the founder's story? 

Gabriel Engel: So we started because a few customers of ours wanted to have a way for their sales team to talk to the people who are visiting the website. I was running another company that had a CRM, kind of Livechat or Intercom. Our benchmark at that time was Zappin that later became Zendesk Chat. But we missed. We were going to build a tool for them and we wanted to have it deeply integrated into the CRM. We wanted to make it open source of more people could customize. But what we missed when analyzing the competition was really “okay, this is a good tool to talk to my customer but if I need to talk to my colleague, then I have to jump in a different tool”. And then sometimes the conversation gets broken. And because we said we were using Slack at a point and we were users of HipChat before, we decided - let's make the backend rather than look. As much as those tools that had just talked to customers, let's make it look like a tool that  talked to my colleagues for people inside the organization. So it was really, one thing to keep collaboration and customer servers and support on the same tool that drove us to try to design a product like this. 

Piotr Karwatka: Gotcha. So that idea was to support those, let's say, external use cases where they communicated with the clients, the same way they used to work with the colleagues, within the same processes, maybe even the same integrations, right?

Gabriel Engel: Yeah, the ability to build the same bots. Maybe you have a bot that will help some internal process. And then the same guy that developed this as well, maybe we'll use the same framework, SDKs and wants to develop a different bot to talk to the customer. So, or maybe there's a process that it starts with the customers and then I have to bring someone internal from the organization and sometimes might not be the support team, might be someone from the legal or billing... And then we started to think about when you think about email. Everybody, you might receive an email from a customer, but then you can just add anyone to this conversation from your organization, because everybody has email, right? We don't have these boundaries that some people will be able to talk to some people. So we wanted to replicate that feeling and that freedom of who participates in our conversation. They have an email on the enterprise communication level on a chat level. 

Piotr Karwatka: That's awesome. I guess it's shortening the communication paths and actually the time needed to process the topic, the cases you have with guides a lot, right? Because you have everybody on the topic. You don't have to forward mails back and forth. 

Gabriel Engel: Yeah. It can just include that wire to a conversation for customer. If I have something rather than me having to copy and paste it onto the technical team, I can just include the technical guy to the conversation, right? If after I, maybe I did the three I's and understood a little bit of the problem, I can just say, okay, I know what I need to add to this conversation and just add your developer. Or UNA escalates from someone from the billing department. You just add that person to the conversation, you know? So, it gives you a lot more freedom and then people, sometimes I think people grow too now. Expect those walls between areas of the organization or the systems that they use, which are single purpose. Then when you talk about having everybody in the same detail, like, wow, I didn't even think that that was possible anymore. And then you have to think about the mayor. Can't you do this with email? Yeah, I can but for some reason we forgot that we used to have that freedom. 

Piotr Karwatka: Now I got what does it mean, this “ultimate” in your claim, the ultimate communication platform.

Gabriel Engel: Yeah, we looked for the right adjective to put there. And we felt like “ultimate” is how we get the best of all the products out there and build the ultimate one. So that's where the ultimate comes from. 

Piotr Karwatka: How you started the company? Was it just you or have you had some founder teams? And when you actually started, like how long ago it was?

Gabriel Engel: I had another company that I mentioned, it was the CRM building company, it still exists, it’s called Konecty. And then this project started to grow inside that organization. but at some point when you made it open source, you got a life of its own. It really kind of blew up our expectations of how many people are interested in this project and in the concept. And immediately we had to spin off into a different company. So we made the project officers in 2015, it was late may, 2015. January started to receive so much attention and started to divide. Like what started to split the team to put more effort into it. And then eventually we started to be approached by investors that started to really like what we were building. And then in 2017, kind of very end of 2016 we received an offer from NEA, New Enterprise Associates, to give us seed money to spin off the company and actually incorporate as a different business. So Rocket.Chat was incorporated in late 2016. Very late 2016. 

Piotr Karwatka: And then you switch over to a full focus on it, right? For this project. 

Gabriel Engel: Well, then it was very clear in my point of view that I could not run the two things at the same time. So, once I had to look for a new team for the, for the other company, a new CEO And you showed the other company because I had to be completely restructured. And then I became fully dedicated to Rocket.Chat.

Piotr Karwatka: Interesting. That's a pretty cool story. I recently recorded an interview with the founder of Content Stack. It's not yet published, but it was a very interesting conversation about the spinoff they made working on the product. So pretty similar story. So, you found that the company is growing rapidly. You tell us about some of the use cases, like CRM-like use cases, Intercom use cases. You have a really great API. Preparing for this call I dug into it playing with some docs and even the API itself, it's very easy to use, very well documented. So I guess that developers are in your target. 

Gabriel Engel: Product led growth company and developers came first. There's a community of developers in the product. So, that's how it works.

Piotr Karwatka: Absolutely. I think that even guys outside of the open source community you have on GitHub, that different story, is also growing a lot, like more than more even, maybe close to 30 K stars is growing. I'm not sure what is the number today, but it is growing at such a rapid pace, but I guess that developers on the enterprise side, the users are using just the API to build connectors and other apps. Actually my question is what are the most interesting cases you heard of, built on top of your APIs, other than those Intercom and CRM cases?

Gabriel Engel: I think it’s not just about APIs but I use some of the UI components as well. Sometimes the use cases it’s how they tune Rocket.Chat or changes slightly for a specific industry. For instance there is one that is really cool. When I was in the UK, they built a Rocket.Chat version there was for tutoring of children. They didn't have enough money to pay for tutors if they were going not doing so well at school, in their studies, they could join these websites, put their profile and they will be added to channels with teachers, which were volunteers, to help children in need with their homeworks and assignments. So they use the APIs to automatically create this bearing, you know, like you hit get it for what you need. And then you put those two people in the same room together. They were very keen on having full, first, why did they do not do this on Zoom? Or any other? Because it's much more text-based, there's pictures. They take a picture of their homework. Then the teacher goes there... Because you're talking about kids, they need to be able to have a complete auditing trail and auditing tools of all the conversations from teachers and students. They needed to have full privacy from the external world about the data of the kids that are being there. So it was one of those scenarios where you see like, okay, I never thought about it, but then Rocket.Chat was this perfect tool for it. And we have one that also I liked a lot, in Africa, and those are the other projects that we don't make any money out of. But if you get that warm feeling that you are able to make it happen in some way like that, you provided the acknowledgment for something cool and amazing to happen. And we had this. A project in Africa where there was a nonprofit that was trying to foster entrepreneurship in a lot of countries in Africa. And it’s like entrepreneurs work a lot better when they are together, that when they share experience, when they can help each other out and because of the infrastructure there it was very hard to get a good chatting tools or projects. So they decided that they could run local servers in Rocket.Chat. On those villages or those places where they're trying to get entrepreneurs were people who are trying to start a business together, and then they could use those servers to have a proper and deep conversations about the topics that they liked. 

Piotr Karwatka: You mean they created a local hub, like extranet kind of setup, right?

Gabriel Engel: Yeah. And it was so cool because before they got the grant to actually do this. they first run an experiment in five CDs where they run the project with dowel, the communication tool and another five CDs where they actually put the servers to get those people to communicate.nAnd then they run this project for almost a year. The first year was testing and then they found a statistically significant difference on the outcome and on the success of those companies, where the entrepreneurs had this place to communicate and share experience and help each other out. So that's where they got the grant to read more servers across Africa.

Piotr Karwatka: Better communication made the difference. Yeah. 

Gabriel Engel: The fact that you were able to create channels and communities and the guys who are like really helping each other out made the difference. Then they got a grant to run on a large scale in more countries in Africa.

Piotr Karwatka: That's amazing. And also do those cases you just pointed out, probably wouldn't happen without the open source version of Rocket.Chat. 

Gabriel Engel: All those are on the open source, right? They were able to deploy on servers that they wanted because they needed to control, they needed to customize their UI and experience to feed those specific use cases, and usually those non-profits don't have much money to apply. We didn't make money out of it. We just got this amazing, warm fitting of helping out in those really good causes.

Piotr Karwatka: I think that these causes themselves are worth having open source edition. But I guess it wasn't the only reason why open source is important for your project. What are the other reasons?

Gabriel Engel: There are so many. Now all percents became so much our DNA that is almost impossible to think. Rocket.Chat was not an open source company, because we became just open sourcing the code, the open search, our handbook, our process... I tried to open a search, everything that we can think of, like the default on the companies to make things in the public. And then, the only thing, if there is a reason, and that's not just an external public, but sometimes you're talking about like the leaders and the rest of the team. The open is the default. But if you're talking about open source itself, for me, the very first is even on our vision of the product was, it didn't have the full vision when it started. And the community played a big role in showing to us what was actually possible with Rocket.Chat. What targets, what markets we can act, which is actually served with the technology that we're building. I never heard about bots. I've never that I didn't heard of a budget. I was totally new to the cost of any bots interacting with people in those chat environments in the way we had them having now. And that was something that the community brought up this requirement and this need and this vision that this was going to be something important. And he started to show us that he needed to invest in that. We never understood fully how the Federation component was important until we started to see the community wanting to integrate different Rocket.Cat servers and ask us to build those bridges into different servers so they could share channels between multiple organizations. So the community gave us this ancient for understanding where the market is going, how we need to position ourselves, is the engine for innovation for trying out different things and see if they work or not. They're very good at giving us feedback. they're very, both when we get it wrong, right. When you get it wrong as well, obviously. Innovation, direction, vision, finding feedback security level as well. You receive a lot of fixes, many improvements from even the US Department of Defense did a lot of pull requests, fixing and changing the security side of Rocket.Chat because they were using it instead of the dog DOD. So, at that level, your community helps you to deal with the product. And then you have so many other black laundry organizations that help us build important components of Rocket.Chat. Deutsche Bank, it’s not the bank, but the transportation system in Germany, because they are using Rocket.Chat, they built a lot of the structure for the treads, discussions, how you break the conversation into smaller subject units because they wanted to be able to run some AI, to analyze topics and discussions and conclusions, to build a knowledge base. And when you have a channel that never ends, like is only a continuous conversation for years is really hard for the AI to make sense of what is there, like, why does the topic who told, who mentioned it? So they helped us to build this. distinction. They also helped to build a universal search, using solar and other systems. So there's a lot of contributions from not just individuals, but larger organizations that were using Rocket.Chat. 

Piotr Karwatka: Wow. That was an amazing answer. I didn't expect that the community is so engaged in the process. That's really cool. And I think that by having this really huge community and all the different actors, enterprise, even governments, as you said, it's like you are building the industry standard more than just a product, which is absolutely awesome.

Gabriel Engel: Yes, and that's our vision. I think we're having a vision discussion. We always discussed the vision again and again, and to make sure that it’s always up-to-date and we are living to our standards and, more and more to discuss with that. Like we are, we are building a company that needs to be a category defining product. We don't want to be put in a box and say, Oh, are you the open source version of Slack? And think this is a too narrow definition. And then it's like, no, no, no. We wanted to redefine what open communication means.

Piotr Karwatka: I'm glad I didn't ask this question! I had it on my list. 

Gabriel Engel: We're really finding what you mean. We're not just being open source versus Slack. No, you're really finding what communicating needs. We want to bring back the concepts from email, the Federation, the openness we want to bring. Concepts from blockchain, having a distributed ledger of message. That can be trusted and verified and signed. I wanna build components from bots and process automation, having buttons and interactive components on the messaging and on the channels that people can feel that they can. use beyond, just that. So it is really trying to define communication as we think it should exist in the world, rather than just trying to copy someone else's and build it into an open source version of something.

Piotr Karwatka: That sounds fantastic. But... wait a minute. It sounds too good to me. Like, I mean, just to get the context: yesterday I had a pre-call preparing for another interview with one folk from Red Hat and we were discussing Dev Ops things and we were discussing Docker. Like, you know, Docker has started the containers, like to popularize this idea of containerization. But actually right now Coobernetti's is a standard. And saying nobody's using Docker would be not to the point because a lot of people are still using it, but it's not, not a standard anymore. It got broader. So they introduced a new standard. But as a product is not that successful. And my question is how you avoid the situation with Rocket.Chat? What's your business model? Because being very popular open source is one thing, but being a successful product is a totally different thing.

Gabriel Engel: Absolutely. We experienced that ourselves, firsthand as well. Like we invested so much under product for many years. So we got the funding, let's say 2017 was the first year that we really started building a company. So 2017 and 2018 four years there, we were just investing in the product and making very little money out of it. And then we realized, okay, this is going to be a recipe for disaster. If you don't start taking care of the enterprise side of the company, we sent you straight in, like trying to build an enterprise version that would have like more, much more. Features for auditing tools, engagement, dashboards, better scalability and so on. And then in 2019, he was when I started building a sales team. But, I can tell what our recipe is to avoid that. But, I think each company in which project might have to find obviously their own. In our case, we had to create the Boardman or a team in the company, which was really focused on understanding what the large and, customers wanted out of communicating. Why were they are pain points? So we could build a version of Rocket.Chat, like an extension to the core product that would then fulfill those needs and something that was going to be sellable. And also in the long term, we started to think, how can we build a whole ecosystem that is economically viable, healthy.

[00:23:53]and then we went for the marketplace and thought there's a lot of, value that can be created by. Managing a big marketplace for all those servers that servers that even if they don't pay, even if they are using the free version of university, they might want to buy a plugging or an extension from another development.

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