The Open Source CEO: Boris Kraft, Magnolia (Part 6)

In this sixth installment of the Open Source CEO Series, I decided to change gears a bit, and talk with Boris Kraft, CIO of Magnolia, a leading open source content management company. Boris differs from previous CEOs profiled in this series because, first of all, he's not a CEO. But I decided to make the exception here because he's the strategic leader and community manager for a vibrant open source project with executive responsibility for Magnolia, the company, as well.

Name, position, and company of executive
Boris Kraft, CIO and Community Lead, Magnolia, Simple Enterprise Content Management.

Year company was founded and year you joined it
The Magnolia project started in March 2003, with the first public release on November 15th, 2003 (Magnolia 1.0). How the company was founded to capitalize on growing interest around the project is a long story.

Stage of funding and venture firms that have invested
Magnolia has raised no external funding, i.e. Pascal Mangold (CEO) and I have transformed our company from a service provider to an open source vendor and cross- financed product development with services. In the process we had to downsize our company from 15 to 4 people by the end of 2005. Things have been considerably better since then as I've explained elsewhere.

Background prior to current company
Magnolia (then "Obinary") was not originally open source. The decision to go open source was a pragmatic one at the time. On one hand, we were in no position to launch yet another commercial CMS [Content Management System] product in the middle of a business downturn (and it would not have made any business-sense, since nobody spent money on CMS at that time). On the other hand, our original intention was to have something that works for us, since we did need a system that would allow us to finish our client projects faster and better and easier and more standards-based. We thought: "Why not share what we did with others?" Hence the idea to open source it and see what would happen.

Biggest surprise you've encountered in your role with your company
The biggest surprise was that it is very hard to give something away for free. Just because a software is free or open source means nothing anymore, since so much free and open source software exists. It has to be of real value (boy what an insight;-)) and you have to market it for it to get traction.

The next big surprise was that nearly all of the things we expected to happen did not. All the things the average person thinks they know about open source. Yes, we did have a lot of downloads. But we did not sell a single support contract for our free software for several years! Nobody wanted us to do custom extensions for them. Thousands of brilliant software developers did not join the community and work for free on Magnolia. The media did not pick up on us and make us famous overnight (we did not *really* expect this). Donations did not pour in over us like mid-day rain in the tropics. In short: while Magnolia was an immediate success in terms of usage around the world, ROI was a long, long, long way off.

Hardest challenge you've had so far at your open source company
The hardest challenge was to survive cross-financing the development of Magnolia until all our ideas added up to something that would actually result in positive cash-flow.

If you could start over again from scratch, what would you do differently?
I will never again start without significant outside investment into my ideas. Besides that, everything we did worked out brilliantly. But, doing it over again, I would have sought outside investment.

Top three pieces of advice for would-be open source CEOs

1. For project leads I think that every project is different. It's hard to give general advice. The hardest part is to build up the community and ensure that its not a single-person project, else you will be busy answering emails 20 hours a day.
2. As a CEO, you should be able to accept that if you do open source business, others will get a big chunk of the revenue that you believe should or could be yours. Anybody can take your project and sell what you sell (service contracts, support, implementation, training or sometimes even the software in the form of derived work) without giving back to you. That is part of the game. You need a state of mind that accepts this as a fact of life, and be happy about the business that you do generate for your company.
3. One more thing: Don't forget to go sailing on weekends.

Great insight, Boris, especially given that you prove that a project can be very successful...without being immediately financially successful. It takes patience and a lot of work (and then more patience) to turn a winning open source project into a winning business. Thanks for sharing.

Next up in the Open Source CEO Series...Kelly Herrell of Vyatta, the leading provider of open source networking software.