Canonical, creator of the Ubuntu Linux distribution, has taken its share of criticism for not being innovative enough for some in the Linux community. In 2010, however, Canonical's focus on design and packaging will come to be seen as a seriously shrewd strategy as it helps to take Linux to the masses.
The reason? The innovation that pays is changing, and UI matters more and more.
When we think of innovation, we normally think of traditional research and development (R&D), complete with a white-coated scientist or pizza-gobbling engineer.
As Apple, Google, and other highly successful software companies demonstrate, however, today's innovation opportunities may lie more in user interface than traditional R&D. Google's emissary to the start-up world, Don Dodge, hints at this in a discussion of the various email systems he has used:
[O]ver my career, my first email thing was Vax Mail, which was awesome at the time, it was revolutionary. I went from Vax Mail, to Outlook, to Lotus Notes when I was working for Ray Ozzie, then back to Outlook again, and now Gmail. Email is a pretty straightforward application. They have basically the same features, it's all a question of user interface.
Sure, there are differences under the hood between Google's Gmail and Microsoft's Outlook, but the innovation that matters most today may well be the "superficial" e-mail experience that these different systems offer.
Back to Canonical and Ubuntu.
Canonical's founder, Mark Shuttleworth, understands that innovation is shifting from core research to the user experience, as he's opined on his blog. He has set his sights high, not content to replicate the Windows PC or Mac experience, for example, but has instead insisted on surpassing it.
The money for Canonical is in packaging open-source technology, not necessarily in creating the technology in the first place. The Linux world should be grateful, given Red Hat's and Novell's focus on the data center.
Linux benefits when mainstream users buy into it. Or, rather, when they use it without thinking about "it."
No one cares that their TiVo devices runs Linux. It just does. No one cares that the Kindle runs Linux, either. They care about the functionality these devices deliver. That's the way it should be.
Canonical's opportunity is to make Linux so easy that it becomes completely invisible to the end user. And Canonical may well be the best positioned to do this, among its open-source peers.
Neither Red Hat nor Novell employs an executive to focus on consumer products. Canonical does. No other open-source company has had its CEO discard the executive mantle to "focus [his] Canonical energy on product design," as Canonical recently did.
Hence, perhaps no other open-source vendor is better positioned to capitalize on the rising (and changing) Netbook market or other open-source friendly consumer markets.
Red Hat dominates the enterprise Linux market. Let it.
Canonical could well be set to dominate the consumer Linux market, a potentially massive market that demands a single-minded focus on design. It's a big bet, but one that Shuttleworth is committed to making.
Editors' note: This is a guest column. See John Mark Walker's bio below.
Quick, what were you doing on December 9, 1999? If you actually remember, then there's a good chance that you're an old-school Linux type. If you don't have any idea, then read on, and you'll discover what you missed.
I'll never forget where I was--at ground zero of the apex of dot-com ridiculousness. While I and all of my co-workers were in the office that day, about the only thing we accomplished was writing 15 gazillion Perl-based variations on the theme of stock tickers that displayed the price of LNUX, updated at regular intervals. Well, that and drinking champagne. Words cannot adequately express what it's like to look around the office and know that everyone in the building is a newly minted millionaire--on paper, at least.
Ten years ago today, shares of LNUX, the Nasdaq symbol for VA Linux Systems, went on sale to the eagerly awaiting public. You may recall that VA Linux Systems was the company that combined Linux, open-source software, and Intel-based hardware. Just six months prior to VA's initial public offering, Red Hat Software had gone public with a very successful IPO.
We were in the middle of the open-source pixie dust revolution, when many flagging companies jumped on the open-source bandwagon in a desperate attempt to recapture past magic. It was this phenomenon that led to the general conflation of the late-1990s open-source boom with the dot-com bubble, and it would be a few years before most industry analysts, pundits, and beat reporters figured out that there was a difference.
But back to IPO day. I strolled into work sometime after 9:30 that morning and was immediately greeted by Pay, my manager, with some astounding news. We all guessed that the day would be significant, but none of us were prepared for the tsunami of blissful, surreal numbness rushing to greet us.
He showed me a sheet of paper faxed that morning from the investment bank's office (truly ground zero on that day), that was copied ad nauseum and shoved into disbelieving faces. I'll never forget what was on it: just a simple table with 2 columns. The column on the left was a list of investors, and the column on the right was the price they bid for our stock. The numbers were astronomical: $320, $250, $200, $300, $290.
Curiously, some investor didn't get the memo and bid a paltry $50. We laughed at that because it was really funny--at the time. A year later, and I would recall that lone investor for an entirely different reason: on December 8, 2000, LNUX closed the day at $8.49.
On IPO day, we could all do the math, and on that day, the math was in our favor. The official IPO price was $30, and most of us owned options on shares with a much lower strike price. We had all won the lottery, hit the jackpot, (insert gambling metaphor here). Or so we thought. What actually happened was, as Don Marti so artfully described it, we had all become players in a game none of us truly understood.
To this day, the VA Linux IPO remains the Nasdaq's most successful, in terms of its first-day gain, but what does that success really mean, in the context of events that have taken place since? At the time, the LNUX IPO was lumped in with the rest of dot-com mania and treated as the poster child for the insanity that gripped the market.
The New York Times summed up that view best with its report on the IPO, "A Tiny Company with Dim Prospects Goes Public with a Bang." (Note: the Times has since changed the headline, but we remember the original.)
You'll be unsurprised to know that we viewed things slightly differently. But as the stock price plummeted, we went from a sign of the audacity of the times to a symbol of wasted effort, a gloomy future, and everything that was wrong with the go-go '90s. We were somehow expected to repent for the misdeeds of others.
It is simply wrong to view VA Linux as a dot-com vehicle or to attach a greater symbolism to its downfall. It was really neither; it was simply the dramatic rise and fall of a company that overreached. It was a real company that made real things and believed very strongly that open source was going to be a major component of IT very soon.
That we executed poorly and paid dearly for it does not diminish the original ideas behind the company. While VA was not profitable after the IPO, it was certainly not because of revenue. In fact, revenue growth was strong, but our unrealistic growth plan--to become Dell in less than two years--did us in. Only the convenience of timing allows VA Linux Systems to be mentioned in the same breath as eToys, Pets.com or Webvan. The revenue of those was rather paltry, in comparison.
To put the VA Linux IPO in its proper context, let's rewind and remember what was going on at the time:
- Red Hat had a great IPO the summer of 1999.
- IBM had jumped into bed with Apache and had started its first big push with Linux.
- Oracle and most other major database players had released native versions for Linux.
- A year earlier, Dan Kusnetzky famously authored the famous IDC report showing explosive Linux growth of 212 percent.
And yet, in spite of these obvious signs of traction and increasing market share with real customer demand, Linux and the rest of the open-source "bandwagon" were treated like Summer of Love refuse that had never really come down from the acid hits.
Every article about Linux included (stupid, irrelevant) questions about whether it would replace Windows 98. There was a widespread belief among industry observers that open source was fueled by the dot-com bubble and would wither away when the bubble burst. Every article referenced a ragged band of hippie programmers who did it out of love or ideology and just wanted to beat the evil empire.
At that time, no one had really figured out what was driving open-source development. It's worth pointing out that we card-carrying members of "the" open-source community played our part in that perception. Who can forget the famous Windows Refund Day? And if you never smelled Richard Stallman or Eric Raymond at a conference, then you clearly missed out.
It was a heady time of uncertainty, doubt, and eternal optimism. A time of green-field bliss, of "Linux without limits," and there was no problem that a few lines of Perl (Practical Extraction and Report Language) couldn't solve. After all, "the geek shall inherit the earth." It must be true; I read it on a T-shirt.
It truly was a time of the almighty individual weaving his magic and changing the world--and if you were lucky, getting paid well for it. We were young and naive, and those of us endowed with Y chromosomes were high on testosterone. We truly believed that we were on the right side of history but were too stupid to realize our own limitations. This was a blessing and a curse.
That unyielding belief in the omnipotence of writing code gave our army the energy to slay dragons we wouldn't have otherwise, but it also gave us the chutzpah to tackle issues that we ultimately could not solve. Case in point: that time when someone who shall remain anonymous tried to rewrite our ERP system from scratch. In Perl. He didn't last very long.
As it turns out, we were right about the open-source thing, but we somehow forgot the other history lesson: the one about how being on the leading edge of something successful doesn't mean you'll enjoy all, most, or indeed, any success. Those who ultimately reaped the benefits of open-source proliferation did so because they were smarter and took a more conservative approach.
The 10th anniversary of Red Hat's IPO passed without much fanfare last summer, probably because its management is too busy running a successful company to really take the time to pause and reflect. VA Linux Systems, meanwhile, was devastated by the tech bust because those start-up companies were a significant percentage or our revenue.
VA Linux Ssytems changed its name in 2001 to VA Software, after jettisoning the hardware business entirely, and it focused on selling licenses for SourceForge Enterprise. And when that didn't work out, it became SourceForge, a collection of Web sites deriving revenue entirely from ad sales. And it has since changed its name again, to Geeknet.
For the veterans of the VA Linux IPO, we're left to ponder what might have been and savor the unreal moments, while deriving some small consolation from the fact that our instincts were right: open source was not a fad; it was just the beginning. It's not going away, and VA Linux was ahead of its time. Small consolation, indeed.
Most businesses would die without centralized marketing and operations. The Linux kernel, however, thrives under this model.
The closest thing to a CEO in Linux land is Jim Zemlin, executive director of The Linux Foundation. While Zemlin doesn't steer the Linux ship, he does a great deal to corral its competing interests--vendors, developers, customers--to guide Linux to the impressive market position it holds today.
I caught up with Zemlin late last week to get a pulse on the state of Linux in the market. As ever, Zemlin didn't disappoint.
Q: Nearly a whole decade has gone by since the original tech bubble burst, and Linux has done quite well. How does the current recession compare to the hit that tech took ten years ago and how does it position Linux for the next decade?
Zemlin: IDC says the largest increase in Linux adoption took place in 2001/2002 during that bust. Since then, it has become mainstream and is being used everywhere.
Today's recession is quite different than the bubble and bust we experienced nearly a decade ago, since it has reached every corner of every market around the world. IDC already restated their growth forecast upwards for Linux due to the recession and I would expect analyst research to surface an even greater growth spurt for Linux over the last couple years as they get better at accounting for unpaid Linux and open source use.
Linux provides better value than Windows, and in tough times this difference makes all the difference.
But the recession isn't what's positioning Linux for growth in the coming decade. With or without the current economic climate, Linux is the only operating system (OS) that can help OEMs achieve any margin at all from devices that will soon be free.
The PC industry is moving towards a services business, much like the one we see in telecom. The OS must be free or nearly free or OEMs can't compete. This is why Microsoft is investing so much in search and other initiatives; it knows the business model for its former cash cow, Windows, is slowly dying.
There has been a lot of consolidation in the market. For example VMWare's Springsource acquisition and now the E.U. is saying they are concerned about Oracle's acquisition of Sun because of MySQL. Is this good for open source?
... Read more
Open source is now mainstream and routinely used in mission-critical applications. For 99.999 percent of the people reading that statement, it's so obvious as to induce global yawning. But for Peter Gyorgy, chief information officer of GE's Consumer and Industrial division in Europe, it's apparently heresy.
Gyorgy is quoted by eWeek as follows:
I think open source is great for own internal playground type of things, but if it's running vital mission critical applications--networks running on open source for example--then that is a huge, huge risk to the organisation....
We are not here to be an IT shop, we are here to be the partner of a business and we shouldn't put businesses operations into risk by running very low cost solutions.
So much factual error, so little time.
First, it's ridiculous to suggest that because something is "low cost" it is inherently risky. Gyorgy seems to believe that the more he spends, the safer he is. Last time I checked, Google et al. were running their networks at more significant scale than GE, and all on open source.
Maybe Gyorgy simply doesn't like equal or better performance for less money. In this, he's apparently alone. The 451 Group's survey data has roughly 90 percent of the 1,700 IT executives surveyed declaring that they have realized cost savings with open source. These are IT executives that a few years ago might have shared Gyorgy's views on open source.
No more.
But Gyorgy needn't trust strangers. He could just talk with his colleague, Laurent Rotival, senior vice president and general manager of Enterprise Solutions, GE Healthcare who, in conjunction with one of the leading health care providers in the United States (Intermountain Health Care) and Red Hat, put together a Linux-based health care system that he describes as "state-of-the-art" and that "presents less risk for our customers, protects their total costs of ownership, and ultimately takes them from a legacy architecture to a state-of-the-art architecture."
Left hand, meet right hand.
Second, Gyorgy's assertions are ironic given GE's widespread use of JBoss, Linux (in GE Healthcare and elsewhere), Alfresco, MySQL, and other open-source projects, in Europe and globally. Contrary to Gyorgy's assertion, these aren't "internal playground type" applications. Some of them are mission critical by anyone's standards.
I am personally familiar with several of these.
So is Gyorgy's boss, GE's global CIO Gary Reiner. Reiner not so long ago purchased an enterprise subscription for MySQL when he discovered that GE was running MySQL all over the place, and not solely for internal "playground" sort of applications.
Apparently, no one sent Gyorgy the memo that spells out areas in which GE is actually sponsoring open-source projects (like VTK), in addition to its broad adoption of open source. I suspect Gyorgy isn't the only one to have missed the memo. After all, the CIO is the last one to know.
Mike Milinkovich
(Credit: Eclipse Foundation)Open-source communities are founded on trust. It's therefore disappointing but not surprising, to see the Eclipse Foundation's executive director, Mike Milinkovich, rip into former Eclipse Foundation director of community Bjorn Freeman-Benson and tell him to take his "steady acid drip of negativity" and "go away."
Milinkovich, a steelie, hockey-playing executive, didn't mince words in a blog post:
Your former colleagues at the Eclipse Foundation have tolerated your public abuse quietly because we are professionals, and we honestly thought that you would tire of it. Apparently we were wrong. But the time has come to say it: You are a jerk. Please go away. You quit the Foundation, you have zero commits since April, and we tire of your sniping from afar.
Not the most diplomatic but better than a body check against the glass any day.
Given Freeman-Benson's constant carping on the foundation and his former colleagues, it's understandable that Milinkovich went on the offensive. In a variety of posts, including the one that prompted Milinkovich's post, Freeman-Benson has sought to undermine the Eclipse Foundation, which has successfully managed one of the industry's top open-source projects.
His criticism may have been fragmenting the trust that held together the Eclipse community.
Indeed, as Eclipse Foundation director of marketing Ian Skerrett told me, "There is a long history of troll-like blog post[ing] that built up to this point; yes, it is harsh, but it was hurting the community."
Call it tough love for the open-source set. Given the existence of poisonous individuals in many open-source communities, it may be "love" we see more often.
As cloud computing edges its way into the enterprise, the open-source Apache Hadoop project may well prove to be the poster child of the movement. Hadoop effectively gives enterprises the power of Google or Yahoo Web indexing for free, or for the cost of a CloudEra subscription if you want to involve Hadoop's core developers in your rollout. Credit card giant Visa is an early corporate adopter of Hadoop, and points to a bright future for the open-source project.
I caught up with Visa's Joe Cunningham, head of the technology strategy and innovation group, to talk about the company's adoption of Hadoop.
Q: What got you interested in Hadoop initially and how long have you been using Hadoop?
Joe Cunningham: It's early days for us here at VISA for Hadoop. It's still very much classified as a research and development activity.
My role is the head of technology strategy and research and development for the company. Our task is to look outside the company for interesting technologies on the landscape and identify potential opportunities for those technologies to add value to either the VISA business of VISA technology and then bring them in and play with them in our lab research environment until they are ready for mainstream or commercial activity.
Hadoop is one of those technologies we've been looking at for about a year and we think it offers certain value as an augmentation to existing systems and capabilities VISA has.
Q: How do you use Hadoop at VISA? What made you think it could be the best solution for what you're trying to accomplish?
Cunningham: The most important thing to remember is VISA obviously has a heritage of offerings--very large, very scalable, very reliable, and very secure services to the payments industry. And we're continuously trying to innovate and make those services more valuable to our clients and ultimately to cardholders.
We have a data challenge we attempt to meet every day in terms of the number of transactions we handle and therefore we think there's an opportunity to look at the skills VISA already has in the data analytics space with the power of Hadoop to handle very, very, very large volumes of data.
To put that in context, we handle approximately 200 million transactions a day at VISA. That works out to be about 8,000 transactions a second, and with that comes huge volumes of data and Hadoop offers the potential to harness some of that along with some of our existing capabilities to extract more value from those transactions.
Q: Are there particular directions in which you'd like to see Hadoop evolve?
Cunningham: I think we're interested in looking at Hadoop and looking at its evolution over time. We're certainly interested in how the Hadoop community continues to operate in this open-source environment.
My specific interest is how can Hadoop evolve from the alpha beta environment in which it is today to the mainstream and how can we continue to integrate it as a mainstream technology with all the existing platforms we have here at VISA.
I'll give you two examples. The operations management space is very important to us: how we guarantee the reliability and security of our systems and how Hadoop can be merged or integrated into that environment. And secondly, and I guess this is a common question, but how can we enable SQL-like access to some of the data via the Hadoop file system or via the Hadoop engine?
Q: Given that it's still early days for Hadoop at Visa, it's interesting that you're speaking at the upcoming Hadoop World conference, along with JP Morgan Chase, China Mobile, and other Hadoop users that may be further along the adoption curve. What are you going to be talking about?
Cunningham: I plan to talk about the application stream, so I'll be taking a business-focused view of how we see Hadoop offering value to Visa. If there are tech junkies in the room, they are probably not going to be as interested in what I talk about.
I plan to spend a little bit of time showcasing Visa's technology today to set the scene. I will talk a little bit about our research and development function and how it works with the rest of Visa. Then I'll spend some time expanding on what I call our information products business.
The information products business for Visa offers services to our clients that are, obviously, information-based. So, some of the use cases where we see Hadoop potentially offering value in the future are in the areas of transaction analysis (particularly for risk products and the modeling of risk scenarios), fraud analysis (assisting our clients in potentially managing fraud more carefully), and in the loyalty space where Visa offers services on behalf of our clients to cardholders.
There's an opportunity for us to combine the power of Hadoop with data analytics capabilities that Visa has to augment those services and products on behalf of our clients.
In fact, that's an area that I'm hoping to learn a lot at the event. In some industries, Hadoop is very much mainstream but for some others, it's still emerging and I'm trying to understand whereabouts on that hockey stick or [Gartner] Hype Cycle Hadoop is, or whether Hadoop is already mainstream and it's just a matter of us catching up.
It's always good to gauge and plot that evolution. I think you need to get to these events and talk to other companies and key leaders in the community to really understand where we fit and what we should be doing next at Visa.
For those interested in attending Hadoop World in New York, the organizers are giving Open Road readers a 25 percent discount if you register by September 24.
Richard Stallman, godfather of the free-software movement and co-author of the GNU General Public License (GPL), has apparently found a home:
(Credit:
Steve McLoughlin (Alfresco))
It's not clear whether it's a retirement home, a private club for members, or what, but I'm sure they'll welcome him anytime he's in London, where it's located. Let's hope it's nearby Microsoft CEO Steve Ballmer's Zune House, as the man doesn't seem to have much love for the iPhone, according to this story in Ars Technica.
(I think GPL, in this case, actually stands for Garden Picture Library, but...don't tell Stallman. :-)
Microsoft has had some exceptional people driving its open-source strategy over the years.
Now, with Sam Ramji, senior director of platform strategy and Microsoft's point man on open source, officially leaving for a Silicon Valley-based start-up at month's end, Microsoft has the opportunity to select someone who will ramp its open-source engagement to the next level.
Should Microsoft choose a pragmatist or an anarchist?
Sam Ramji
It's a provocative question, but one that becomes easier to answer when you consider the state of open source at Microsoft and how its various open-source leaders have managed it.
Initially, it was Jason Matusow who took the bullets for Microsoft (and protests/pickets) as it cut its teeth on open-source engagement. Later, Bill Hilf took the reins and moved Microsoft's open-source involvement from discursive engagement to practical deployment: the company opened its open-source interoperability lab, and Hilf lobbied to partner with a variety of open-source companies.
Then came Ramji, who brought open-source credibility to his role at Microsoft, having used it extensively at a previous start-up. Ramji helped to kick off CodePlex, Microsoft's open-source code hosting site and has actively educated Microsoft on open source as much as he has worked with the open-source community to understand Microsoft. (Ramji is also becoming interim president of Microsoft's newly created CodePlex Foundation.)
Microsoft, as Hilf explained Thursday in announcing Ramji's departure, is far more advanced in its open-source activities than it once was, which suggests the ideal replacement for Ramji:
The perspectives on OSS at Microsoft have evolved to the point where Microsoft's open source strategy is no longer just locked in a single 'lab' on campus - now OSS is an important part of many product groups and strategies across the company. We have become increasingly clear on where we work with open source - development methodologies, projects, partners, products and communities - and where our products compete with commercial open source companies or platforms. Today, there are engineering and business leaders across the company, myself included, looking at how to drive interoperability for customers and as a lever for new growth.
Open source is, in other words, increasingly part of the standard fabric of Microsoft's technology and business strategy. As such, it doesn't need a missionary so much as a diplomatic, pragmatic messenger to discover areas within the company where open source can take greater root and to engage with the community outside Redmond.
Microsoft doesn't need a talking head, someone to fill panels at every open-source conference and pontificate on the immaculate conception of open-source code. Rather, it needs someone to help motivate Microsoft's rank-and-file to get involved in such events and to intelligently explain Microsoft's diverse and sometimes seemingly contradictory positions on open source--a fact that shouldn't be surprising to anyone who has worked at a big company.
Microsoft doesn't need a Che Gates, someone who believes open source is The One True Way and is afflicted with the unhealthy and unhelpful Microsoft-hating disease. Such a person will never be heard within Redmond and rightly so: the world has already figured out that open source is a powerful means to develop and distribute software, but it's not the cure for global hunger.
Rather, Microsoft needs a thoughtful mediator to deepen its engagement with the wider open-source community while continually reminding its employees to consider open source in product and business decisions.
In short, Microsoft needs someone who can credibly advocate for open source without being consumed by mindless rhetoric. Someone, in other words, very like Matusow, Hilf, and Ramji, but probably with a shorter Microsoft tenure (similar to Ramji). Any ideas? Send them to Hilf.
To end on a personal note...Sam, you have been incredibly generous to me, usually when I least deserved it. You have been patient and forbearing. I think the world of you. Your new start-up is lucky to have you. The only area in which you failed is I can't remember a single Arsenall ticket being sent my way. But we all have failings. :-)
Follow me on Twitter @mjasay.
Most vendors must guess what customers want to buy, and how they'll use it. For IBM, however, with about 400,000 employees, it has the potential to be its own best laboratory, one that becomes even more potent when mixed with active participation in open-source communities.
That potential, as I discovered in an interview on Friday with Jeff Schick, IBM's vice president of social software, isn't a "gimme," but is powerful if you can enable the right sort of corporate culture and processes.
For example, Schick mentioned that IBM has a technology adoption program for employees that spans the gamut of new products, add-ons and patches to existing products, and still-raw technologies direct from IBM's labs. While the invitation list and process is different for each particular item, IBM generally encourages its product groups to "experiment" upon each other. The earlier in the development process, the better.
At the heart of this open approach to technology adoption are open standards and open source. When I pressed Schick on the relative importance of both ("If you could only choose open standards or open source, which would it be?"), he responded:
Our products may include open-source components, and often do, but ultimately open standards are the most important consideration for customers. As customers integrate our products into their various enterprise systems, open standards are critical for ensuring they work.
Point taken, but it's impressive just how much open source influences IBM's product development. Gartner estimates that 80 percent of commercial applications will include open-source components by 2012. At IBM, the number may even be higher.
Despite IBM not releasing its core software products under open-source licenses, Schick noted just how integral open source is to IBM:
From a development perspective, as we build our social software products in Lotus, we're always looking at ways to improve quality and time-to-market. Open source often helps us with both areas.
For example, we were blogging within IBM for a long time before deciding to build the Lotus Connections product, which is fast approaching hundreds of millions of users. After some study, we decided to build the blogging piece of Lotus Connections using the Apache Roller project, an open-source Java blog software. We have become active contributors to the project since then.
But it's not just in Lotus Connections. As you look across nearly every capability across our social-software strategy, open source plays a critical role. Open source is an integral part of how we build products. Our engineers are very much in tune with the wide variety of open-source components that are available to them, and use and contribute to them. Regularly.
IBM seems to have figured out better than most how to marry the global open-source laboratory with a massive internal laboratory. Talking to Schick, there appears to be a very blurry line between "internal" development and "external" development, giving the company a significant advantage over proprietary (Microsoft) and open-source (Liferay, Open-Xchange) competitors alike.
Some competitors may be able to match IBM's scale, but few to none have managed to marry internal scale (employees) with the power of external scale (open-source communities) in the way that IBM has.
Follow me on Twitter @mjasay.
Peter Fenton
No other investor has had as much success in open-source software as Peter Fenton, general partner at Benchmark Capital.
A competitive triathlete, Fenton has turned the standard marathon of open-source business-building into a sprint, churning out four big open-source sales--JBoss ($350 million), Zimbra ($350 million), XenSource ($500 million), and SpringSource ($420 million)--while most investors have yet to turn a profit on any.
Not that Fenton is a one-trick pony. He also just sold FriendFeed to Facebook and sits on the board of Twitter. It's fair to say that Fenton can now afford a second Aston Martin.
But Fenton is still busy, sitting on the boards of open-source companies Pentaho, Terracotta, and Engine Yard. He's also willing to share the secrets to his open-source success, telling The Wall Street Journal the key to building a winning open-source business.
Spoiler? Build a direct line to your customers using open source and then ensure an excellent product to pave the way to adoption, then usage, then sales. According to the Journal article:
Rather than "expensive sales efforts and negotiations with the upper management to get the most money possible," the people that will be using the software can easily download and try the product. This helps the best products proliferate and weeds out the underperformers.
"If you don't have the best product, you're not going to make it in open-source," unlike traditional enterprise software, where customers often flock to good-enough products.
Having a well-received product not only results in plenty of downloads, users and developers, it also makes the sales process that much easier. With SpringSource, "anyone the company sold to was already using the product," he said.
Sounds easy, right? Well, no, not if you've ever been involved in an open-source business. Building a great product is hard enough, but doing so in a transparent fashion while encouraging active adoption without appearing faux to your community...? That's hard.
Venture investing may be more art than science to some, but Fenton has done more than most to turn open-source investing into a science, as VentureBeat reports. For instance, many open-source companies are ecstatic to have widespread adoption, but Fenton is careful to call out the difference between adoption and actual usage, as he does in this Benchmark presentation (PDF).
In this presentation Fenton calls out two strategies for investing in either "farm-raised" or "free-range" businesses. Think of these categories as company-led (e.g., Zimbra) or community-led (e.g., SpringSource) open-source businesses. Neither is better than the other: they simply refer to whether an open-source community predates a company set up to monetize it.
The strategies Fenton takes depends. For "free range," it looks like this:
(Credit:
Peter Fenton (Benchmark Capital))
For "farm raised," Fenton's strategy looks like this:
(Credit:
Peter Fenton (Benchmark Capital))
All of which means your next open-source investment or company should be a snap, right? Maybe not. It's one thing to call the correct shots--and quite another to make them. Part of the reason Fenton has been so successful is that he has invested in exceptional operators at each company, including Marc Fleury and Rob Bearden (JBoss); Satish Dharmaraj, Scott Dietzen, Andy Pflaum, and John Robb (Zimbra); and Rod Johnson and Rob Bearden (SpringSource), among others.
Perhaps this is really the key to Fenton's success, after all is said and done: he knows how to attract top-tier entrepreneurs to top-tier open-source communities. That's not something one accomplishes with a jog or casual bike ride. That's the work of a triathlete, which makes Fenton perfect for the job.
Follow me on Twitter @mjasay.
