Desire2Live

There’s a very interesting interview of Desire2Learn CEO John Baker and General Counsel Diane Lank in T.H.E. Journal. It’s a particularly good read if you haven’t been keeping up on the details of the trial, but there’s also good stuff in it for people who have been following closely. For me personally, the biggest bit of news in the article was this from John Baker:

$3.1 million is a lot of money, but it’s certainly not putting us in any financial jeopardy whatsoever. We’ve been very fortunate to have incredibly strong clients over the years, some of which pay almost that much money as an individual client. So we’ve been very, very fortunate to have good clients and good cash flow–no debt–we’ve got a very strong cash position. So we could pay that, without actually skipping a beat, and continue to be profitable this year and going forward. So from a financial perspective, it’s one of the concerns people have raised over [the course of the trial]. In the early days, $3.1 million was a lot of money for us. Today it doesn’t even come close to our R&D budget within our organization.

So we’re quite comfortable; we’re still hiring a lot of people; we still intend on growing; we’ve obviously launched new products; and we’re actually going to be launching more later in the year. So we’re intent on keeping our innovative edge and [focusing on] the clients and client success.

What’s interesting is we actually think that by all of our clients moving to 8.3, it’ll actually result in us having to support less versions of our application. Instead of being like Blackboard, where they’re probably supporting about 20 different versions of the application, at tremendous cost, we’re going to be supporting one, which will probably shave millions off of our costs [which will be applied to] new projects, new technology. We’re going to better support our existing clients. Or to focus our energy on the next version, the 8.4 version, or the 9.0. So we’re actually quite excited. We’re actually trying to find the silver lining in this and put ourselves in a better position than we were [in at the start of this]. Now, it’s not what we wanted to go through, but we can afford to pay it.

And then, what might happen is that if we lose on appeal, there’s nothing else we have to pay. We’ve got that workaround put in place. So that one-time cost for us is something that we can absorb. Some of the things we’re going to be asking the judge to do is to reduce that as well, if he doesn’t eliminate it altogether.

Because D2L is not a publicly traded company, we’ve had no visibility into their financial situation and how the suit was affecting them. If they can manage to get the injunction cleared up (particularly it is cleared up by the judge accepting their workaround), then they may come out the other side of this just fine.

Also, they’re still cranking out product. Version 8.3 appears to be a fairly robust release with a lot more functionality than just the patent workaround, and they have a new and impressive sounding ePortfolio product. (I highly recommend Barry Dahl’s podcast interview with D2L’s lead product manager Kenneth Chapman.) Their management team must be really good, because I never would have predicted that a company their size would have the cash reserves to manage under this sort of financial burden and the focus to keep developing with this much distraction.