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Saturday Jan 19, 2008

In a Vortex

In a vortex. That's the only way to describe the past thirty days, during which we closed out our second quarter, and put together the transaction to acquire MySQL. How'd it all start?

"That'll never happen, I've been trying for years." That's what I told Rich Green (EVP, Software at Sun) about six months ago in response to his assertion, "if there were one company I'd love to acquire, it'd be MySQL. They're an amazing company." Why'd I say it was impossible?

For nearly five years, I've been getting together for dinner with Marten Mickos, MySQL's CEO, catching up on the industry, chatting about trends and business models, and just as the dessert was about to be served... I'd say, "geez, we have so much in common, Marten, we see the world so similarly, what would you think about becoming a part of Sun?"

At which point Marten would say he was flattered and honored, pour some milk into his coffee, stir, and start talking about Finland.

"I still think it's worth trying," said Rich. So we did - Marten, Rich and I set up another dinner for early December. At which we went through the same great conversation, updating one another on what we saw in the market and industry, how much we had common, and just as dessert was showing up, I popped the question. And...

...smile, stir, we're talking about Finland again.

So we leave the restaurant, talk about scheduling another dinner six months from now, and I look at Rich with the "See what I mean?" look on my face.

But unlike prior meetings, the next morning, Marten called me back and said, "We've been doing some thinking. Are you still interested in talking about an acquisition?" Um, yes. Yes. Just like the past four years.

And that's where it all started.

Tenacity pays, and Rich joins the growing list of people who can pull an "I told you so" card. (For the record, I'm happily proven wrong, it keeps me on my toes.)

Other than "how did this deal come to pass?" I've heard a lot of questions over the past few days, and thought I'd write down a few answers.

First things first.

A billion dollars for a company that gives its products away for free?

Facebook gives its products away for free, too. They make money on ads, we make money on service, support and infrastructure. MySQL has a big business, growing very rapidly. Investing in the future has more value than buying the past - which is why the latter so often comes at a discount.

What happens to your commitment to PostgreSQL?

It grows. The day before we announced the acquisition, and within an hour of signing the deal, I put a call into Josh Berkus, who leads our work with Postgres inside of Sun. I wanted to be as clear as I could: this transaction increases our investment in open source, and in open source databases. And increases our commitment to Postgres - and the database industry broadly. The same goes for our work with Apache Derby, and our JavaDB.

Josh says it exactly right on his blog - Sun wants to be the leading provider of datacenters. Not just MySQL datacenters. Exactly.

Who are you going to buy next?

Now that's a great question, we'll tell you after we're done :)

More seriously, I do agree with those that say Sun's acquisition of MySQL proves the value of open source business models - and I'm hoping it fuels yet more investment from the venture community in truly open source innovation. There is a ton of value to be had, just ask MySQL's investors.

What happens to your relationship with Oracle?

Oracle's a very important Solaris ISV - and we have joint customers across the world that have relied upon the service and support Sun and Oracle provide in mission critical environments to run the world's banks, retailers, telcos, governments, etc. Absolutely nothing changes about that commitment as a result of this deal - just as nothing changes in our willingness and ability to support DB2, or Microsoft's SQL Server (which also happens to run quite well on our systems, btw). Customers want choice, and we maintain our commitment to offer it.

It's important to remember, our service organization focuses on our customers, not our products.

Will the integration be complex like StorageTek?

StorageTek was 7,000 employees, with complicated supply chains, logistics processes, real estate, factories, redundant systems (like any big company), different engineering models and processes built up over a 35 year history. Integration was, to be blunt, complicated.

MySQL is 400 employees, without offices (their employees work from home), without a supply chain, no factories or real estate, and they have an engineering model and business process just about identical to ours.

So no, the integration won't be complex. It'll be quite straightforward.

After the transaction closes, Marten Mickos will continue to lead MySQL, will report into our Software organization, and will join my Executive Management Group (the top officers at Sun).

And strategically, there are technical synergies everywhere we look, as well - from MySQL on ZFS and Lustre, to better integration with Glassfish, OpenSolaris, NetBeans and our Grid Engine.

Will you change their platform priorities?

Absolutely not.

Why not?

Because the L in LAMP stands for Linux, not Looney. Customers prioritize MySQL's platform choices, not Sun. As with Glassfish, their number one download platform is still Windows - and we're very committed to those developers, as well.

Will you change MySQL's choice of license (the GPL)?

No. As you can see with Java, and with Glassfish (and NetBeans and OpenOffice), we're huge supporters of the GPL.

Are there cost synergies in the deal?

Nope.

Are there revenue synergies in the deal?

Everywhere we look.

Where are the revenue synergies?

The more interesting question is "where aren't the synergies?" Wherever MySQL is deployed, whether the user is paying for software support or not, a server will be purchased, along with a storage device, networking infrastructure - and over time, support services on high value open platforms. Last I checked, we have products in almost all those categories.

In addition, the single biggest impediment to MySQL's growth wasn't the feature set of their technology - which is perfectly married to planetary scale in the on-line/web world. The biggest impediment was that some traditional enterprises wanted a Fortune 500 vendor ("someone in a Gartner magic quadrant") to provide enterprise support. Good news, we can augment MySQL's great service team with an extraordinary set of service professionals across the planet - and provide global mission critical support to the biggest businesses on earth.

Where will you take MySQL next?

That's a question you'll need to vector to MySQL - both before the acquisition (given that we're still separate companies), as well as after. We're not acquiring them to tell them what to do - we acquiring them to listen. To their leaders, their community, and their customers.

And having listened to about 10 customers face to face over the past couple days, I've heard only one comment, made consistently - "Congratulations, this is absolutely fantastic news for all of us!"

I totally agree.

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Here's a quick interview Rich, Marten, Greg and I did on the Sunday before we signed (personally filmed by noted director Anil Gadre)... pay attention to the good luck charms that show up around the 3:30 marker...