September 20th, 2006
How you acquire open source projects
You do it backward.
The integration, both personal and technical, occurs before the deal closes. The price, based on sales, is determined afterward.
Pentaho CEO Richard K. Daley has done four such deals for the open source business intelligence tool company he heads-up, and calls the process akin to a courtship.
The latest such acquisition is the Weka Project, a data mining tool which began life in New Zealand, at the University of Waikato. Other projects acquired by Pentaho, which is based in Orlando, are in Belgium, Germany, Switzerland and the U.S. It’s a small world after all.
"Usually we’ve partnered with these folks. Our developers work with theirs. We integrate. None of the four projects we’ve done are out of the blue. We’d worked with them before. We liked working with them and vice versa. They value us and we value them."
One example of how it’s different is in "skeletons," financial planning documents detailing how cooperation and planning will go forward. In an open source acquisition, these are signed long before the deal is done. In a conventional deal such cooperation is haggled-out after the purchase. "You know everything about the deal before you consummate it."
What exactly is being bought? "You acquire copyrights to the code, all the rights to the Sourceforge project (you become the admnistrator) you get the trademarks and you bring over the key members of that team – whether it’s one person or four people or whatever."
And the price? "There’s no science to putting a number to it. It’s what’s fair, based on the momentum of the project, the community built around it, how much work do we have to do and turn it into a commercial offering."
Just remember that this is a personal agreement first, and not a financial deal. Daley worked at Lawson Software, Hyperion and IBM before co-founding Pentaho. "I’ve done a lot of corporate acquisitions, he concludes, and this is not like them. "Our due diligence is real life."
Dana Blankenhorn has been a business journalist for 30 years, a tech freelancer since 1983. You can follow Dana on Twitter. See his full profile and disclosure of his industry affiliations.
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| 09/22/06
