Open Source Think Tank 2010: Registrations are Open!

Olliance Group, the open source strategy firm, is organizing the 5th Annual Think Tank that will be held at the Meritage Resort in Napa (California) on April 15-17.

If you never got a chance to join the Open Source Think Tank, the leading invitation-only commercial open source brainstorm and networking conference, get a gist of what you can hear, below an excerpt of my notes from the 4th Open Source Think Tank.

Keynote Address

Marten Mickos, Sun Microsystems Senio Vice-President and Mike Olson, Cloudera CEO delivered the Think Tank’s keynote on Monday morning, answering also few questions from Andrew Aitken, OllianceGroup founder and host of the event.

Mike Olson, best known for have being the CEO of Sleepycat Software, the makers of Berkeley DB. Mike after spending two years at Oracle after they acquired SleepyCat in February 2006, now he is Cloudera CEO and sits in most of the open source vendors advisory boards.

Mårten Mickos was MySQL AB CEO for about 7 years, until when Sun bought MySQL AB, then he served as senior vice president of the database group at Sun Microsystems until April 2009. At the present time  Mårten is an happy billionaire, occasionally twitting on open source business.

Answering Andrew’s question about the acquisition process, Mike said that before the acquisition the business was great.

Dual licensing Sleepycat was easy to upsell to the highest performing commercial product we have – said Mike – but back in 1995-6 they knew they needed to expand internationally more seriously, since the opportunity caught up in US wasn’t enough to substain our business growth. Instead of going with venture capitalists, and risk to loose control before Xmas, we strategically decided to go towards an acquisition able to push us internationally. Oracle enthusiasm was deeper than ours, and Ironically the strategic move slowed down the business for a while, but in the end I think we made the right decision: the software and the team are still there, we are earning more customers and the business is doing well.

About staying in full control of your company.

MÃ¥rten said that they were always very conservative about the decision to retain full control on the company, and everytime some company was proposting us some strategic acquisition they always said “no, thank you”.
The board was interested in keeping decisions allowing the company to grow faster, but we didn’t know, since you have to make assumption and it’s always a guess, it is always a difficult decision.

Mike took the word to say that in these decisions there are a lot of emotions involved, so even if you try to make you better business then ever, your feeling are importart, and even if they don’t dominate your thinking, they have a lot of impact. He explained that the role of the bank they hired was pretty important, helping them to organize a number of meetings, included Oracle.

MySQL success story

Marten on his first meeting he said that Jonathan Schwartz, Sun’s CEO, invited him for a dinner in September, and it took few months to set it, because Jonathan’s agenda was pretty busy.

At the end of November during our dinner Jonathan was very cheerful, so I wonder why he is so cheerful? So at the end of the dinner during the coffee he told me he would love to acquire your company. and I said no, as we always agreed with my collegues to say. But the day after I called the board, because we have been always strict about M&A are not Ceo’s business. And I got a positive feedback from the board. So I called back Jonathan and we started talking about it the first day of December, and we got a turn-sheet signed within the 18th of December, and the deal signed by the 15th of January.
About the negotation the board was very involved, we agreed that until the end of the discussion we had to mantain this duality, so while you shave our cat, you don’t know if your cat is live or dead, but you must keep both ways going. Personally forget what you’re against or not, just taste the situation, assuming that we’ll all be part of Sun and think about what how to do it best.
The other important thing once we decided to proceed, was that we didn’t want to waste our time, so we agreed no gaming one the way or the other, no gaming on legal issues or price, no bullshit and we all wanted just things get done and we proceeded very quickly.
We did have a bank involved, for whatever reason it happen, but they got into this discussion at a very, very low level. Talking about the deal, Sun to make a due diligence asked us all our contracts with the clients, but they proably didn’t know that MySQL was having thousands of customers, and we had to send thousands of sheets.

Mike commenting MySQL’s speed of acquisition said that is uncommon, and added that in their case the role of the bank was enourmously helpful, and also understanding when the buyer was posing some questions that really needed an answer. Talking about price’s issue he said that was important, but there are others that are important too. When you sell a company if you to want to make the acquistion successful, you really need to be operationally involved, and since you know the business better then the buyer, you have to explain them tactically afterwards, if you don’t you probably make a mistake.

About Due Diligence

Marten said that during the acquistion Sun did a lot of due dilegence, posing many questions about projections, the community, founders, the technology, and so on. A lot of question. Two of us from MySQL were answering questions to fifteen of them. Mike also confirmed same situation, thirty people on the other side, posing questions to three or four of us. We were shocked. Especially the delivery process, the roadmap, what you want to keep open source and what is not, and so on. One question the buyer put on the table was you got to sell, not the buyer. And they want to check all contracts, Cvs, and so on. So if you want to save time and money you better call a company like Black Duck to help you to sort out if everything in the software is actually your IP or third parties’s IP.

Mike said that they had to cope with two groups, the legal team and the HR team. The legal team wanted to be sure that everything about the GPL was ok, doing the due dilegence was an hard work, and he agrees that you need someone helping you documenting it all.

About explaining your business

Both agreed on the fact that acquisition is the perfect time to spend as much time as possible to explain the buyer how your business works, in order to make integration as simple as possible. Marten mentioned that a company like MySQL, employing 400 people spread through 33 different sites in 40 different countries, had to be integrated conserving its values, included the fact that many work from home, and Sun said it was no problem to them and it was nearly true. Make them happy and retain those people was actually an important part of the deal, and Mike gave similar feedback talking about SleepyCat acquisition. After two years the process was almost done, he said, and his role wasn’t that clear anymore.

Marten says that people are absolutely key, but at the same time I thinks that entreprenurs’ have to build an organization that can still work in spite of any leave, otherwise you’ll never be able to be acquired.

When I was the CEO I received all the questions, I was on duty just for everything. When we got acquired we spent all our energies to make the integration as fast as possible, as deep as possible, Then I realized I wasn’t going to take decisions, it was the corporation doing it. To be sure that the integration was going well actually was my number one goal.

Registration are now open, follow the OllianceGroup blog to know more.