slimdevicelogo2.bmpLogitech has acquired Slim Devices, the Mountain View maker of open source home networked music systems, for $20 million in cash plus a performance-based payment that will amount to “several multiples” of that.

This is a hit for the 20-something founder Sean Adams. He founded the company in 2001, and got by on almost nothing — by relying on a community of developers for the company’s main products, the Squeezebox and the Transporter.

He reached profitability on a mere $330,000 in angel backing (see comment from VC backer Bill Tai at bottom of our last piece), and then raised another angel round not long ago. Assuming the total funding was $1 million, this is a great accomplishment.

Here is Sean’s note to his users.

We wrote about the latest Squeezebox here, about how it lets you play your music anywhere in the house, and how its Web-based platform hooks it up with all kinds of services, from Pandora to Rhapsody.

Tai, who is a venture capitalist at Charles River Ventures, said Logitech has a friendly structure for retaining employees it acquires, and that if performance objectives are met, in several years there is payment that is several multiples of the $20M.

The success of Slim Devices is one more sign that any consumer entertainment device going forward must have a Web-based platform.

Meanwhile, Tai gives his late-evening two cents on what the deal says about the venture capital model:

On the venture front, it’s another indication that the huge wave of infrastructure investing that occurred during the build up of the Bubble has laid the groundwork for extremely low cost “company creation” — the web and open source have allowed pure web-based companies AS WELL AS companies like Slim Devices, which ships its value in a “hardware connected form factor,” to deploy their services for nil, and acquire customers through the web at extremely low cost. The high IRR (internal rate of return) part of our business in now expressing itself in more granular, horizontal bets than big vertical ones.

(Our emphasis added.)

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