Enter The JBoss Matrix Where JBossians blog

When JBoss pioneered the Professional Open Source Model in September 2003, there were many questions asked:

Nearly two years later at JavaOne 2005, the record culminated in a series of announcements by JBoss and others that proves the momentum of this model for the Middleware segment of the market. I don’t blog often, but there are enough events for me to try to demarcate this point in the evolution of the Middleware Industry and Professional Open Source. This is really the first time I have written publicly about how our business is going since my first blog describing the JBoss business model in February, 2004. It also seems to be kind of a good time to reflect on the state of JBoss.

Would this make large customers feel safe enough to use open source software for large, mission critical projects?

The answer is clearly yes. We have seen surveys from analyst firms, as well as an increasing number of articles and letters from end users that prove that the number one thing that holds customers back from using open source is Support.

Red Hat and Novell are proving this in the Linux arena. And JBoss success in Java Middleware has been very, very strong in a short period of time.

I am currently in Europe for two months. One of the things I have been doing is meeting with large telco companies – both manufacturers as well as operators. Most of them are JBoss users – rolling out very large scale Network Management platforms controlling thousands of devices, or service delivery platforms supporting millions of users. JBoss is designed in many equipment manufacturers like Siemens, Alcatel, Nortel, Telcordia, etc. These are mission critical systems that feel safe running Professional Open Source projects.

We are seeing similar pick up in government accounts. I recently saw a demonstration of a system built by the Navy to control all of the inventory and logistics for Air Craft Carriers – bringing together all of the resources to send a plane or group of planes on a mission and bring them home safely.

And of course commercial end users are deploying huge applications – Travelocity, Ameritrade, European Bank. Autotrader.com talked at the last JBoss World conference in Atlanta about how they manage 200 JBoss Servers. Norisbank is one of our new European Customer Advisory Board members - they are running €3 Billion per year of business thru JBoss. And there are many that are not willing to go public (although some of the stories are leaking out – like the CIO of Goldman Sachs talking about their growing usage of JBoss, or the GE manager who was bragging about how much money they had saved with JBoss - both at investor conferences). And just as an example of the mass adoption, yesterday an email came in from Pakistan where a person was asking for pricing on a Support Subscription for a banking app that was deployed on 70 servers.

So in terms of both user surveys and real case studies – the answer to the first question is an unqualified YES.

Is this a viable business model?

Fortunately for the customers, partners and employees of JBoss, the answer is yes. JBoss, Inc. is a growing and thriving business. Since the announcement in September, 2003 our monthly sales are up by a factor of about 9X. Our employee base has grown to over 130 people. And we are running about cash flow break even.

In addition, there is a thriving ecosystem that has grown to take advantage of JBoss technology. In a simple calculation of all the hardware running JBoss, all of the software that ships with JBoss (like Mercury or BMC, or Sterling Commerce or Filenet or Adobe or literally thousands of software packages), and all of the System Integrator projects (like the French DGI with Atos Origin, or the State of California with Accenture) – the total is well of $5 Billion (with a “B”). So the whole ecosystem is able to make more money with JBoss.

The keys to the business model are:

If this is good, then why is only one company doing business like this?

Well, this was actually one of the two sparks that got me to write this up (the other being our JBoss Portal announcement). We are attracting a growing list of companies who are starting to at least try our business model out.

Computer Associates was the first large organization to try this model with Ingres. They went to a total open source model, and focus exclusively on support subscriptions. Since doing this almost a year ago, they have actually seen their business improve. Their customers feel safer now that the code is in open source, and the usage is expanding because of the move to Professional Open Source.

Recently, IBM bought Gluecode to capture the Geronimo project. They state clearly that they will be charging a support subscription and making the Gluecode software open source – as well as trying to upgrade users to the licensed WebSphere product. Sun also announced that they will open source their base reference implementation of their app server – although not yet willing to go the whole way with things like clustering and security. They will focus on selling support subscriptions to this base – as well as trying to upgrade users to a licensed version (which they also package in subscription form now). Sun also announced that the RI for the new Java Business Integration spec will be open sourced, and I am guessing they will be positioning the new SeeBeyond acquisition as an upgraded license sale. Iona also announced Celtix – an open source ESB implementation that they intend to sell support subscriptions for as well as try to sell the licensed version of their product on non-Java platforms like the Mainframe.

In addition, a number of smaller firms are moving to this model. Alfresco announced a nice high end content management system based on an open source model. As well, Panscopic acquired the leading open source reporting project called Japser – and actually renamed their company JasperSoft.

It is interesting to note that many of these offerings involve a dual license strategy. Typically with a low end offering that is open source and a high end offering that is a traditional enterprise model. It is difficult for these vendors to make a shift from the license revenue stream and associated cost structures.

This is all very good for JBoss in several ways. First, it confirms the basic business model of Professional Open Source. Companies standing behind an open source project and being able to fund it by providing support subscriptions on the product. Second, and more importantly, it helps paint the picture for end user organizations as to how to adopt open source. One of the keys to the success of JBoss as a business is to have a larger percentage of our users become customers. If the standard in IT gets set to have support for any significant open source projects, then JBoss, Inc. will do very well from a business perspective. Most of our users still do not know there is a company providing support subscriptions and the JBoss Network behind the product. The collective efforts of all of these vendors will help to raise the visibility of Professional Open Source in the market – you can see it already working with the broad proliferation of the term.

Can JBoss continue to gain market share?

The biggest macro impact of all of these announcements is the growing feeling that open source will become the majority of the market in many software segments. JBoss has already achieved a very large #1 market share (34% penetration according to BZ Research). With other vendors endorsing open source and having their own implementations, the overall percentage of the market that is open source will grow over the next 5 years. It is almost certain that open source will become the dominant (>50%) deployment platform for middleware in that timeframe, capturing all of the growth, and potentially some of the existing customer base of proprietary vendors.

This environment will enable JBoss to continue to expand our own market share for the base Application Server. Now that IBM, BEA and Sun have in effect endorsed an open source solution (and Sun has even endorsed the JBoss App Server now with our new partnership with the Sun Hardware group Certifying on JBoss), customers who previously would not evaluate an open source solution will now look at this path. When they look at the available solutions, the substantial technical and market lead that JBoss has accumulated will make JBoss a very likely choice. In addition, JBoss is offering our entire middleware stack as free and open source. So JBoss should capture a decent share of these new open source users coming into the market.

The JBoss strategy of mass adoption will make it difficult for any sort of significant penetration by other open source application servers. JBoss is free, it is high quality, there is excellent free documentation and wiki's, there is a wealth of free information available on the web and on the free development forums, and there are many high quality books and research done on JBoss. JBoss continues to stay in the forefront on important technology like EJB3 and AOP, while maintaining a very high degree of backward compatibility. JBoss is also very transparent - allowing anyone to look at our JIRA system to understand our roadmap and look for our time schedules for new features. JBoss has also attracted a very deep pool of outside developers who contribute code and their experience to the community. In addition, there is such a large ecosystem around JBoss - that allows users to buy other software that works very well and easily with JBoss. Even examples like working between JBoss and IBM MQSeries - there is a huge base of users and experience with this integration. So there is no compelling reason that will force an existing JBoss user away from JBoss.

The more interesting question that has emerged from this opening of Pandora's Box by these former foes of open source in middleware is that it begs the question of "If Professional Open Source is good enough for the Application Server, then how about for Caching, Portal, Integration and many other areas in middleware?" This will allow JBoss to expand even more into new middleware markets like Portal and Integration.

Is JBoss going to be able to continue to expand the community around the project?

The JBoss community has grown significantly since the emergence of Professional Open Source. There are a number of areas of growth:

As you can see, the JBoss community is very healthy. Our professional open source methodology is being spread out to many projects (23 total open source projects now get significant development effort from JBoss, Inc. - including Apache Tomcat and Eclipse WebTools projects). JBoss is a real community player.

Can JBoss replicate their success beyond the App Server?

Absolutely. We have developed a methodology around Professional Open Source that goes from the development to the community to how we do public roadmaps, to how we market and sell and partner. In December we introduced the JBoss Enterprise Middleware System - JEMS - as our overarching architecture and roadmap. Over the next 1-2 years we will build out an entire middleware stack. The unique attribute of this stack will be it is all plug and play. Meaning that you can use products stand alone - for example if you want to use Hibernate or JBoss jBPM with WebSphere - that is fine. If you don't need an app server, and just want to use JBoss Cache - that is fine. Of course we will make sure they all plug and play nicely together.

The JEMS stack is now what the community is talking more about than simply the application server. This does not mean we are turning our attention away from the app server. As you can see from our web site, we are actively building out JBoss 5 with a greatly enhanced Microkernel architecture. In fact this Microkernel architecture will enable easier plug and play between the different product sets.

We are approaching the market in a very deliberate manner by gaining success on individual project basis and maturing each project. We are seeing rapid adoption across our entire set of projects:

The JBoss Portal release is a significant milestone for JBoss and the industry. Today it is still only 70-80% of the functionality of the larger Portal products. However, with the price of portals being close to $50,000 per cpu, a free and open source alternative can meet a great many customer's needs. We expect a number of our base application server customers that have portal needs to upgrade to this new product because of the high functionality and ease of development integration with things like Spring, JSF, and MyFaces. We have had customers benchmark the portal to great success - telling us that it is easier to install and use, runs faster and is more stable than other open source portal projects like Jetspeed and Pluto. We are also seeing partners jump into this arena with us. Most notably, Novell has dedicated engineering talent to work on the JBoss Portal, and will be donating dozens of their portlets to our open library. They are also supplying the WSRP implementation.

In summary, the Professional Open Source model is gaining increasing momentum in the market - much like a snowball rolling downhill. JBoss has helped to pioneer this model, and the JBoss community is gaining tremendous benefits from it. A healthy and growing set of plug and play free and open source middleware projects backed by JBoss and our large partner ecosystem.

JBoss has spent a lot of time and effort on coming up with a rational, complete strategy on indemnification for our customers. This issue was highlighted by the SCO lawsuits on various Linux vendors and users, and continues to be a concern for companies as they adopt Open Source Software.

Indemnification is the term used in legal contracts where the vendor provides some level of coverage on intellectual property claims to the customer. This means if there is a claim that a software product infringes upon a patent, copyright or trademark then there is some liability on the part of the vendor.

Indemnification is almost always provided in commercial software contracts, where the vendor will typically cover any costs of a claim up to the value of the contract. It is not covered in the various major open source contracts like GPL, LGPL, Apache, BSD, etc. In fact, there are sometimes provisions that seek to protect and hold harmless the developers of the software from liability. This is great for contributing software developers, but not so good for users of open source projects.

JBoss was one of the first vendors to announce Indemnification coverage to our Support customers in 2003. We basically provided the same level that is typical in commercial software products where we covered indemnification up to the value of the contract.

Recently, we provided a major upgrade to customers after a long review with inside and outside counsel as well as a thorough business and strategic analysis. To our knowledge, JBoss is the first company to offer this comprehensive level of coverage and commitment to our customers.

We have broken indemnification into three basic parts:

The revolutionary step JBoss has taken is to provide UNLIMITED coverage for the Defense, Repair and Replace elements of indemnification. We are making this move for several reasons:

- Customers want this level of “ownership” from a vendor

- JBoss, Inc. needs to make sure our products are complete and useable or else we do not have a viable company

- JBoss has a set of controls in place that are similar to commercial software vendors (and better because of the real-time public scrutiny) to help prevent malicious or accidental infringement on some other intellectual property.

- JBoss now has the resources in terms of size, key developers, balance sheet and insurance to deliver on this commitment.

This approach also has the additional benefit of centralizing any legal action against JBoss users. Obviously, we keep the damages element limited to the value of the contract since many of our customers and partners are much larger financially than JBoss is.

What this means to Users

Quite simply, this move is meant to continue our commitment to make Professional Open Source safe for commercial use. Our customer base continues to grow exponentially, and our customers continue to build out more mission critical applications that run their businesses. Our customers deserve this level of commitment from JBoss.

In addition, our Certified Partners are also covered by this program, and if they are providing integrated JBoss Support to their end users, we provide the same level of coverage. This makes it important for end users to ask their vendors who bundle JBoss to make sure they are properly covered for indemnification by a JBoss, Inc. contract.

Professional Open Source

JBoss will continue to innovate at the business and technology level as we lead the market toward the vision of Professional Open Source for the Enterprise. We encourage other open source projects and vendors to adopt these types of innovations as they are able to.

Governance is an important step in the definition of next-generation, Professional Open Source and a fundamental part of the JBoss strategy, moving forward. Having touched on this topic in my last blog, I will expand on it now.

What is Governance?

The term governance has become popular after the Enron and Worldcom fiascos. It actually has a broader meaning than the typical dictionary reference:

1: the persons (or committees or departments etc.) who make up a governing body and who administer something.

Several groups have vested interests in JBoss:

JBoss Federation of Open Source Projects
Customers
Partners
Employees
Related Open Source Projects
Investors
Users

JBoss, Inc.'s existence and success depends on taking into account all of these constituencies and making sure that they are all aligned with a common direction. Governance for our Professional Open Source model means giving these groups an active say in the direction of the Federated JBoss Projects, as well as the company standing behind them. This means opening communications and developing structured methods for receiving feedback and making decisions.

What are the primary methods of JBoss Governance?

1. Open Source Licenses. The first and most powerful constituents are the Open Source projects themselves. Our source code is in full view for anyone to see. Anyone can contribute to the community as long as they are doing it for the benefit of the community. Over 500 people have contributed their time, efforts and source code to the JBoss projects during the past couple of years.

Not only is the source code open, but our mailing lists are open, with almost 100,000 posts. In addition, our online forums also have 100,000 posts from thousands of people across the world. This real-time, community-driven communication is a core strength and part of our governance model.

In addition, the open source license reassures all of our constituencies that JBoss, Inc. has to continue to provide value in our offerings, since anyone can take the source, use it in whatever way they like, and provide whatever services they like. Users do not have to pay JBoss, Inc. for anything. They are free to use the software. Partners do not have to work with JBoss, Inc. unless they see the value in our offerings. This free-market dynamic guarantees a certain level of governance that proprietary software vendors simply do not have. There is no ultimate lock-in, the way there is with proprietary software license agreements.

2. Board of Directors. JBoss, Inc. is a C Corporation registered in Delaware, with a European subsidiary. This corporate structure ensures that JBoss is guided by the normal laws of a company. All major decisions are made by a Board of Directors. All company records are viewed and assessed by the Board of Directors. Each member of the Board has fiduciary obligations to uphold the law and ethical behavior of the company. Regular Board meetings are held, and the Board includes both members of management, investors as well as outside parties. In the next several weeks, we will announce that we have added one of our customers to the Board of Directors, an aggressive move to ensure customer visibility and governance. We will also announce a Board Observer from a major partner company who will have full access to all company information. These independent members add a higher level of governance than is typical in a private software company.

3. Customer Advisory Board. We kicked off the Customer Advisory Board this past week in Atlanta. We have 10 major customers (note you will see a press release on this, but a number of the larger companies have company policies prohibiting the use of their names in press releases) who came to spend a day and a half with us. We shared our plans and they shared their plans and directions. In addition, they will provide ongoing direct feedback to us on what we are doing well, what we could do better and new things we could be doing. The event was moderated by John Rymer, a middleware analyst from Forrester Research, to facilitate communication and provide another outside perspective. We got incredible feedback from this group, both positive encouragement, as well as ideas on how we can do better. I will be posting this separately. We will be holding a formal meeting twice a year, and will regularly communicate with this group on an ad-hoc basis. If you would like to be a part of this board, please send me (bob.bickel@jboss.com) your request and some background information. I will then bring it to the Customer Advisory Board for approval.

4. Partner Advisory Board. We plan to establish a Partner Advisory Board made up of a cross section of key systems vendors, systems integrators and independent software vendors who bundle JBoss. The JBoss Authorized Service Partner (JASP) program is key, not only to JBoss but, more importantly, to users and customers. They significantly broaden the services and solutions that are available with the JBoss Federation of projects. This Board will be set up and convene its first meeting in the summer of 2004.

5. Strategic Advisory Board. We set this up a year ago with Jim Green, of WebMethods and now Composite Software; Larry Augustin, of VA Software and Azure Capital; Larry Rosen, a leading open source lawyer, Andy Miller, a VP of Technology at Corporate Express; and myself. This board made the decision last year around this time to have JBoss become J2EE Certified. The members have been given consistent updates on the progress of our business and have been valuable guides to our success over the past year. We also intend to expand this group over the coming months, since I am now an employee and Andy Miller is moving to one of our other Boards.

6. User Group Meeting. We will have our first official User Group meeting in October, 2004. This will provide a forum for users to meet face-to-face, and to provide a mechanism to for users to share their knowledge and information about JBoss. It will also provide a great opportunity to meet the whole JBoss team, to learn about our direction and offer your advice and input.

7. Employees. JBoss has set up a very open internal culture, based on an open source mentality. Most of our employees are technical (even I have an Electrical Engineering degree and used to write microcode and do digital circuit design!). All employees have options in the company so they can share in the rewards and have a vested interest in making sure we are doing the right thing. All of our employees have agreed to uphold the highest level of ethics and standards as a part of our company employment offers. Our culture also encourages individual responsibility and accountability. This allows us to grow fast and have a team of very high caliber people. In addition to our Atlanta headquarters, many of whom can be working anywhere they choose.

9. Investors. We have recently taken on outside investors with Tier 1 venture capitalists Matrix and Accel. These VCs bring a lot of experience in growing companies and have a proven track record of investing in high-quality companies and helping they grow. They have already helped with our growth plans and strategy. It is also useful that David Skok, the Matrix Partner who joined our Board of Directors, has significant operating experience from his days as CEO of Silverstream Software.

8. Related Open Source Projects. It is important for JBoss to continue to contribute to other open source projects. We are not dogmatic about insisting that JBoss own everything or on one type of Open Source license vs. another. We make significant contributions to a number of projects, including Apache Tomcat, Apache POI, Apache Axis, JacORB, and others. We encourage other Open Source projects to make use of JBoss projects and to contribute to us in an open fashion.

Summary

As you can see, we have set JBoss, Inc. up to make sure we continue to define the Professional Open Source business model. This goes beyond traditional Open Source projects and loose affiliations. We are accountable to our various constituencies and have formal methods for communicating and receiving feedback. This ensures that we meet the needs of the market and continue to grow and thrive, which benefits the entire JBoss community.

If you have any suggestions or comments on how we can do better (we know we still have a long way to go), please do not hesitate to contact me or others at JBoss, Inc.

Bob Bickel
856-234-5828
bob.bickel@jboss.com

JBoss announced that we closed $10M in VC funding on Feb. 19, 2004. I thought it might be useful to review the logic behind the move and answer some of the commonly asked questions.

The simple reason to move forward with VC funding is that it helps enhance the Professional Open Source business model. We think that there are a lot of developers, IT shops, software, systems and integration partners that want a "safe" open source project to use. There are a couple of key elements to making this open source project "safe":

• 24X7 Production Support. This is not only someone answering a phone or email, but having an escalation procedure in place, improving our ability to fix bugs, provide patches and roll them into future release cycles.
• Partners. JBoss is very, very widely used by software, systems and integration vendors. These partners add value to the core JBoss and take the combined product or service to market. By having a company like JBoss standing behind the open source project and continuing to move it forward, as well as provide that back end production support, these partners can feel more comfortable continuing their investments in JBoss.
• There are plenty of other areas like Training, J2EE Certification, Indemnification, etc. that benefit from having a real company stand behind them. JBoss' business had grown to the point where it needed to move to the next level. Think of it as V2.0 of the company.

What is the business plan?

JBoss laid down a new business plan in September, 2003 that was based around shifting from a consulting focus to helping customers that had moved or were moving JBoss into Production environments. As mentioned above, the two key components are the 24X7 Production Support and the JBoss Authorized Service Partner (JASP) program.

Over the past year, there has been a major shift in who is using JBoss and how they are using it. Customers are moving JBoss into real production applications - enterprise level, mission critical apps. This coincides very well with our recent offerings of Production Support. We have seen Production Support cause a steep increase in the company's bookings, and we find that customers are not only saving money on licenses, but our pricing based on the number of applications, and not the number of CPU's is a lower cost model that is easier to administer. Additionally, a number of partners are entering into third level support agreements with JBoss. This is good because it keeps our sales and marketing costs low.

We will continue to be an LGPL biased company. We think this gives our customers and partners the assurance that the software stays free, and partners are able to embed the software.

This is a good business model because our development costs are lower Due to the power of the community and the productivity and quality of open source development. Additionally, our sales and marketing costs are low.

Taking money from services customers - is that Open Source?

Yes. Open source refers to the license under which we release our software and the existence of an open community of developers. And of course, because of the LGPL, the software is and will remain free to use.

A better question is what happens to the money we make from selling services - well it is used to pay the employees who drive the company forward. Just like any business. This means that JBoss developers are all making a decent living and working on open source software that is very widely used. For some people, this beats coding for free. (JBoss is not forcing anyone to pay us to use our software, nor do we require anyone to use our services.)

Is this the next step to doing an "Enhydra"?

No way. Enhydra was an early open source app server that changed their business model to selling a commercial version - this ended up ruining the project and the company. Not only do we believe strongly in the idea of a free license to JBoss Application Server, but the LGPL license makes sure that it will always be free.

What does this mean for future contributors to the JBoss open source projects?

We want to continue to expand the projects, and this will help in a number of ways. First, it allows us to continue to hire the best JBoss contributors (take note developers wanting to join JBoss: the best way is to get recognized by committing). Second, a lot of our partners are starting to contribute. As our partner network builds out we will have contributors from Apple, HP, Unisys, WebMethods, Iona, Ascential and many, many others. Third, we strongly encourage the academic community (we sponsor several projects at different Universities). And we want the individual developer contributing. We try to give our contributors recognition via the web site, and the LGPL does not require you to forego your copyright to your code. So, we are completely open and encourage all to join us in continuing to build great open source middleware.

Does JBoss make a profit? Is it cash flow positive? Can it really grow?

In spite of tripling revenue in 2003 over 2002, tripling employee count and paying Sun a very large fee for J2EE Certification, JBoss was both profitable and cash flow positive. The company had a profit sharing plan for all employees. Sure, it is easier to grow an early-stage company, but this is a significant achievement.

And, yes we can really grow. BEA has over $250M per year of revenue just from Support of just the WebLogic Application Server. There is room to grow a large company.

If things are going so well, why do you need outside funding?

There are several reasons. Probably the most important is that the company needed to move to the next level of maturity and ability to execute. To enhance our truly outstanding 24X7 Production Support, and to keep the technology pushing forward, we need to further professionalize our development community (be more than a loose connection of developers).

A top quality VC brings much more than money, they bring the experience of helping companies go thru the growing pains. They help set up appropriate governance models, thru due diligence assure proper accounting, contracts, employee agreements, option agreements, etc. are put in place. They help build a management team that can continue to expand the company and provide opportunity for existing and future employees. They help assure that their investment companies are truly providing value to customers.

In addition, having cash in the bank assures customers and partners of the stability and viability of the company. It enables the company to make investments ahead of the revenue stream to ensure that we continue to satisfy customers and employees.

Why did JBoss end up with Matrix and Accel?

JBoss was a very attractive investment. Revenue IS growing fast, we are profitable and cash flow positive. We have a new business model and plan that make sense, a great set of products, and some very talented people. JBoss did not have to call one VC - we were deluged with inquiries and interest.

We were looking for several things in a VC partner:

• They had to agree to our services model. Many VC's wanted us to sell a higher functionality version for a price - and we immediately cut those off.
• They had to have experience in Middleware and Java and understand our space. We did not want pure finance types.
• They had to be able to work with us on a day-day basis to grow this company. That means that we had to like each other, respect each other and help each other grow.
• They had to have an excellent reputation and track record. Tier 1 VC firms like Matrix and Accel are quite simply very good to work with.
• We wanted to keep control of the company - meaning we did not want to give control over to the VC in terms of ownership % of the company.

We talked to at least a couple dozen VC firms. We attracted a number of "term sheets" (these are offers to invest in your company at a certain valuation and % ownership).

Matrix was the first firm to really step up and aggressively show their interest in investing in JBoss, and the type of value they could add. David Skok is the partner from Matrix who will join our Board. He had excellent experience, not only starting and running several companies himself, but was the Founder and CEO of Silverstream, a middleware and application server company. We had a number of meetings with him, and he introduced potential partners to us. Matrix was the first company to give us a term sheet. They also showed great patience as we did our due diligence and talked with other firms to make sure that Matrix was the firm that made the most sense.

While we were doing that due diligence, another partner started to stand out above others - Peter Fenton at Accel. He, like David, really understood this space, and was very interested in working with us. Accel demonstrated their commitment to JBoss by agreeing to let Matrix take the lead investment position, yet committing to be an integral part of our success moving forward.

What will JBoss do with the money?

We intend to spend very little of it. We do not want to get into a "bubble" type of situation. It will allow us to spend a little bit ahead of revenue, but we have set some internal guidelines on this. Our business model is strong enough to give us excellent "visibility" because we are mostly in the support business. This means we may sign a support contract, but we do not count that revenue initially - we distribute it evenly over the next 12 months.

In terms of what the company will be growing, the typical things of a growing company - Development (our lifeblood), Support infrastructure, Management, Sales, Marketing, Finance and HR.

You talk about JBoss "maturing" by having this VC funding - what does that mean?

JBoss had a corporate structure of an LLC, and we are now a "C Corporation". This means we have a cleaner, more open structure. For example, our employees all get stock options. Also we have a better governance model by having a Board of Directors.

Our business plan also calls for growing the company and assembling a management team with broader experience. For example, we have added a new CFO, Cary Smith who came to us from Earthlink. He was the VP of Finance and Corporate Controller there. He was responsible for all SEC reporting, opened up offices across the globe, did acquisitions, etc. We hired a Director of Operations, Tom Wix, who will have responsibility to make sure we are delivering our services with our customers. And there will be more to come.

We are also in the process of assembling a Customer Advisory Board as well as a Partner Advisory Board. These will both review our technology and business plans and offer insight and advice on our directions. In addition, a user Conference is being planned for this fall.

What does this mean to JBoss employees?

This is good news for JBoss employees. It means the company keeps growing and offering new opportunities for everyone. It also means that they can see the value of their options in the company, and can have a sense that we are heading it he direction of continued success.

-Bob Bickel
VP Strategy and Corporate Development
JBoss, Inc.

Other questions? Please send them to me at bob.bickel at jboss.com.