Bynari Tries New Approach for Selling Microsoft Exchange Killer

by Alex Woodie

Bynari, the Dallas, Texas, software company that developed a way for users to replace their Microsoft Exchange e-mail server software--lock, stock, and smoking barrel--with much less expensive software that runs on IBM's Linux eServers and works seamlessly with Microsoft Outlook e-mail clients, is looking to change the way it sells and distributes its software.

Tom Adelstein, the founder of Bynari and now its chief technical officer, said he has received numerous offers to buy Bynari and its software assets. But despite the lure of cashing out, Adelstein persists with other plans. At issue is the key piece of software Bynari developed that allows any generic server based on the Internet Mail Application Protocol (IMAP) to mimic Microsoft Exchange and work with Microsoft Outlook clients. Bynari calls the software InsightConnector for Outlook.

"We released the software at LinuxWorld in January," Adelstein said. "Ever since, people have been trying to buy the company or buy the connector. . . . Everybody wants to buy it so they have the capabilities. It's like an auction atmosphere."

Adelstein, who said he's received offers of up to $10 million for the company, is reluctant to part with the software or the company because he thinks he can do better for his investors in the long term by keeping control over the software. At the same time, Adelstein said he doesn't want to take venture capital money that would further dilute his share of the company and his role in guiding its development.

In explaining his decision, Adelstein went on a brief tirade against venture capitalists. "They would want to bring in a bunch of idiots I don't know, give them very large salaries for I don't know what, and have them ignore the accomplishments we've made," he says. "They would take my stock down to 9 percent. If, over three years, I reach their revenue goals, I'd get the stock back, but they could still terminate me. That's the state of the art in the VC [venture capital] world. They've got the upper hand. It's a buyer's market." Adelstein, who says Bynari is his fourth startup, says he didn't take venture money, even during the dot-com boom years of the late 90s, but instead relied on a few interested investors, who he refers to as "angels." "They don't dictate terms, the way Austin Ventures and firms like that do."

Instead of selling out or accepting venture capital as a way to build Bynari's business and satisfy what Adelstein claims is a booming demand for InsightConnector, Adelstein has created a third option. He calls it his "thinking outside the box" option, and it consists of making the connector available as open source.

Well, it's not exactly open source. Adelstein will be the first to tell you that Bynari's new business plan doesn't conform to the Open Source Initiative's definition of open source, which requires the software to be available to the public free of charge. Instead, Bynari is offering to sell the connector's source code to users, other software companies, or hardware resellers for a flat fee. Well, it's not really a flat fee, either, Adelstein confesses; it's negotiable. And Bynari would expect a 15 to 20 percent royalty on the license fees that partners would charge for the repackaged or resold Bynari software. Currently, Bynari charges between $23 and $40 per Outlook user for the connector, depending on how many are bought.

"The idea of selling the code is a hybrid idea of the open source model and a channel type reseller market plus OEM-style licensing," Adelstein says. "It's a new model--actually an old model that's been revised."

Adelstein's aim with the new open source initiative, which Bynari announced last week, is to increase the visibility and availability of InsightConnector, primarily through the xSeries sales channel, and through zSeries channels to a lesser extent. (Although available for the iSeries, via Linux, Bynari's software is generating the most interest among users of Linux-on-Intel servers and mainframes. Company officials say they plan to target the iSeries more aggressively in the near future.)

Making the source code open-source would also allow other companies to translate the software into other languages, Adelstein says. Bynari employs a small staff of programmers who don't have the time or resources to translate the software into the language of every non-English speaking customer or reseller who has expressed an interest in it. At least one prominent reseller is eager to port InsightConnector into Chinese, to tackle the lucrative Chinese market, Adelstein said.

In April Adelstein brought in Hyun Kim, a former IBM Global Services manager who also used to be an AS/400 consultant with IBM Global Services, to help drive Bynari's partnerships with resellers and other software vendors. Kim's role as vice president of sales and marketing will be a crucial one if Bynari is to be successful with this new business model.

"What we're trying to do is open up new channels so that our time to market improves," Kim says. "I'm going to be working with business partners from all over the world."

By releasing their grip on InsightConnector enough so customers and resellers can modify it and support it themselves into the future, Kim hopes that Bynari will capitalize on the dissatisfaction that many customers have with Microsoft and its software.

"We're way too small a company to go after the market share that Microsoft owns for Exchange," Kim said. "By allowing business partners to modify and sell the product, it will allow us to open up a lot of channels."

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