Put up or shut up

It has been a very bleak year for Arsenal supporters like me. It has been made worse, however, but Arsene Wenger's (the Arsenal coach) tenacious optimism. Actually, that's the polite word. The real word is closer to "foolish, unsubstantiated hope."

After every game, as a member of Arsenal's ticket club, I get a letter from Mr. Wenger. At first I was cheered by these "We deserved to win but unfortunately we lost" notes. I agreed with him. But after 9+ losses this season, I can't stomach another one.

At what point in soccer/football, as in business, do we put up or shut up? We can keep crying that the market just doesn't understand us, that our product really is better than Microsoft's, Oracle's, Documentum's, etc. But until we're winning deals and taking market share, we'd do better to just keep quiet.

In business, there is one thing that buys respect: sales. Without these, everything else you do is frosting: gives you a burst of energy but cannot sustain you.

So, don't be like Mr. Wenger (a coach that I greatly respect, but for his emails). Be more like Jose Mourinho (never thought I'd be saying this): win first, then talk.

Dear Arsenal Supporter,

The Blackburn game was one we were really unlucky to lose because we were really on top. [Asay: Except that we lost. Again.]

In every game, you face different kinds of problems. On Saturday we faced a very different way to play and we got caught once where Blackburn scored a very good goal.

We played a bit too much within ourselves in the first half but that happens sometimes when you have played a big game in midweek. Sometimes it is difficult to get going again. [Translation: We beat one of the world's best teams, and somehow this made it hard to beat a mid-tier English club? Please, Arsene!!!!] It was important not to concede a goal but we did.

In the second half we went up a gear. We played in one half of the pitch but unfortunately could not score. I am sad for the players because they gave everything until the last minute but it was not to be and we lost another game where we couldn't score away from home.

Looking back at the game I feel we lacked a little mental sharpness but I cannot fault the players for effort because we were really on top and gave absolutely everything right to the end. [Well, yes you can fault them. Because they lost. Trying doesn't matter if the score is 1-0 against you.]

We were very close to scoring but it was difficult to find real fluency because the pitch was difficult and that did not help.

We have had problems away from home but I feel Saturday was slightly different. If we had played like we did at Blackburn in other matches we wouldn't have lost eight games away from home. [Yes, at those games Arsenal did other things wrong that weren't our fault. Grr.....]

Exporting affluence

I'm back home now in Utah, but Venezuela is still with me. I had an excellent week of meetings with Alfresco's business partner there, Tecnocomputacion 3000, as well as prospective customers. It was an experience I won’t soon forget.

The beautiful mountains. The dirty streets and stray dogs. The exhaust from ramshackle cars. The impeccable dress code for businessmen and women. Fascinating.

What struck me most, however, were the people. Everyone I met seemed to be earnestly, strenuously working for a better life. My business partners started work at 8:00 (if not earlier) and ended at 9:00 PM, or later. While there I received emails from prospective partners and customers in Chile, Peru, and Brazil, all sent “after hours.” Clearly, this is a people who are willing to work.

One problem, however, is for whom they actually work. The United States, to a large, unhealthy degree. The software and hardware they were using comes from American companies, for the most part. Most of the products in the stores I visited were from American and European companies. In essence, they’re trading Bolivares for dollars, and losing in every transaction. They are net buyers, not producers.

And they’re not able to buy much. As I drove to the airport, I asked my driver how much a typical apartment (2BR, 1BA) costs. Answer? Roughly $218/month. I then asked how much the commuters we passed were paying per month for transportation to work ($145), and what they – largely manual laborers – made in a month ($227 is the minimum wage). I paid more for my taxi fare than they make in a month. It made me ashamed.

I don’t believe it needs to be this way. I believe there are markets waiting to be born in South America. And I believe (finally - I've been a complete imbecile on this topic in the past) that open source is one way to grow them. Sure, open source is a more efficient way to develop and distribute software but, until this trip, I didn’t really see the incredible opportunity it offers to developing nations. Open source is, essentially, a way to transfer wealth to these nations without them shipping dollars back to the US and Europe in return, and without these developed nations losing anything in the bargain. In fact, quite the opposite. It’s a way to help others grow local economies, which growth we can share in, as my company does today.

While I feel a moral and ethical responsibility to help grow these markets, and you may, too, this is not about charity. It’s about helping to create markets that we can sell into and, perhaps, disproportionately benefit from. Grow the pool of Bolivares for my Venezuelan colleagues, grow the local manufacturers earning them, and hopefully they will then share a small portion with me. Everyone wins.

[Note: BusinessWeek just ran an excellent article on admissions at Amherst, a premier US liberal arts college. The new president is trying to bring in more disadvantaged students, who generally are disadvantaged both economically and academically, without upsetting the school's academic standards/reputation. His job is much harder than the software world's, relative to providing increased prosperity and chances for others. In his world, he's dealing with a relatively finite number of incoming students - it's somewhat zero sum (let a poor academic performer in, leave a top performer out). In open source, there is no such quandary. It's just bits and bytes, so give liberally. There really is no tragedy of the commons.]

Governments and Software Libre: I was wrong

So, it's actually not uncommon for me to find out that I'm an ignorant Muppet. But it's somewhat uncommon for me to admit it publicly. ;-)

I'm in Venezuela meeting with partners and customers, some of which are government agencies. In so doing, I've asked for further clarification on Venezuela's legislation (Decreto No. 3.390 [PDF download]) mandating the use of open source software. I've criticized this (and other governments' open source legislation) in the past, not because of a disregard for open source software (My entire career has been spent promoting open source), but rather because I dislike government edicts that require use of a particular kind of software.

As it turns out, the Venezuelan legislation preferences open source software, but does not mandate its use in areas where it might not be a good fit. So, for example, the government isn't throwing out its SAP ERP software (yet!), but will shift to open source ECM, CRM, operating systems, office suites, etc. because those currently have strong open source alternatives.

This, I believe, is smart legislation. In talking with people here, it's clear that money really isn't driving these decisions. Freedom is. Freedom from lock-in to vendors whose interests are not always aligned with the government's. Freedom to build up the local economy by keeping Bolivares here, rather than wiring it back to the US, Europe, or anywhere else.

Here's a relevant part of the legislation (in Spanish):

Articulo 1. La Administracion Publica Nacional empleara prioritariamente Software Libre desarrollado con Estandares Abiertos, en sus sistemas, proyectos y servicios informaticos. A tales fines, todos los organos y entes de la Administracion Publica Nacional iniciaran los procesos de migracion gradual y progresiva de estos hacia el Software Libre desarrollado con Estandares Abiertos.

Chavez is on the march....

Way off-topic: Arsenal kick Real Madrid's Bernabeau

No one but me cares about this, but Arsenal finally put a bright spot on an otherwise gloomy season, trouncing the fancy lads from Madrid (Beckham et al.) on Madrid's home turf (Bernabeau).

I'm now super-bummed that Alfresco changed our management meeting for the week of March 13. I was scheduled to be in London for the rematch (Real Madrid vs. Arsenal @ Highbury)....Oh, well.

P.S. I'm also ecstatic that Liverpool lost. It's Arsenal's turn to be last place and still win the Champion's League.


....And now back to our regularly scheduled programming on open source....

Can one acquire open source into oblivion? (Network World

Network World just published an excellent story on open source M&A, and whether commercialization of open source is harmful or helpful to open source software development. The best quotes in the article come from large enterprises that use open source:

Barry Strasnick, CIO, CitiStreet (and JBoss customer):

"I believe what will really determine the success or failure of commercial firms purchasing open source vendors is the extent to which they can keep the key developers. One of the main reasons that CitiStreet likes to deal with vendors such as JBoss is that our senior technical staff can deal with their technical staff, instead of having to deal with useless layers in between. We don't buy software because of fancy brochures or well-dressed sales staff. We buy software to gain benefit from great programmers.

Could JBoss possibly have paid for a better advertisement? I love that line "useless layers in between." It's true. Who wants to talk with someone that can't immediately solve your problem?

And this one from Bob Hecht, VP of Content Strategies, Informa ($1.5 billion publisher and conference organizer and MySQL + Alfresco customer - truth-in-advertising):

"I'm comfortable in saying that if we build something on an open source platform and it gets bought, it's ours anyway. The implication is for future development, but open source has a way of living. It finds a way."

Hecht goes on to say that he ensures his developers understand the open source code they deploy so that they don't have to passively accept whatever the market throws at them. Good counsel.

Open source meets Web 2.0: Mashing up

Reuven Cohen has a cool idea: open source mashups. He's created a site to house the mashups. Not much there yet, but consider the possibilities of mashing up Sugar and Alfresco, Plone and Compiere, Zimbra and JasperSoft, etc. Very cool, Reuven.

Update: Matthew (Silent Penguin) demands that the idea were a hair-shirt as penance for being a Really Dumb Idea. :-)
Oh, and BusinessWeek questions the utility of Web 2.0 mash-ups (as do I - but my point is that if they're meant to be nothing more than cute and clever, then where's the harm?)

Choosing a systems integration partner

Given the positive feedback I've had on the idea to bring an implementation/systems integrator focus to OSBC Boston 2006, I figured I could start the conversation here by discussing some of my findings about choosing a strong SI partner.



In my experience, different SIs bring different strengths, and it's not clear that one is necessarily better than the other. Some of the different types I've worked with at Novell and Alfresco:

1. Open Source Savvy. Systems integrators with a strong open source background can be a huge benefit in pitching reluctant customers. You don't waste time trying to bring them up to speed on the "Why open source?" question, and they generally have solid customer references to help newbies "cross the chasm." The downside to open source SIs is that they don't always have good depth in a given market (CRM, ERP, ECM, etc.). Worse, because their backgrounds tend to be with "in the wild" open source projects, they sometimes have a hard time pitching commercial open source alternatives.
   
   It's therefore imperative that you work out a clear sales strategy/competitive differentiation with your open source SIs. In Alfresco's case, for example, one of our partners - Cignex - has traditionally been a Plone shop. They found that a number of customers wanted a Java-based ECM offering (Alfresco is J2EE-based), however, and have established clear guidelines for when they pitch Alfresco versus Plone, making us comfortable that they're not undercutting us or underselling us.
   
   
2. Proprietary Solution Savvy. These are SIs who have a long track record in implementing SAP, Documentum, Siebel CRM, etc. These partners are great because they tend to have excellent customer references and have felt their clients' pain acutely, which usually stems from implementing overly expensive, inflexible, and featured products. They tend to see open source offerings as a low-cost alternative to their more costly, proprietary partner offerings.
   
   The downside with these partners is that they tend to lack a sophisticated understanding of open source and therefore don't always pitch this value accurately or emphatically. You need to work with these partners to help them see open source as more about flexibility, choice, and innovation than it is about cost.

I haven't found either type of SI partner to necessarily be generally better than the other. Each has its strengths and weaknesses and should be brought into deals accordingly. I have found, however, a few more things:

1. Size doesn't matter. Some of our best SI partners are 3-5-person shops. They are hungry to work with us and do exceptional work.
   
   
2. They're not in it for the license revenue. Because open source solutions tend to cost less, 10-50% in margin won't mean as much as it will in a bloated, proprietary software deal. But the good news is that there is still plenty of money for them to make in implementation. Open source doesn't obviate the need for customization to an organization's business processes.
   
   
3. SIs are absolutely critical to open source's success. A successful open source business model is one that scales well beyond its own employees. SIs give an open source company leverage and range. Building a robust SI channel is therefore one of the most important things an open source startup can do (in addition to building out a strong inside sales team).
   
   
4. To pay or not to pay? At Alfresco, without exception our best SIs are those that invest the most in Alfresco. They're the proactive partners who get neck-deep in the code and end up understanding it as well as we do. Generally speaking, they're also the ones who invest money upfront in our partner program. I'm not sure whether the commitment is a consequence of having invested actual dollars, or if it's a trailing indicator, but the two invariably go together. Lesson? If someone isn't willing to invest at least $2,000 in your company (in order to make a multiple of that on their first deal alone), are they really that committed to your product? Probably not.

I'd be grateful for any other insights people may have into this. Please share.

The importance of architecture

I'm in Caracas, Venezuela right now for customer visits and partner training. I've never been here before, and was super excited to have the chance to visit such a great city/country.

I was less excited, however, after an hour in the car from the airport, with another 1.5-2 hours to go. Normally, the trip from the Caracas airport is 30 minutes to downtown, but the "Viaduct" (bridge connecting the two) is down, requiring a HIGHLY circuitous, corkscrew route from the airport to downtown. It was hell. Pure hell. I actually only made it half-way before I revisited my Delta Airlines meal. Enough said.

Why is the bridge down? (And, more appropriately, why is there only one direct way to get to the airport?) Because the mountains between which it is suspended have been moving, causing the bridge to buckle. When it was built ~50 years ago, no one thought about complex foundations to flex and give. Who can blame them?

Today, however, the result of this architecture is clear: a broken bridge and my near insanity at being cooped up in a car for nearly three hours on super-windy mountain roads.

Much of today's software world is made up of Caracas bridges. In my world (content management), there isn't a major proprietary ECM product that was built in the last six years. Documentum is 15 years old. FileNet, Vignette (did a major redesign, much to its customers' chagrin), Interwoven, etc. All are burdened by antiquated architectures. The same holds true of other product spaces (ERP, CRM, etc.).

Part of the value open source brings, then, is simply novel architecture. And because that code is open, the architecture tends to get vetted early and written "right" or the project dies. Open source, then, offers a way to build the "Viaduct" in a transparent manner, resolving architectural snafus early on.

So, if you're an enterprise buyer, do you want to invest in a stodgy, decrepit, proprietary architecture? Sure, it probably has more features, but that's a temporary advantage. Besides, why not invest in a modern, flexible architecture and build up the product through a system integrator, rather than trying to chisel down the calcified remains of an overwrought, overweight proprietary architecture? In my experience, the former road is cheaper and more likely to lead to IT happiness than the latter.

Book Review: The Wal-Mart Effect (A-)

I just finished reading Charles Fishman's The Wal-Mart Effect, and found it fascinating and disturbing. I admit to despising Wal-Mart: I don't like companies who only innovate in making things cheaper, without product innovation and/or without taking responsibility for cutting prices in a responsible fashion (as, for example, Southwest Airlines does).

Fishman writes a cogent, fair analysis of Wal-Mart and its effects on its customers, suppliers, and cities/counties/etc. in which it operates. He doesn't come across as a Wal-Mart fan, but nor does he write as holy crusader against Wal-Mart (as I would be). Still, Wal-Mart can't help but come out looking ugly in its devout, relentless insistence on "Everyday low prices." It's not that Wal-Mart is an evil machine, but rather, as Fishman notes, that its scale makes some of its practices destructive, no matter how innocent they may have been in its founding decades ago.

At some point, for example, a rigid insistence on lower costs means suppliers must cut corners. Those corners may be the quality of their products (as Fishman illustrates with Snapper lawn mowers), the quality of the environment (Chilean salmon at $4.84/pound in part because of the massive destruction of the Chilean oceanic waters), or the quality of the lives of their suppliers (inhumane working conditions in Bangladesh and elsewhere to produce Kathy Lee Gifford apparel). But you can't forever squeeze costs without squeezing someone.

This "Wal-Mart effect" is just one reason that I don't like it when we view open source as a commoditizing force. If all open source can do is wring costs out of the system, then it is a paltry gift indeed. No, open source is a way to refocus innovation, allowing us to innovate closer to the customer's perceived value rather than reinventing (company by company) the infrastructure of, say, a CRM system. Open source is more efficient, or can be, without being blindly efficient, in the way I believe Wal-Mart to be.

Anyway, here are some of the more interesting factoids/comments from Fishman's excellent book:

• At the end of 2000, Wal-Mart had 888 supercenters (up from 9 in 1990), and was the number-one food retailer in the United States. So, the company went from a "standing start" to first place in roughly 10 years. That's power. (3)
  
  
• Every seven days more than one hundred million Americans shop at Wal-Mart - one third of the country. Each year 93 percent of American households shop at least once at Wal-Mart. Wal-Mart's sales in the United States are equal to $2,060.36 spent there by every U.S. household in the last year. (Wal-Mart's profit on that $2,060.36 was just $75.00.) (6)
  
  
• ExxonMobile, number-one on the Fortune 500 list, employs about 90,000 people worldwide; Wal-Mart employs 1.6 million. ExxonMobile is growing by raising prices; Wal-Mart is growing despite lowering prices. (7)
  
  
• Wal-Mart sells more by Saint Patrick's Day, March 17, than Target (its closest competitor) sells all year. (7)
  
  
• How does Wal-Mart do it? Not by focusing on profits, but rather on cost containment. Relentlessly driving pennies out of the dollar: driving jobs overseas (without much concern for how those jobs are fulfilled, so long as the result is a lower cost), driving costs of its own employees (locking them in its stores overnight, forcing them to work overtime without pay, skimping on their wages and health insurance, etc.), and driving its suppliers out of business.
  
  For example, Wal-Mart has proved exceptionally adept at externalizing costs to its suppliers. Wal-Mart "charges many of its vendors with keeping product in stock on its shelves; Wal-Mart cascades data about its sales out to its vendors...but it gives those vendors the responsibility of analyzing those waves of data and reporting the insights back to Wal-Mart." (94-95)
  
  
• Does Wal-Mart create or kill jobs? Fishman reports: "While the entire country (from 1997 to 2004) was adding 670,000 new retail jobs, Wal-Mart was adding 480,000 jobs in the United States. More than 70 percent of all new retailing jobs in the United States in the last seven years came just from the growth of Wal-Mart. The remaining new retail jobs - 190,000 in the entire nation spread over seven years - amount to just 540 new retail jobs in each state, each year...." (107)
  
  Juxtapose this with manufacturing, and those lame Wal-Mart jobs look even worse. During that same period of time, "U.S. manufacturing jobs...fell by 3.1 million jobs, a loss of 37,000 factory jobs a month, on average, for eighty-four straight months." (108) [Interesting factoid from Fishman: the US now has more people working retail than in manufacturing, a shift that happened in 2003. We truly are a consumer nation.]
  
  As Fishman says, "We find the abandonment of U.S. factories from Georgia to Michigan unnerving; we find cheaper stuff on store shelves addictive. And we don't connect the two." (108)
  
  More: In the first year after a Wal-Mart opens, it adds 100 new jobs to the typical U.S. county. Keep in mind that each Wal-Mart typically employs 150-350 workers. Do the math: even as Wal-Mart opens, it puts others out of business. That 100 new jobs? All Wal-Mart jobs. No one else benefits. Then, in the years after Wal-Mart arrives, retail employment falls gradually, so that five years after Wal-Mart's arrival in a county, there are only a total of 50 new retail jobs. Add to this the fact that unlike smaller competitors, Wal-Mart does its own distribution, resulting in a net loss to a county of 20 wholesale jobs. Five years after Wal-Mart moves in, a county has gained only 30 new jobs. Wal-Mart is hardly a growth engine for any economy. (144)
  
  
• On suppliers. "Companies doing 10 percent or less of their business with Wal-Mart had operating profit margins of 12.7 percent. Companies that become..."captive suppliers" to Wal-Mart - selling more than 25 percent of their goods to Wal-Mart - see their profit margin cut almost in half, to 7.3 percent." (163)
  
  
• Wal-Mart and poverty. Economists found that "once you control for everything else, U.S. counties that had a Wal-Mart just before 1989, or that added one during the decade, had higher poverty rates than counties that were Wal-Mart free. In a county with at least one Wal-Mart, poverty fell not to 10.7 percent but to 11 percent. The difference - three tenths of a percentage point - looks trivial....But it is not. In counties with a Wal-Mart, the rate of poverty fell 10 percent more slowly than it would have without a Wal-Mart during that decade." (164)
  
  
• Wal-Mart and groceries. "Part of the reason Wal-Mart can sell a salmon fillet for $4.84 [It used to cost $5.00 or more for a quarter of a pound of salmon] is that...'they don't internalize all the costs.' Pollution ultimately costs money - to clean up, to prevent, to recover from. But right now those costs aren't in the price of a pound of Chilean salmon. Salmon-processing facilities that are run with as much respect for the people as the hygeine of the fish also cost money - for reasonable wages, for proper equipment, for enough workers to permit breaks and days off. Right now those costs aren't in the price of a pound of Chilean salmon, either." (179)
  
  
• Workplace conditions. A recent lawsuit against Wal-Mart alleges that Wal-Mart's low price guarantee and relentless insistence on squeezing costs "makes it impossible for suppliers to comply with even the most basic laws where they operate, including wage and hour laws." Yes, Wal-Mart does a limited number of inspections of its suppliers for safety/workplace conditions. 12,500 of them in 2004. "But only 8 percent of them were surprise inspections. That means 1,000 inspections were unannounced, and 11,500 were scheduled in advanced. Still, Wal-Mart reports, 9,900 of the inspections resulted in violations serious enough to either suspend a factory or put it on notice. Even if you presume that the 9,900 number includes every single surprise inspection - that is, if you presume that every surprise inspection resulted in uncovering serious violations - that leads to a remarkable conclusion: 8,900 inspections of factories in 2004 revealed serious violations in factories that knew in advance that Wal-Mart inspectors were coming. if the code of conduct has to be signed by the factory management, if it is posted on the factory wall, if the inspections are scheduled with advance notice, and still thousands of Wal-Mart supplier factories get a "yellow" or "red" rating...how seriously are the factories really taking Wal-Mart's code of conduct?" And if those are the conditions in the factories on a day when managers know Wal-Mart is coming, what is life like on a typical day? (189-190)
  
  
• "Wal-Mart sells $178,125 worth of stuff per employee.
  
  Target sells $156,506 worth of stuff per employee.
  
  Whole Foods sells $121,875 worth of stuff per employee.
  
  As those numbers go down, the pleasurability of the shopping experience goes up, and that's no accident....Wal-Mart is relentless at measuring its own costs; it isn't so interested in measuring its customers' costs [i.e., of waiting in line, finding shelves stocked and organized, etc.]." (203)
  
  
• Conflicted shoppers. a recent study uncovered four basic kinds of Wal-Mart shoppers: champions (they love Wal-Mart and heavily promote it), enthusiasts, conflicted ("Actively dislike Wal-Mart because of its impact on communities, wages, and jobs"), and rejecters [me]. Shockingly, conflicted shoppers are "by a wide margin...the second most frequent shoppers at the store [5.6 visits/month]...and they spend nearly as much at Wal-Mart as the champions - $289 a month." (220)
  
  
• The punchline. "[Wal-Mart's] dominance at both ends of the spectrum - dominance across a huge range of merchandise and dominance of geographic consumer markets - means that market capitalism is being strangled with the kind of slow inexorability of a boa constrictor. It's not free-market capitalism - Wal-Mart is running the market. Choice is an illusion. Wal-Mart's suppliers can't consider themselves serious players...unless they are doing business with Wal-Mart. Once they are doing business with Wal-Mart, though, they are doing business on Wal-Mart's terms because Wal-Mart already dominates whatever business they're in....
  
  [By way of example, t]he new P&G [formed by the merger of Procter & Gamble and Gillette] will be number seventeen, or thereabouts, on the Fortune 500 list in 2006. But remember: Wal-Mart isn't just P&G's number-one customer; Wal-Mart is as big as P&G's next nine customers combined. Cheerful discussions of partnerships notwithstanding, Wal-Mart owns P&G's business." (234)
  
  
• Bigness beyond Wal-Mart. "The five biggest public companies in the United States - with sales of $1.1 trillion - account for 9 percent of the economy. The top twenty companies account for 20 percent of the economy. Those numbers are arresting, and they are moving in the direction of increased concentration [as 10 and 20 years ago the top 30 companies accounted for 20 percent of the U.S. economy]....We don't often talk about the concentration of corporate power, but it is almost unfathomable that the men and women who run just twenty companies make decisions every day that steer one fifth of the U.S. economy." (242) Indeed.
  
  
• Wal-Mart isn't just a store, or a huge company, or a phenomenon anymore. Wal-Mart shapes where we shop, the products we buy, and the prices we pay - even for those of us who never shop there. It reaches deep inside the operations of the companines that supply it and changes not only what they sell, but also changes how those products are packaged and presented, what the lives of the factory workers who make the products are like - it even sometimes changes the countries where those factories are located. Wal-Mart reaches around the globe, shaping the work and the lives of people who make toys in China, or raise salmon in Chile, or sew shirts in Bangladesh, even though they may never visit a Wal-Mart store in their lives.
  
  Wal-mar has even changed the way we think about ourselves - as shoppers, as consumers. Wal-mMart has changed our sense of quality, it has changed our sense of what a good deal is. Wal-Mart's low prices routinely reset our expectations about what all kinds of things should cost....
  
  The Wal-Mart effect touches the lives of literally every American every day. Wal-Mart reshapes the economic life of the towns and cities where it opens stores; it also reshapes the economic life of the United States - a single company that steadily, silently, purposefully moves the largest economy in history....
  
  Who knew shopping would turn out to be so important?" (5)
  

OSBC Boston 2006: Soliciting your input

First off, I should note that Ross was generous enough to set up an OSBC wiki. There isn't a lot of traffic there yet, which isn't surprising since we kind of forgot to tell anyone about it (and only set it up a few days before the event). We'll be using SocialText to enable wikis for future OSBC shows, as well, to provide a forum to collaborate before/after/during the show. I think SocialText is part of the second wave of open source. (First wave = commodificication of old markets; second wave = taking old technology (like wikis) into new markets; third wave = new technology, new markets.)

Also, we'll be posting the presentations soon. IT Conversations will be posting audio feeds for the keynotes. Stay tuned.

Lastly, and the real purpose of this post, I want to solicit feedback for our Boston show. My Alfresco experience has me increasingly convinced that a major determinant of open source success is one's channel. At Alfresco, we are heavily driven by our systems integrator, OEM, etc. partners.

With this in mind, I'd like Boston to have at least one track heavily focused on implementing open source, with SIs/OEMs/etc. playing a key role. I even came up with a clever (OK, I think it is, but you may not) title for the show:

“Channeling Open Source: The Real World of Open Source Implementation”

What do you think? And what should we cover?

Full circle with open source

I ran into Ransom Love, former CEO of Caldera, at this past Open Source Business Conference. He's in a new gig and is much happier. Talking with Ransom reminded me of just how far we've come in open source (or how far we've fallen, if you're of that mind).

Years ago, Ransom was vilified for saying things that we now take largely for granted. He wanted to charge a per unit license charge, arguing that support was not a good enough business model (or, at least, not the only business model for open source), and was classified a "parasite." Today, Red Hat has created a fantastic business with a per unit license model. (Yes, they call it "support," but it's really a license fee.) Today, SugarCRM, Alfresco, etc. etc. etc. all essentially charge this way, though we've become creative in how we get there. Today, we're heralded for our foresight. Ransom was trashed.

Speaking of trashed, remember what happened when Trolltech instituted its dual-license model whereby developers could use Qt for free...until they actually wanted to go into production, at which point they had to pay? The open source community was outraged, starting Harmony and other projects to avoid being "locked in" to Trolltech, the evil corporate beast.

Yesterday I had a call with an interesting open source company that plans to do much the same: free for development use, but pay if you want to go into production. My bet? No one will bat an eye. It's a clever licensing model (and not too dissimilar from Red Hat's, SugarCRM's, Alfresco's, MySQL's, etc. Each of these effectively gets to the same result, just through different means).

I'm sure there are other examples of this: open source practices of yesteryear that were rebuked just a few years ago, but are crowned as genius today. Generally, I think our more progressive view of open source is a Very Good Thing. Up to a point. If we treat open source like a commodity to be exploited, rather than as a community to be nurtured, we'll soon find that both the words "open source" and the substance behind them will be dissipated. But for now, we need to keep moving to a point where we can extract more value (read: dollars) from the trend so that we can foster more of it. More money = more development. Up to a point.

(On that note, I was thinking about this last night: we have an ever-increasing body of open source code, much of it from commercial providers. You can get most of an excellent CRM system from SugarCRM, for example, with few to no code encumbrances. Ditto with JasperSoft, Pentaho, etc. in business intelligence. These companies may be keeping some code commercial, but they're giving away much more than they're keeping. This leaves a substantial body of code that the rest of us can borrow and build from.)

OSBC West 2006: Post Mortem

Another year, another show. I generally think this last Open Source Business Conference was a success. There was a great energy about the show and all of the right people were there (noted, too, by Zack). OSBC has clearly become the place to be if you're a rising force in the open source business landscape.

But it also stinks at some things. Here are my thoughts on this last show's strengths and weaknesses.

Strengths

• Startups. This year our Emerging Elite Showcase included ~30 companies, an increase over the past few shows in terms of both quality and quantity. The Showcase is a good indicator of the parallel improvement in the industry itself - open source companies are trending toward better products, more experienced management, and superior business models. The Showcase is a great shortcut to seeing what's happening in the market.
  
  
• Keynotes. We had some of our best keynotes ever at this show. I wasn't able to hear all of them, but a few that I heard (John Roberts, Nick Carr, Larry Lessig (as always), Jonathan Schwartz (How does that man pitch his company so obviously and yet remain so interesting??), and Mitch Kapor) were inspiring and enlightening. I actually hadn't expected to get so much of John Roberts' keynote, but loved the low-down on how the company operates. I think we'll add this as a staple keynote to future shows (with Marten Mickos likely to be the next one, if he accepts): a keynote that addresses the mechanics and evolution of a successful company's business model.
  
  
• Sessions. Again, I didn't hear all of these, but the Marketing to Dilbert session I listened in on was fantastic. I think OSBC has become more practical in its content since its inception. We did a much better job of sounding out community-building aspects for this show and gave attendees good information on how to build successful open source businesses.
  
  
• Food. Yes, Zack, you're right. It's nice to have a good meal there at the show, so that people can spend more time on-site, talking, mixing, sharing. As the content guy for the show, I, of course, wanted everyone in the session rooms, listening. But the primary benefit of a conference is those with whom one confers. That's why I think it was a positive that we went to smaller rooms (which were often standing-room only) - we could have the hallway conversation without making the speakers feel like they were talking to themselves.
  
  
• Peripheral chatter. OSBC has become a clear launching pad for new products and companies, and that was evident this past week. Sun announced OpenSparc. Project.Net launched as an open source project. And Oracle, of course, announced the acquisition of Sleepycat. All good.

So, what was weak at OSBC?

Weaknesses

• Not enough IT buyers. We actually had a rise in the number of IT buyers registered for the event (we've been trending up show after show), but it's still not enough. To be frank, I've somewhat given up on getting them there. I guess I just don't understand how to market to that crowd. True enough that OSBC was not founded to meet the enterprise buyer's needs, but we've introduced content over the years that is focused on them. We had VP-level people registered from E*Trade, Dell, DreamWorks, etc., but not critical mass. Should we just be satisfied with having at least one senior IT person on each of our panels? Your thoughts on how to tap this group are appreciated.
  
  
• Too long. The first day seems to go on forever. I didn't personally finish that day until 10:00 PM. I was wiped out. I heard from some that we need to extend the morning and afternoon breaks - we'll look into that. I also think we need to start our first day "footnote" a little earlier so that people have more time to mix/mingle at our reception. (This is my fault - as the content guy, I always feel that people should get their money's worth, which I've interpreted to mean that I need to cram a semester's worth of information/education into two days....)
  
  
• Too much?. We've been wondering if we're pricing some of our most desired attendees - entrepreneurs - out of the event. We've always comp'd (provided free passes for) qualified IT buyers, so we're good on that group, price-wise. And we get a critical mass of the best and brightest in open source business. But would we better serve the market by going to a $995 price? (For those who think it should be free, please pull the spliff from your mouth and consider that it costs us serious cash to put on a show, starting with the $100K+ minimum food and beverage we have to buy from the hotel to the A/V to the speaker costs, etc. Free is never going to be an option for 90% of the people we'd like there.) My personal thought is that we should go to $995 with an early-bird iPod/Bose headphones/Sony PSP/etc. incentive. Thoughts?
  
  
• Keynotes. Some were great (see above). Some were weak. Again, I didn't hear them all, so don't view a lack of mention above as a sure indicator that I thought the keynote was weak. Let's just say I can't fathom why someone would choose an open source business conference as a venue to talk about how open source businesses will never innovate, make it big, etc. We'll leave it at that. :-)
  
  I also think we need fewer keynotes. We experimented this last time with having shorter keynotes (this was a good move - many thanks to OSCON for pointing the way on this) and more of them (this was a bad move). People spent too much time sitting in their seats, both mornings. I think we need to cut down on the number of keynotes and focus on improving the quality of them. (To do so, we'll need the cooperation of sponsors who always want to buy their way into a keynote slot. We're experimenting with the idea of a separate sponsor track where they can pitch products and such. It's been done at other conferences and actually has been quite successful. I guess people don't mind marketing pitches when they're expecting them.)
  
  
• Demos. These were actually one of the show's best features, and its worst. They were awesome when the demonstrators did what they were supposed to do: demonstrate. But when they turned into PowerPoint product pitches, they were boring, annoying, and counter-productive for the companies doing them. In the future, I'm thinking of adding some additional tweaks to make these better:
  1. Require that the startups explain how open source factors into their business and what, exactly, is and isn't open source in their products;
     
  2. Require that demos actually demonstrate a product (and boot them off the stage if they don't - trust me, I'd do it. I care more about attendees than sponsors);
     
  3. Provide a public voting mechanism so that lame demos are publicly flogged by the audience (perhaps through a live IRC channel that is projected onto a screen, the way some O'Reilly conferences have done). Let the people decide what stinks and what rocks;
     
  4. Other thoughts?
  
  
• Wireless. At the first OSBC, we (the show's organizers) went to CompUSA and bought our own routers so that we could do it ourselves. It worked fantastically well. Since then, IDG has insisted on using the hotel's wireless setup, and every time it has been terrible. We pay them good money (lots of it) to set up the wireless and keep it working, and they universally stink at doing so. Grr....
  
  
• Holidays. For the record, we didn't plan to have our shows screw up Halloween and Valentine's Day. I won't say who did it, but let's just say its name includes three letters, that look a bit like this: I D G.
  
  Our next three shows don't conflict with any human holidays, so I think we're good (and that they've learned their lesson. ;-).

I'm sure I'll think of other things - mostly negative, as I tend to focus on those aspects - but on the balance, I'm really happy with the show. It's not all things to all people, but it's a great resource for the rising open source business community. When we started the show three years ago, it was hard to find qualified people to speak. Now it's hard to limit the numbers of speakers, demos, and Showcase participants. The open source business community is growing, strengthening, and taking over. No, it's not "just a rabbit," this open source thing.

News: Oracle tried to buy MySQL

Marten Mickos today confirmed with Stephen Shankland @ CNET that Oracle tried to buy MySQL. Not sure when, but it sounds recent (and, I suspect, more than once). It's not surprising that Oracle would make this move, though it surprises me that it wasn't IBM (which is not to say that they haven't tried, too - I haven't asked Marten that) - IBM has a clear strategy of using open source as a "low-end" alternative to its high-end products.

What is most impressive in all this (and just one reason that I think Marten is one of the top CEOs anywhere, and certainly in open source business) is Marten's response to Stephen's question as to why not sell:

"We will be part of a larger company, but it will be called MySQL."

It's a different riff on the same theme that he said last night:

"Trying to kill MySQL by acquiring open source is like trying to kill a dolphin by drinking the ocean."

Marten, like Matthew Szulik before him, has prized independence as a corporate virtue and has had the audacity to believe that he can compete with the Big Boys.

Give 'em hell, Marten!

More: Christof Wittig has a good analysis on his blog.

John Roberts OSBC keynote: Commercial open source

John Roberts is in the middle of his OSBC keynote, and has said a few things that i find pretty intriguing:

1. SugarCRM never pretends to be anything other than "commercial open source." It has been careful not to deceive would-be users or developers that it is a pureplay open source company that is interested in free love. (Each of the founders has kids. They'll soon be learning about "tough love." :-) I think this kind of transparency is actually quite innovative.
   
   
2. John put up some compelling charts showing engineering vs. sales/engineering spend at its competitors. I wasn't surprised to see that Siebel spends significantly more on sales/marketing rather than actually writing a quality product, but I was very surprised to see that Salesforce.com comes in last on the list: they spend $10 on sales and marketing for every $1 they spend on engineering their product. That's an amazingly paltry amount for Salesforce.com to spend on writing its product.
   
   
3. SugarCRM isn't proprietary - it's commercial. There is a difference, and the amount of free/open software they write and release grows over time, and is always in the majority.

Great, salient points. Great company.

Killing dolphins, drinking oceans

Marten Mickos said something last night during the OSBC Executive Town Hall that was both provocative andn profound. Asked whether the acquisitions of Sleepycat and InnoDB were a threat to MySQL, Marten suggested that no one can successfully acquire the life out of a successful open source company:

"Trying to kill MySQL by acquiring open source is like trying to kill a dolphin by drinking the ocean."

I'm not sure I got it exactly right, but that's about it. His point? Successful communities are not subject to one or two dependencies, people-related or technology-related or otherwise. Successful communities grow, self-heal, and adapt. I agree.

But then, I don't think (and I somewhat doubt if Marten thinks this - he's certainly never said so) that Oracle is attempting to kill MySQL through its acquisitions. Its intentions are elsewhere....Where? I'm not yet 100% sure.

Open source and Roots

In all of us there is a hunger, marrow deep, to know our heritage - to know who we are and where we came from. Without this enriching knowledge, there is a hollow yearning.

Alex Haley, Roots

I'm sitting in Peter Graf's keynote at the Open Source Business Conference, but can't shake some of the ramifications of yesterday's sessions (almost universally excellent).

Perhaps Mitch Kapor's keynote on Wikipedia was most striking to me - talking about community-driven knowledge aggregation and dissemination. I've written on the topic of genealogy before, but I believe today, more than ever before, that genealogy is a massive business opportunity waiting to happen.

There is a company - MyFamily.com - that already pulls in $100M/year providing subscription access to census records and such. But the real opportunity is in providing a platform upon which average people can share their family information, with mash-ups that allow us to drill down onto historical and geographical information surrounding that data. So, I know my family tree back to the 1700s in England and Belgium, but I know very little about the kinds of lives they must have had.

I'd enjoy clicking through to learn that information, and would even appreciate having someone advertise against that interest: travel agencies pitching me on trips to Belgium, as a trivial example, but even more nuanced approaches that could include "olde thyme" advertisements that mimic old products that were available then. Maybe the record labels have listings of songs that were popular at the time, and link me back to their modern libraries. Stuff like that.

It's inefficient to have one company, church, or other organization providing a single source to this data. The human family is too vast. This is a community effort, or it is a fruitless effort. We have the technological tools (wikis, blogs, instant communication, ECM systems, databases, etc.) AND a rising clarity in business models to monetize the "marrow-deep" interest in learning about who we are, based on who we were.

Why isn't someone doing this?

Second thoughts on Oracle?

I had lunch with some friends from Oracle the other day. It was a highly interesting and, at least for me, informative session. I learned, for example, that over 50% of Oracle's business today comes from support. I was also reminded that Oracle provides Level 3 support for Linux (and, unless I'm misremembering or misheard, for Apache).

So what? Well, clearly Oracle knows how to support open source projects/products. Also, Oracle's business model already looks a lot like an open source company (except that the support they earn is in the billions, to the tune of $7 billion).

See where I'm going? Maybe the (alleged) JBoss acquisition actually makes sense. Maybe, just maybe, Oracle is the new SpikeSource, SourceLabs, BitRock, OpenLogic, etc. That is, maybe Oracle's future is in providing a supported, certified open source stack.

This is easier said than done, of course. I learned at Novell that the shift to an open source-friendly culture and business model is non-trivial. It will not come easily to Oracle (or any traditional software company), $7B in incentive dollars or not. But I think I see the potential in the (alleged) deal now, whereas before I only saw a threat.

So, when's it going to be, Larry?

News: MySQL nabs $18.5M more in a Series C round

So, my data on $1.3 billion raised in open source venture capital is already old....MySQL just announced that it has raised $18.5 in a Series C round of funding. Investors included Institutional Venture Partners (IVP), which led the round, and corporate investors Intel Capital, Red Hat, SAP, and and Presidio STX.

Keep on rockin' in the free world, Marten! (You and Neil Young.)

Linux vs Windows: The TCO wars continue (new study)

Dave is reporting over on our InfoWorld blog that Enterprise Management Associates has a new report [PDF] out that debunks the primary myth in Microsoft's studies:

In various older studies, Microsoft and some analysts claimed Linux has a higher Total Cost of Ownership (TCO) than Windows. They attributed the difference mainly to higher system management costs, and concluded that the higher TCO outweighed the much lower license and acquisition costs for Linux.

However, in a new study of over 200 Linux enterprises, Enterprise Management Associates (EMA) found that this perception is no longer accurate. Sophisticated management tools now allow Linux management to be fast, effective, and inexpensive. With far lower acquisition costs, Linux is now a cost-effective alternative to Windows.

EMA analyzed the cost factors cited in previous studies and found the following results:

• Provisioning – 75% of administrators using sophisticated tools can provision a system in less than 1 hour; one third can provision a system in less than 30 minutes.
  
  
• Patch management – most Linux administrators spend less than 5 minutes per server per week on patch management.
  Sophisticated management tools reduce this effort even further.
  
  
• Configuration management – supporting multiple versions of a given distribution has no discernible impact on Linux management. In some cases, respondents actually had more versions of Windows than Linux.
  
  
• Reliability – most respondents reported 99.99% or higher availability for their Linux systems. A significant number (17%) report no downtime at all.
  
  
• Problem resolution – in over 60% of cases, when problems occur in Linux environments they are diagnosed and repaired in less than 30 minutes, over 8 times faster than industry average.
  
  
• Management and support – 88% of enterprises with Linux and Windows spend less effort managing Linux; 97% believe it is, at worst, the same for both systems. Respondents with sophisticated management tools all report Linux management is the same or easier than Windows management....
  
  
• Resource costs – most administrators, for either Linux or Windows, earn under $60k. Salaries for combined Linux/Windows administrators are only marginally higher than for Linux-only administrators. Linux skills are readily available.
  
  
• Consulting and training costs – 79% of enterprises spent nothing on Linux consulting, and 63% spent nothing on training. Only 4% spent over $10K on consulting or training.

In addition, this research found the following in areas not adequately addressed in previous studies:

• Acquisition costs – for similar environments, Linux acquisition costs can be almost $60,000 less per server than
  Windows in software costs alone. Windows also incurs higher hardware costs.
  
  
• Productivity – Linux tends to be more productive, as Linux administrators tend to manage more servers than Windows administrators, and Linux systems tend to handle greater workloads than Windows systems.
  
  
• Security Management – 75% of Linux administrators spend less than 10 minutes per server per week managing security. With sophisticated management tools, this goes up to over 85%.
  
  
• Virus and Spyware Management – 95% of Linux administrators with sophisticated tools spend less than 10 minutes per server per week managing viruses and spyware. Respondents strongly endorsed Linux as inherently less vulnerable. No administrator reported spending more time on Linux than Windows.

So, there you have it. The game is won.

Until the next TCO study, that is.... :-)

More than $1 billion in open source venture funding

Robin Vasan and I have been working together to figure out how much money has been invested in open source startups. The (tentative) number?

$1.3 billion in the last five years.

That's an amazing sum of money, and one that is only just now starting to pay off. Yes, we have Red Hat's IPO, and the Sourcefire, Sleepycat, JBoss, and Zend acquisitions, but the real money is yet to be made.

(Btw, this number is not yet comprehensive, as I'm missing VA Linux/Software, Red Hat, early SUSE rounds, as well as some of the rounds of others that are on the list we're compiling. And we've applied a fairly tight definition for "open source company," such that the Web 2.0 companies and their ilk aren't in the list.)

Apple customer service (The saga continues...UPDATED)

UPDATED:

I just got off the phone with Apple, and I'm a believer again. Apparently their supplier for PowerBook G4 "top cases" (the part that surrounds the keyboard, overlays the track pad, etc.) is what is on order, and won't get in until at least March 3. So (get this!) they offered me a new MacBook Pro ("because of the inconvenience this has caused [me]"). This, of course, had me salivating...until I realized that it wouldn't ship for a month or so.

Much as I'd love to try it out, my wife wants to have her PowerBook back (I'm using it right now). So they're sending me a replacement system (with an upgraded hard drive "because of the inconvenience this has caused [me]"), and they're sending me back my original system so that I can transfer files from it (and then send it back).

Apple rocks.


..............................
Just had to vent somewhere...

...Apple, which has always been great for me in the past, is being maddenly slow (and silent) in fixing my PowerBook. No status updates. Nothing. I call and am told,

"Well, a part is on order."

"Which part?"

"I don't know."

"When will it come in?"

"I don't know, but you're first on the list."

"That's very reassuring."

"Anything else I can do to help?"

"Um, could I have my laptop back?"

Grrr....

Impressed by NeoOffice (OpenOffice)

Yes, I've complained about OpenOffice in the past. In part, because I don't care enough about office "productivity" suites to think we need expend undue energy on them. I think email is the real office suite that most of us work on daily, and Zimbra (and like companies/projects) is a better investment of time than on an outmoded view of how people work.

Still...I came across a great feature in OO.o that isn't available in Microsoft Office, and is a huge improvement. It's called "Enter Group." In Microsoft Office, I often group things (images, text, etc.) when using PowerPoint. Maybe I want them to follow animation rules together, or maybe I just want to keep things tightly organized. The problem is once I group them, I often want to swap out a graphic, change the text, etc. In Microsoft Office, the only way to do this is by first ungrouping the items, making the changes, and then regrouping.

It mostly works. Most of the time.

In OpenOffice, as I just discovered, I can "Enter the group." This allows me to make changes to the grouped items without first ungrouping them. So, for example, in the presentation I'm giving at SCALE tomorrow my Bill Gates graphic got munched converting from PowerPoint to OO.o (Impress). Rather than ungroup everything, make the change, and regroup (and pray that it doesn't screw up the format/animation/etc.), I was able to swap out the Gates photo and exit the group.

Easy. Innovative. Simple.

And a foothold in my wee brain to get me to use OO.o more often. It may well be that I've been missing out on lots of little gems like these. Mea culpa.

Open source M&A: What value, community? Downloads? Source?

What with the hoopla around the possible JBoss (and other) acqusitions in the near term, it set me to thinking about how open source companies should be valued. Once they "grow up," of course, like Red Hat, they're valued in a somewhat rational (P/E) fashion.

But how does one value the frontier of open source business models? How does one value downloads? (I remember Kevin Harvey of Benchmark and David Skok at Matrix both telling me that part of their investment calculus in open source companies/projects hinges on downloads, but how do these factor into an acquisition?) Do downloads equal "community" and, if so, is "community" something that can be valued? (In my conversations with IBM, they certainly seemed to think so, though they didn't share with me how they'd do so.)

And what about downloads or users (as in the case of a XenSource (Xen), Zend (PHP), or GroundWork (i.e., Nagios)) that don't directly relate to sales of a company's products? Can one have a highly successful project without having a highly successful business? Of course one can. These downloads/users are leading indicators, perhaps, but not always revenue-determinative. Relatedly, should MySQL, with a reported 70+ million downloads, be valued higher than a PostgreSQL-based or Berkeley DB-based company that has fewer downloads, but a higher conversion rate into paying customers?

At some point, of course, open source companies will likely get to serious revenues sooner than they have in the past. The trailblazers (JBoss, MySQL, Red Hat, etc.) took many years to get to profitable, meaningful revenues. New companies (including SugarCRM and my own Alfresco) seem to be on revenue trajectories that will get them there faster, largely because of the paths these trailblazers established.

In the meantime, we need to figure out rational valuation models, and be realistic as sellers. This point came home to me last night when I bumped into a good friend and former controller of Lineo, my first open source company. We laughed about how we had scorned $225+ million quasi-offers, and remained scornful up until the day the company was sold off as scrap metal once the promise behind died. We were foolish and greedy. I suspect we're in the midst of another bubble time for open source companies and would do well to be prudent in our expectations. Downloads do not a profitable, revenue-rich company make.

In thinking this through, I stumbled across this excellent report [PDF download] that identifies common valuation methodologies for software companies. I've included a fair amount of relative detail here - try to figure out which you would use to value MySQL, JBoss, SugarCRM, Zend, Groundwork, Compiere, Sleepycat, Tenable Network Security, or others.

They are:

Earnings Focused Value Methods

• DCF - Discounted Cash Flows: This is the most common method used in mergers and acquisitions and is being used more often for other valuation purposes, especially for larger companies. The authors of the report feel this is the best method to use.
  
  In this method:
  • The value of the company is based on the free cash flow to investors, expected to be generated in
    the future.
    
  • The value is the sum of the net present values projected for future years (normally 3 to 5 years) plus the value of "continuing operations" after the projected period.
  
  This method is frequently the only method applicable to companies in the start-up stage and to companies expected to have extremely high growth rates driving even larger growth in their profit margins. The difficulty in using this method primarily relates to determining the risk that the company will not achieve its projections. The old adage that the higher the risk, the higher the return, really applies in the DCF model. Thus, the greater the risk of not achieving the projections the higher the required return required (discount rate).
  
  Discount rates applicable to DCF models for most software companies will vary from 20% to 70% depending on the risk to be assumed by the investors. The better management can support the projection'’s assumptions, the lower the discount rate required and the higher the value indication for the company.
  
  [Asay note: This might be the authors' preferred way, but it bears no semblance to "reality" as it exists in today's Web 2.0 world. I suspect that intangibles would drive this rational valuation to huge heights, well beyond revenues.]
  
  
• Free Cash Flow - LBO model (i.e., Investor assumes that the company's worth is equal to the down payment plus the debt that the free cash flow will support after reserving some of the cash flow (typically 5% - 15%) as a margin
  for error). or model whereby a company is worth three to eight times its cash flow represented by EBITDA (earnings before interest, taxes and depreciation and amortization). The valuation process starts with a multiple of approximately four to six times EBITDA and is adjusted upward or downward based on the qualitative aspects of the company. In this variation, it is assumed the investor will be happy receiving his/her capital back in three to eight years depending on the risk assumed;

Asset Focused Value Methods

• Replacement Value: The replacement cost method is based on the assumption that the company is worth what it would cost to replace all of the company's identifiable assets [Perhaps this is a good place to measure downloads and/or community?]. Replacement cost values tend to be most useful in two situations:
  • First, for young software companies, with few, if any, sales, user base or dealer base. This may be the highest value indication possible when the primary investment has been in the technology or product.
    
  • Second, in a company with an operating history which does not reflect its investment (time and money) in it product. The company maybe making a major business model change in its platform, versions or distribution channel.
    
    [As the authors note, one problem with this model is that a great deal of damage can happen between the cup and the lip. Take, for example, the execution risk Oracle faces if it were to acquire JBoss, or...well, I'd better not go there. :-) The point is, much "replacement value" can be lost in the very process of trying to make an acquisition that looks good on paper, also look good in practice. Particularly to a skeptical open source community.]
  
  
• Liquidation Value: Liquidation value is the value of the individual assets if the company were to be liquidated today. [Not likely to be used in many successful open source companies.

Market Focused Value Methods

• Internal Transaction Price: This method assumes the stock's current
  price should at least be equal to the last price paid for the company's stock or the last transaction price. [I can't see this being used very often, however much a buyer might prefer it. There's little incentive for either the VCs or the companies to sell out at parity (for the VCs).]
  
  
• Public Company Revenue Multiple: This method looks at analogous public software companies and calculates a revenue multiple by dividing the public company'’s market capitalization by its revenue. [Note, however, that private companies tend to have lower revenue multiples than public ones.]
  
  
• Private Similar Company Earnings Multiple: Similar to the Public Company Revenue Multiple, except it uses the revenue multiples calculated from private M&A deals.
  
  
• Public Company Earnings Multiple: The public company earnings multiple is very similar to the revenue multiple, except it compares market capitalization to some level of company earnings. The concept behind using a multiple of earnings is that earnings more effectively reflects the difference in the return to the investor between companies than the
  revenue multiple.
  
  
• Private Similar Company Revenue Multiple: Like the private company revenue multiple, the earnings multiple is derived from transactions that took place in the mergers and acquisition world. The earnings multiple is computed by dividing the transaction price by the appropriate earnings of the company.

So, what do you think? I imagine open source M&A will use composites of the above-mentioned models. Some open source companies have real revenues and so will likely be valued against those revenues, primarily, while other companies with strong communities but tepid sales will hope for (and likely get, while the open source euphoria lasts) more of a Replacement Model valuation, whereby the cost of building a community will balance out the lack of revenues.

News: Alfresco closes $8M round (Mayfield & Accel)

Tooting our own horn here, but thought some would be interersted to know Alfresco just closed our Series B with Mayfield and Accel Partners. Some relevant parts from the press release below:

Alfresco Closes $8 Million Investment Round; Top-Tier Venture Capital Firms Mayfield Fund and Accel Invest in Series B Round

LONDON--(BUSINESS WIRE)--Feb. 8, 2006--Alfresco Software, Inc., the first provider of an open source enterprise content management solution, today announced the closing of $8 million in new funding co-led by the Mayfield Fund and round A investor Accel. The new funds will be used to develop the breadth of the product offering and expand the infrastructure to support the growing global customer base and community [as well as cover Matt Asay's extravagant lifestyle]. In addition, Mayfield Managing Director, Robin Vasan will join the Alfresco Board of Directors.

"Our investment in Alfresco reflects our belief that open source alternatives to traditional proprietary software, at all levels of the stack, are gaining momentum rapidly," said Robin Vasan of Mayfield Fund. "We are confident that the Alfresco team and solution will disrupt the current Enterprise Content Management market, similar to the way in which our open source company IT Groundwork has re-defined systems management."

...2005 was a tremendously successful year for Alfresco. The product was launched on October 31st that year and by December had been downloaded over 100,000 times, whilst simultaneously being endorsed by numerous enterprise customer deployments. Alfresco was named as one of the winners in the annual EContent 100 awards - a list of companies that matter most in the digital content industry - for content management and also for intranets and portals. Other winners included such names as Google, EMC and Microsoft. Leading analyst firm The 451 Group encapsulated the opportunity for Alfresco as - "The company could become the de facto name at the open source CMS layer, much as Red Hat did at the operating system, Apache at Web server and increasingly, JBoss is becoming with the middleware stack."

Robin Vasan will join the Alfresco board. He currently serves on the boards of Akimbi, Centrify, Elemental Security, GroundWork Open Source Solutions, and True Demand as well as leading the firms investment in Webroot. Prior to joining Mayfield in 1999, Vasan was a founder and/or key member of several successful software start-ups including: CATS Software, Infinity Financial Technology, acquired by SunGard (SDS) and Risk Management Solutions.

One more reason to stay to the end (OSBC)

So, apparently at 4:15 on February 15 (just as our last session is about to kick in), Danny Glover and John Edwards (ran for US vice president; US senator) are going to be hosting a demonstration outside The Argent Hotel. It starts at the Parc 55 Renaissance Hotel, but should make its way to us before the session completes.

So, if you have any interest in meeting Danny Glover or John Edwards, eating the rich, or otherwise raising a ruckus, you will be able to find it all at OSBC San Francisco 2006. We aim to please. :-)

Create a logo, get a MacBook Pro (SourceSense)

Not only is Apache free (as in apple beer), but one of its developers (Gianugo Rabellino) is actually gifting a new Apple MacBook Pro to the designer who can come up with the logo for his new company, SourceSense. Can't argue with that.

Check out SourceSense for a sneak peek (very sneaky - there's no "there" there just yet :-) to find out how you can make a killer logo and get a killer piece of hardware.

Mark Driver (Gartner) on open source M&A (EOSJ)

Still in "ponder" mode on the possible Oracle acquisition of JBoss, and came across this interesting tidbit from the Enterprise Open Source Journal (worth a read, if for no other reason than to see Julie in "pensive mode :-). Mark Driver from Gartner writes [PDF download]:

"The [Oracle acquisition of InnoBase] has left many of us scratching our collective heads. On the surface, the motives seem obvious. Oracle, with a clear history of aggressive acquisitions, buys out a critical component of MySQL in order to kill off its commercial support channel. The problem is, we don't actually know the motive yet because Oracle has been mysteriously silent about the acquisition, citing "license negotiations" as the reason. By the time you read this, the issue may be resolved, but I fear it's a lose lose situation for Oracle, no matter what the outcome. Whether deserved or not, once the "stink" of being the bad guy sticks to Oracle, it will be virtually impossible to convince anyone in the open source community otherwise for many years to come.

Bingo!

Not directly related to Oracle, per se, Mark also writes:

Mergers and acquisitions are a natural and healthy part of any free market economy. It's only natural then to see M&A activity as part of the open source landscape. However, many nuances in the business models that drive commercial
support for open source differ from traditional IT vendors. It's one thing when a company such as RedHat acquires Cygnus (as it did in 1999), but entirely another when an old-guard, traditional IT company gobbles up a smaller open source start-up. Are these acquisitions good or bad for open
source? The answer, I fear, is a bit of both.

Companies buy other companies for many reasons, most generally to either acquire products and technology (including perhaps the human capital) or to convert a customer base. A large, established IT vendor might also buy a small Open Source Software (OSS) start-up in an attempt to gain instant credibility and influence within the open source community or simply to gain access to the "inner circles" of the OSS community. [Note: I've written before on whether one can effectively buy an open source community. Verdict? Not a chance.]

Larger vendors have the deep pockets to infuse a project with the capital and resources to accelerate adoption and critical mass. Moreover, large vendors can provide a level of clout and reduce the trepidation that more conservative users may have toward open source in general; after all, numerous IT organizations leverage multi-billion dollar vendors as safety blankets against risk.

However, these acquisitions can also be used as a weapon against open source. It's no secret that open source projects continue to mature in markets with direct competition against incumbent closed source solutions. Many large vendors might decide the best defense is a strong offense and simply attempt to kill off competing OSS vendors as they emerge.

For example, in May 2005, IBM acquired Gluecode Software, which specialized in supporting technology from the Apache Foundation. In particular, Gluecode was the principle source of engineering effort behind the Geronimo J2EE application server project. So, why then is IBM interested in a tiny software company focused on an OSS application server? After all, investments in Geronimo would certainly overlap with its own WebSphere product line. However, Geronimo is also a real threat to JBoss. IBM's strategy is a clear example of "the enemy of my enemy is my friend." I think IBM saw the writing on the wall, witnessing the pounding that BEA is taking from JBoss. Essentially, any OSS application server providing an alternative to JBoss is a good thing for IBM in the long run. On the upside, IBM provides a level of funding and support that Gluecode could never dream of as a struggling open source, pure play. This in turn will significantly help the Apache Foundation in driving Geronimo to critical mass much quicker. On the downside, the jury is still out on whether IBM will attempt to influence the direction of the Geronimo project and steer it away from potential competition with its own application server stack. In fact, IBM recently made WebSphere Application Server Community Edition available for free download. Two very interesting issues arise, however. First, WASCE is not open source-just free as in gratis. Second, it's not a full implementation of the Geronimo project. IBM hasn't included Geronimo's JBI-based ServiceMix Enterprise Service Bus (ESB); not surprising, since IBM doesn't support JBI.

Interesting stuff, Mark. Why aren't you speaking at OSBC? :-)

For my part, I like the smell of IBM acquiring Gluecode much more than Oracle buying JBoss. IBM has legitimate open source street cred, and the strategy (Geronimo as the low end to Websphere) is a legitimate one, whether one agrees with it or not. But I have a hard time seeing JBoss thrive in Oracle's hands.

Open sourcing California

I just received this email, which I thought I'd pass along (with permission from its author):

Senator Bowen asked me to make sure you and the other OSBC conference organizers are aware of a legislative hearing scheduled for tomorrow 2/8/06 in the State Capitol on the subject of open source.

The goal of the hearing is to gather information about the open source model, hear from businesses that have moved to open source, and begin a discussion about whether it makes sense to move toward open source software for our voting systems. Senator Bowen is the chairwoman of the Senate Elections Committee and the hearing will be broadcast on the internet (click on “Broadcast Room List,” then click on “Committee Room 4202.”)

If there are folks you think would be interested in knowing about this policy hearing, feel free to forward this email. Good luck with your conference!

-Jennie
________________________________
Jennie Bretschneider
Office of Senator Debra Bowen
[I can provide Jennie's email address if you'd like to follow up with her for more details.]

I suspect that there are many who will read this who will have an interest in the proceedings. Please make the drive or listen in.

Can open source innovate? Part II

I've long dithered on whether or not open source is an innovative force, starting with the paper {PDF download] I wrote for my then-professor/advisor, Larry Lessig, at Stanford.

Lately, I've been thinking that open source tends to offer open source a way to be both commoditizing and innovative in nature. Are SugarCRM, Alfresco, Apache Geronimo (and other projects), etc. innovative? Yes. They commoditize, yes, but each is adding new or improved functionality that can be considered innovative.

But this is Step 1 in open source innovation. The next step occurred to me last night as I was speaking, and had Jeff Nolan (Director of the Apollo Group at SAP and former VC with SAP Ventures) challenge open source as a tired commoditizing play. He's right. It really is dull if all open source can do (or, rather, what open source commercial enterprises tend to do, commoditize big, existing markets).

But then I looked out into the audience and saw Ross Mayfield there. Seeing him set me to thinking....Old technology (like wikis, in SocialText's case) made relevant to the masses through the masses. That is, through open source. SocialText, then, is an innovative open source company that isn't commoditizing an existing market - they're growing a new market.

The next stage? New technology and new markets, fed and knit together by self-selecting, open source communities. It will happen. Just give us time.

So, what if Oracle does buy JBoss?

I can comment on these rumors, because that's all they are to me: rumors. I have no inside knowledge on this. But there has been a growing cacophony of noise that JBoss is going to be acquired. What started out as an HP rumor, turned into a Novell rumor, and has comfortably settled in to stay as an Oracle rumor.

So, let's just pretend Oracle buys JBoss. What would be the result?

On the Oracle side, it's a chance to shore up the company's open source credentials. It's also the opportunity to pillage IBM, something which Oracle is wont to do. (JBoss, of course, makes money for itself, but it also takes money from IBM and BEA - lots of downloads that would otherwise be forking out cash to these BigCos.) Oracle also would get the chance to lower the price on its applications suite, just as it uses Linux to lower the cost of its databases (i.e., everything except the database price goes down, making the total cost cheaper). And, finally, Oracle would get a great application server, something which it lacks.

What would JBoss get out of it? To the extent that it wants to, JBoss would have the opportunity to tweak its business model, as Red Hat did a few years back (and which MySQL has been doing). It's easier to do this when you have someone else to blame (Oracle). JBoss would also have more money at its disposal to hire relevant developers and expand its ambition (though Marc has never struggled with ambition deficiency disorder :-).

Oh, and JBoss would get a boatload of cash for itself. I'm guessing north of $300 million.

What are the dangers? Well, the obvious one is that Oracle, being Oracle, would scare away JBoss' developer community. I suspect that some of the "we're in this for free love and peace" mentality would necessarily die with an Oracle takeover. With this, I think suddenly Geronimo and JOnAS suddenly look a lot more appealing. If I had to choose between Red Hat and Oracle, I'm likely to choose Red Hat, if I'm an enterprise Linux buyer (and these tend to be the type who experiment with JBoss and MySQL).

Interesting times. And this is only the second open source M&A deal I've heard about. The other has to do with a certain database company, and I'm not talking about MySQL.

Lessons on hosting software (Greg from RightNow)

I'm sitting in a fascinating session that Greg Gianforte (CEO, RightNow Technologies) is giving at the Enterprise Software Summit. (Small, intimate event. Really cool location - Sundance, Utah. I'm actually sitting in the screening room where Redford does his summer training course for the film director class.)

Greg has been talking about the nuances of building a successful hosted software business. Some interesting tidbits:

1. RightNow charges the same price for hosted or on-premise subscriptions. Somewhat counter-intuitive, since they have to invest a lot of money in the infrastructure for delivery. However, Greg indicated that their hosted customers are much better margin than on-premise customers, because the cost of supporting those on-premise customers is significantly higher. It's just cheaper to fix bugs when you've got the software with you than when you're trying to fix remote problems.
   
   
2. The on-premise to hosted deployment is a one-way path. None of their customers move from hosted to on-premise, but many move from on-premise to hosted (even governments and financials who insist at the outset that they'd never trust a hosted deployment for security, etc.).
   
   
3. Top four reasons that on-premise vendors won't successfully shift to a hosted model:
   • Architecture. A successful hosted model depends on leveraging multi-tenancy. To achieve this, vendors need to completely re-code their on-premise software.
     
   • Partners. The hosted model requires a very different partner ecosystem. Rip and replace.....
     
   • Financial model. A hosted model requires a different approach, which is highly disruptive to on-premise/license-only vendors. It's just hard (and potentially catastrophic to one's stock price) to shift to a pay-as-you-go or term model.
     
   • Culture. Traditional software with a 9-month implementation cycle delivers little value in a one-year term engagement. Hosted requires you to move faster, and think different, which is culturally difficult for traditional software enterprises.

Really interesting stuff. Thanks for taking the time to speak, Greg.

Media list for OSBC

Updated....

Some have been asking about media at OSBC. The most recent list that I have is from a week or two ago, but here's what it looked like then (reporters' names removed for privacy):

BusinessWeek
the 451 Group
ComputerWire
InformationWeek
Reuters
The Register
AlwaysOn
Financial Times
Forbes
IDC
Investor's Business Daily
Business 2.0
CNET
The Deal
eWeek
Automatisering Gids
idevnews.com/oetrends.com
Robert Frances Group (RFG)
Linux Gazette
ZDNet
JMP Securities
Bloomberg News
Succeeding with Open Source
Oakland Tribune
SD Times
LinuxWorld Magazine
InfoWorld
Computerwoche (Germany)
Ziff Davis Internet
San Jose Mercury News
Open Enterprise Trends
Enterprise Open Source Journal
IT Conversations
IT Newswire
VentureClef
Open Bar
internetnews.com
IT Newswire
Delphi Group
Linux Today, LinuxPlanet
Heise.de (Germany)
Ziff Davis Media's DesktopLinux.com
FactPoint Group
vnunet.com
Linux Journal
The Patricia Seybold Group
DevX.com
Tech Target
LinuxWorld Magazine
Application Development Trends (ADT)
Enterprise Open Source Journal

Pretty good list, and intelligent people on it who really "get" open source. I'm assuming we'll get a few more, too, as we normally have The Economist, New York Times, etc. Stay tuned!

Shamming community

Though I speak with the tongues of men and of angels, and have not acharity, I am become as sounding brass, or a tinkling cymbal. (1 Corinthians 13:1)

I was reading this morning, and came across this passage by Paul. It dovetailed perfectly with a conversation we're having at Alfresco, and which will be one of the main themes at OSBC San Francisco next week.

Namely, how does one bake community into a product?

Paul was talking about charity - a pure love that doesn't reek of envy, malice, self-service, etc. What open source commercial enterprises (and pure-play projects) need is related: community. An other-focused development model.

We tend to blame proprietary companies for being blind to anything outside their companies, but open source companies can be just as bad. An open source enterprise isn't formed merely by releasing source code.

Being community-centric means that you have to relish the fact that sometimes all you're going to get from your community is brutal feedback that your product or process stinks. This isn't to look past the fact that few projects - commercial or pureplay - invite a great deal of outside development. But it recognizes tremendous value in the chatty user community that finds bugs, derides (or talks up) the product, and otherwise participates in the discussion around the product. There is huge value in this open feedback and feedforward loop.

I believe the true open source company has less to do with source code and more to do with this customer intimacy. You don't achieve this by building a tremendous product and tossing it over the wall to the few bored enough to sit on your forums. Users/customers/partners/developers must be involved from the start, before a single line of code is written. Few will participate then, at the first, but as a project/product grows, there will be an increasing number of people interested in helping its development along, provided the community is made welcome.

In short, lest we be hollow-sounding companies masquerading as communities (the "morning glory" among us), we really need to invite community into our product and process.

Event: Collaborating on the success of commercial open source

I've been a bit overloaded recently, and nearly forgot to post this (see below). Robyn Forman of Spikesource pinged me a week or two ago with what seems to be a good idea: gather a group at OSBC to discuss ways to channel and fuel open source's commercial success. Here's what she sent me:

During OSBC, we are gathering a bunch of open source marketing types together for snacks and an informal discussion on how we can work as a group to drive the way open source is perceived in the greater world.

The open source movement saw great momentum in ’05 and the first half of 2006 feels as though it will continue to be positive. After that, we need to be prepared that what the press likes to build up, it also likes to tear down. As a group it feels as though there’s much more we can be doing: commissioning multi-client studies to defray costs; organizing roundtables with customers and press; and picking the themes for this quarter that will help us all. We can also defray myths that there’s no money in open source and bridge the gap between the purists and the commercial ventures. Happy to entertain other ideas as well.

We’re proposing to get a room/book a table at the Argent either the morning of the 14th or the evening of the 15th and SpikeSource has graciously agreed to pick up the tab. If you’re interested please email donna@sparkpr.com and let me know when you might be available and we’ll pick a time that’s good for everyone.

Great idea, Robyn. I'm sorry not to get this up sooner.

Open source customer support

One reason that I'm an Apple fan is that the customer support has almost uniformly been exceptional (as was IBM's when I used to use ThinkPads). When I call Apple technical support I almost never wait on hold, always get someone who actually uses a Mac and can answer my questions, and get a fast turnaround on any repairs that are needed.

Except this time. My laptop has been stuck in technical support limbo since I called Apple on January 21. My PowerBook sat, as near as I can tell, at Apple for days before they formally began to work on it, and now they've ordered a part and I've been waiting for that to come in. I'm not happy (nor is my wife, as I'm using her PowerBook in the interim).

The experience reminded me of a recent technical support experience where I was on the delivery side. We bumped into a problem in the Alfresco system which, upon further analysis, turned out to be a Lucene issue, and not within our repository or other Alfresco-written software. (We use Lucene for indexing and search within our content management system. It's awesome.)

I think there was actually a millisecond or two when we thought this wasn't our problem, as Lucene wasn't written by us. But it was a very short millisecond as we realized that because we were shipping Lucene as a core component of Alfresco's system, the customer wasn't going to stand for third-party finger-pointing. We were responsible, because the customer was buying from us.

All of which begs the question: how can vendors (Alfresco, RightNow, Red Hat, SugarCRM, MySQL, etc. etc.) who depend on open source components, not written by them, provide good support for these open source projects?

The most important way, in my view, is to become a core committer to such projects, as I've written before. It's hard to support code that you don't have deep insight into, and the best way to gain that insight is through actively contributing to the project. Perhaps this is why SugarCRM's community is heavily comprised of its business partners - they engage with SugarCRM to build up the system and to support it.

In Alfresco's case, this means we need to be active participants in the Lucene, Spring Framework, etc. For RightNow, it's MySQL (to which they contribute a great deal of bug reports and fixes) and other projects. To which projects should your company be contributing?

Mandating incompetence?

UPDATED with this prelude:

Sigh....Whenever Dave or I post anything (on the InfoWorld version of this blog) that requires people to read a post completely, or think it through, we tend to get the opposite. I'm not sure how it became controversial to say, "Governments shouldn't mandate using software that doesn't work." But if you read the comments here and on the InfoWorld site, there are apparently some who are so committed to the idea of open source that they're willing to sacrifice the reality of some of its poorly fed projects.

Yes, there are many excellent open source projects. I work for one of them. No, not all open source works, just as not all closed source software works. But then, I wouldn't mandate that anyone use that, either. Will people please read the posting all the way through? And to the extent that they don't agree, will they please write thoughtful responses (like Eben's)? And if they're going to throw mud, will they please use their real names, rather than hiding behind false emails and false names? It's hard to have an intelligent discussion with ad hominems and rebuttals that don't actually address the issues I raised.

My concern, as you'll see below, is rather uncontroversial: it's fine for governments to prefer open source. I can appreciate why, and have made my entire career working for open source companies, starting open source conferences, writing open source articles, and generally promoting open source. But I would never presume to force someone to use it. And I especially wouldn't advocate the use of a particular project that was rubbish simply because it's governed by an open source license. That strikes me as folly. If there's not a good substitute for a closed-source product, why should a government not use the code that actually works? Why would we manacle it to a principle that might not actually serve its citizens well?

So, yes, I'm all for the rise of open source. I feel like I've spent my career making that happen. But I don't believe in forcing the issue - open source will win because (or when, on a project-by-project basis) it's better, and not because it's forced on people. I have four kids - I know from experience that force is a very poor mechanism for making things happen. Much better to create exceptional software than to try to issue a blanket mandate to use open source...when some of the projects that would replace closed-source softare are nowhere near maturity/comparability. Many are. Many are better. But not all.


And now, the original post:

I'm a little worried by the furor over open source within governments. In particular, there is a large government agency (not in the US, though we work with those, too) that is considering Alfresco but might not be able to...not because of Alfresco, but because we use Sun's closed-source JRE. This government has mandated a move to 100% open source over a limited time period.

Sounds great, right? Use the taxpayers' money for open software that no vendor controls, keeping the government out of the greedy paws of self-serving capitalists.

The problem, however, is that open source is not always a good replacement for closed-source software. What should this customer use in place of JRE? Apache Harmony is about the only thing that comes to mind, and it's still a new project that likely wouldn't be a good fit for multiple, massive government agencies.

So when does reason enter into this discussion? In many instances, it doesn't. In Peru, the congress specifies "information autonomy" (whatever that means) and a mandate for open source. (I've complained about the bill here.) In Venezuela, it's much the same (though I suspect they're not going to throw out SAP any time soon...). Around the world, the trend is toward openness in government (even here in the US, as Massachusetts tried to show with the ill-fated ODF.

It's one thing to mandate choice. It's quite another to mandate A choice. In the case of many of these government initiatives, they're not really opening up choice, but rather opting for another closed decision. I don't like to be forced into anything, even free/open source software.

It sort of sounds hippie-ish, in a way. We take off all our clothes and revel in our freedom. But at the end of the day, we're just naked. In the case of these governments, "naked" may mean they're stuck for years with sub-standard software because they've forced themselves into it.

I've made a career in open source. I love open source software, and think Alfresco, for one, is better than any of its proprietary competitors. But that's just one application. There's no question that many open source projects are better than their closed-source counterparts, but there are still missing pieces. What about this government that needs an open JRE? They're out of luck.

Open source apps for the Mac

Macworld introduced me to a great website today: OpenSourceMac.org. It's a collection of open source applications for Mac OS X. Some, like Handbrake (rips DVDs to your hard drive so that you can save battery life when watching on planes, etc.) and VLC (a fantastic media player that plays everything), I've talked about before. But others I'd never heard of, and will be downloading and using today.

Have a look.

OSBC: Boston and Europe 2006

Someone just asked me what the theme for OSBC Boston 2006 will be. Good question. I think this one is going to be a bit more nuts and bolts than normal. On a whim, I came up with:

Channeling Open Source: The Real World of Open Source Implementation

My thought on this is that it's time to give some concrete examples of open source application and middleware implementations. Red Hat and others (including a super-secret event that Andrew Aitken have been kicking around) are trying to look for ways to accelerate the already frenetic pace of open source ecosystem growth. One way that OSBC can help, it seems to me, is by showcasing real-world implementations.

Yes, of course we'll continue to have a healthy dose of the best and brightest in new startups, as well as superior content on legal strategies and business model innovation. But a little dose of customer experiences surely wouldn't hurt, I suspect.

Also, it looks like we'll be doing OSBC Europe this summer (June - I don't know the dates yet), so Matthew can stop nagging me about it. :-) It will be in London, and I'm hoping will dovetail with the Holland Open Software Conference (in Amsterdam, I'm guessing). I'd like to be at both. (Of course, I'm already trying to get out of my family reunion so that I can be at JBoss World that week and the Holland Open Software Conference.... :-)

Oh, and btw, we managed to plan OSBC Boston for a non-holiday. Sorry to those who were hoping to spend Halloween with us again. October 16-17. Get your proposed sessions in soon. Extra credit for panels that include both customers and channel (SI, hosting, etc.) partners.

Cranky customers = good products?

Since joining Alfresco in November, I've been surprised by the quality (and size) of the companies trying out our products. That said, I've also been equally surprised by the sometimes negative feedback the company gets. This is typical of any company, but the difference in open source is that you get it earlier, louder (perhaps), and more publicly (on the company's forums, etc.).

It's aggravating at times - of course as a human being, you want to hear the positives, not the negatives. But I've actually come to appreciate the "grousers" as much, and in some cases, more, than the silent majority that love us and buy from us without logging a single complaint. One example is a Fortune 1000 company that I'm not sure will ever buy from us, and has "cost us" a fair amount of time/resources. The upside of that engagement is that we've had fantastic feedback from a large company that is using Alfresco in a quasi-production environment. Excellent trade-off.

Would we have this if we were closed source? Sure. To some degree. But it would have taken us a year of sales cycles just to get to this point, and I suspect that their willingness to keep working to make the product fit in their environment would be much less. With open source, they feel some ownership in the outcome. Because they can actually help steer the outcome.

So keep complaining when you see a bug/feature-void/etc., would-be Alfrescans, Sugar-ans, MySQL-ans, etc. We love it.

Off-topic: Alfresco becomes a dot-com

It's official. While languishing in the wildnerness for years (OK, months) at AlfrescoSoftware.com, we recently bought the Alfresco.com URL, and can be found there. So now we have a nicely split personality (as with MySQL and others): Alfresco.com if you're a money-grubbing capitalist, and Alfresco.org if you're a free-love developer.

Btw, this also means that I can be reached by email at first.last@alfresco.com, instead of @alfresco.org. In case you were trying to reach me. With that $100K order.

(You were trying to reach me, right??? :-)