Friday, November 07, 2008

The source code matters more in a downturn

Today I was in a meeting with a future customer (hey, you have to be optimistic on a Friday night, stuck in an airport ;-) and we talked about commercial open source companies providing source code to its customers.

The source code has always been an important advantage for us. If you are buying Funambol, you get the source code. No need to resort to costly Escrow agreements (which are a mess, I did one when I was at Reuters). You simply get the source code. And a lot of people that know about it.

We call that "The Bus Factor". If I get hit by a bus, and so does the entire Funambol team, our customers still have the source code and a lot of people behind it (most likely, many in their own town). You can't get that with an Escrow agreement...

Marten called it once the airbag in the car. You do not want to use it, but when you need it... you are thankful it was there. And you make sure it is in the car when you buy it.

How does the economic downturn matters? Well, not for us, but for everyone of our competitors. The likelihood of them going belly up in the next twelve months is quite high. Most of them have high burn and little revenues. With no cash in the bank due to a recent significant fund raising. And zero chance to get more soon.

If you are a service provider or a device manufacturer and you license the code from one of our competitors, how high is the probability of you being stuck with a piece of unusable code in the next 18 months? Being pessimistic (see, I am not always optimistic...) I would say very high.

Having the source code is a much more important factor these days. The Bus is the economy. And when it hits you, you better have an airbag...