Subject Re: [OT] IBPhoenix Share Issue
Author paulruizendaal

What an interesting idea: this could create the first "community
owned" open source company. Let's kick it around for a bit and see if
we can come up with a workable plan.

First of all, I agree with Alexandre:

> The first thing I think is if one buys share from IBPhoenix it could
> have two objectives
> 1.) Invest some money to earn it back and a plus for the investment
> 2.) Invest some money to help FB development

Area two is already well covered by the foundation, so we are talking
about 1.

Area 1 requires some insight into what the company might achieve
financially. Let's begin with public info about the starting point.

> I don't think divulging the details of IBPhoenix's current accounts
> on a public list is probably a good idea, but upto date accounts
> have always been filed with Companies House in the UK, so if
> somebody really wanted to see them, they could get them.

Of course I do this. You file balance sheets only. For the financial
year ended June 2004 the equity was GBP 25K, euro 37K in real money.
If the company were valued at intrinsic, 100% would be 37K, so
investors would have to pay euro 375 per percent shareholding. I
think a lot of people can afford that.

So now for profit&loss and strategy. In a recent interview on OSNews
you were quoted as:

"IBPhoenix employs 6 people, grossed $50k its first year, and has
nearly doubled revenue each year since. Beach formed InterBase
Software to commercialize the existing and mature code base that
Borland had taken open source after several years of closed source
development. [IBPhoenix] is a relatively small company but it is
profitable, it has a solid international presence, and it is growing

Say we have 5 full years, so last year's revenue must have been to
the tune of $50K x 2^5 = $1.6mln, is 1.3 mln in real money. We have
more than 5 years, but it says *nearly* doubled, so let's take 1 mln.
Grossing 166K per head is not bad. Taking integral cost of 80K per
head ($100K), net profit could be 350K. It is anybody's guess, but
take a P/E of 20, then 100% would be worth 7 million, or 70K per
percent shareholding. Very few people could afford that.

Suppose average annual billing per customer is 5K, then there would
be 200 customers. This implies that on average, each support engineer
spends about 4 days per year per customer, leaving about 100 days per
employee to work on sales, community work, etc.

Sounds like a sustainable setup, with room to auto-finance normal
growth. So either the above is not correct, or Paul has a specific
plan in mind.

Let's look at some of the competition:

Co. Sales Empl. Salesforce Funding
MySQL $30..40 150 70? $40mln
Ingres $20 150 70? $50mln
EDB $? 30 10? $ 7mln

It may be that Paul's plan is to hire a lot of sales folk, extra
support engineers and push IBP sales from 1 mln to 10 mln. However,
that would require a lot of money to fund. Typically, at about 1 mln
in sales revenue, VC's become interested to fund growth, below that
it's for angel investors.

For that to work, IBP should morph into a "Firebird Distribution"
maker, I would think -- along the lines of RedHat or EDB. We may have
all the bits and pieces in various ends of our community, but
certainly not focused in one place. A few guys do admin/dev tools, a
few guys do drivers, a few guys do libraries, a few guys and one girl
write books, etc. How do you get them all on board, and if you pick
one from each class, how do you avoid a mess?

The other route would be to wait and see who buys the IB code base
and get this buyer and the community together to reassemble the
copyright of the code base back into one entity (contributors get
paid for their IP in shares :^) and play the game like MySQL, JBoss
or Ingres. Not sure customers would actually like that.

However, the buyer of the IB code base has a great opportunity to
work with the community and jumpstart a FB distribution business as a
spin-out of the spin-out. In that case "IBPhoenix" would certainly be
a case of 'nomen est omen'.

I yield the floor to better brains.