Reason to Merge

By eweek  |  Posted 2006-04-10 Print this article Print

So what would be a reason for you to merge with a larger company? Thats a good way to phrase it [laughter].
Well, what would you stand to gain? What would the company and the technology stand to gain? Were a small entity fighting a big boys battle, and at some point the game becomes financial. And if you look at the public companies and you look at their valuation, were talking billions of dollars. For certain players thats peanuts. So in a consolidating market its impossible for anybody to make the claim that they can reject the financial game. In other words, Im the chairman of the company and I have to consider every guy onboard. So there are a couple things I look at. No. 1 is these folks have been here for a long time. And as we reach our goal of changing the way we develop, distribute and support, we need to achieve liquidity for a lot of folks. I have said many times that I want to create a new generation of open-source millionaires. And Im going to do that, whether its by IPO, whether its by merge at some time … Im not the one reading tea leaves and its the nature of every startup, specifically one that has so much impact in a market thats so rich and is consolidating at the same time. Its almost a triple whammy here. Thats my duty as a chairman, to seek and choose options that maximize value for my shareholders. And the majority of my shareholders are founders and employees. Outside of fiduciary duty, I will not sell the company, economic value or not, to somebody that would dismantle this operation. Thats really not knowing me to claim that I would have done that. Take my two answers to the question you just asked and the one on whats in the future, and youll see how I would justify a merger if there was one: Which is, this is the best place for our community at large. And by community I dont mean some BS lovey-dovey stuff. I mean my employees. Is this a place where people in the morning believe they can still come and change the world in developing the software, distributing the software and supporting the software? And is this a place where our user community will benefit? Or is this something that is going to completely change the model for them and they are afraid and they dont want to go down that path? Because at the end of the day were successful because customers are thirsty for this model of subscription. Is that model something that is compatible with what a potential merge would be? Clearly that would eliminate BEA right there. So fiduciary duty says maximize the value. Dont get me wrong, a lot of employees stand to make a lot of money. And I want these guys to have that. And that doesnt say merger or IPO. And No. 2 is I will pick a place thats completely compatible and where I maximize the well-being and the happiness of our community—customers, developers, co-developers and employees at large. Im very conscious that we have built something thats quite unique. I have assembled a team that is the envy of the industry. These guys are the cream of the crop. These are superstar developers and they are friends. That is great. Thats why people want to come to work for JBoss. People dont realize what JBoss has become, they think its still a ragtag team of ragtag bad boys. Yeah, it is, but its also backed by a corporation now. But its a company thats quite unique. I want to preserve that. Thats what Im getting at. I owe it to the employees to preserve that spirit that is going on. And there are places that would kill that in a second. So what insight can you offer to other open-source companies that might be in or approaching a similar position as JBoss? Id like to talk about the licenses and the difference between free software and open source. I am really happy that a lot of young folks who are starting open-source companies look at JBoss and they want to emulate that. I am happy when I see that these kids have educated themselves about the licenses and go GPL [General Public License] or LGPL [Lesser GPL]. Because there has been so much confusion with people that embrace academic style licenses. Because as developers you dont realize youre giving away all your IP to your competitors, not to your end-user community. So they tend to strip-mine you for the good stuff. And that is what IBM is doing. The end result is IBM bashes Geronimo in public. And the new startups are seeing through that and embracing LGPL and GPL. And Im very happy to see that because no business has been successful on BSD licenses. The competitors of those businesses have been successful. I see a tendency in the open-source guys to bury themselves in consulting businesses. This is where my own experience is you need a little humility and realize you dont know what you dont know about business. And you should go out and get some people who know about business—be it in the form of investment capital, advisors and sales guys—surround yourself with talent. We have a tendency in the open-source community to get wrapped up in our own technical genius and success. But at the end of the day we need superstars in sales and operations to make a company work. Next Page: "Naked ambition."


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