Monday, February 26, 2007

End of quarter

So, the good news: we're about to close a massive quarter. More in one quarter than...well, let's just say a huge amount of money. So, I'm happy about that.

In fact, I was so happy that I decided to ski this afternoon. We had two feet of snow last night. I figured it would be a great time to enjoy the fruits of a lot of hard work.

But it was not to be.

Halfway through my first run (my first run!!!) I had three separate calls requiring me to review contracts. Contracts that wouldn't make or break our quarter, but contracts that would put us over a massive psychological ego boost. I tried walking through the contracts from halfway down the Peruvian lift at Snowbird, but it wasn't working. So I drove home and worked on the contracts.

Open source is many things, but it's not automatic. It still requires much of the same drudgery that any business requires. I just wish that drudgery didn't pile up at the end of a quarter. I really, really wanted to ski today.

Thursday, February 22, 2007

Why you weren't selected to speak at OSBC

This will sound funny, but I never received any submissions. That's not quite true - I received 4-5 very early on (right after OSBC 2006, in fact), but all the rest (and there were plenty) were parked at IDG World Expo. They had set up the system to automatically email me all new submissions, but early on the system stopped working. I have no idea why (nor do they), but I never saw the 80+ proposals.

Not until last week, when InfoWorld (which is now running OSBC) sent me a big .csv dump of the proposals, which they found with IDG World Expo. Weeks to months after most of the sessions had been filled.

To those who submitted proposals, I sincerely apologize. Some were quite good. I just wish I would have seen them earlier.

Wednesday, February 21, 2007

Tim O'Reilly: Pay your users first

Tim has a fantastic post (and important reminder to the vendors of the world, and everyone is a vendor at some level) on the value of customer focus. It's a very cliched notion, but one that I find gets lost in any management strategy session. Tim writes:

Each of these industries [PC, auto, radio, TV, etc.] forgot one of the key principles of success in business, which is to focus on your customers. In our Web 2.0 Principles and Best Practices report, John Musser calls this "paying the user first."

Just remember how Google got their edge. It wasn't just pagerank and better search results, it was refusing to go the portal route, with intrusive advertising, and instead trying to figure out how to create a better user experience with advertising. Making ads non-intrusive and useful to their real customers was one of Google's biggest breakthroughs. (They will forget that at their peril.)

In a world where you get increasing returns from network effects, putting users second, or third, or fourth, in the hierarchy of your concerns is a losing proposition.
This is particularly true in open source, where your users literally pay you either cash, code, or course correction (Discovering bugs, usability feedback, etc.). Getting the license right (as open as possible to encourage downloads and trials), getting the tone of the community right (Helpful and informative), and getting the price right (Free to try, free to use, not-so-free to get live help) - these are all critical.

Which is why I continue to not understand hybrid models. As I've written before, there is zero customer value in proprietary software. They don't need it. They don't ask for it. It is purely a way to force them to pay for something. It is an exclusionary tactic.

As such, I think it violates Tim's cardinal principle: "pay your user first." If, as a vendor, I'm doing something solely to benefit myself, then I am putting customers second (or worse). I'm all for making money - it's what I focus on all day long in my work. But I don't think you have to shaft customers in order to make a healthy profit.

Thursday, February 15, 2007

A most exciting way to do business

I went to parent-teacher conferences today (All is well...so far. I'm sure Hell will break loose when Greta goes to school), where I was asked by one of my daughter's teachers, "What do you do?"

"I work for a software company."
That sounded a little flat, especially since this was my daughter's ELP teacher, so I added,
"An open source software company."
She asked what that meant, and as I started to explain ("Most software companies lock up their property to try to get you to buy it, but we give it away, which means that we have to completely redefine the value proposition for a customer"), the conversation became really interesting.

Open source is like ELP. It pushes you to think differently about software. It pushes you to be innovative in how you do business. It's why I worked full-time through the final two years of law school - cracking the "How to make money on free?" code was too fascinating to lightly abandon.

Seven years later, I'm still fascinated by open source, and am deeply grateful that I serendipitously stumbled across it. I love my work. It is exciting and fun.

While at parent-teacher conferences, I met the mother of one of my son's friends. Her son had been at our house the other day while I was watching Arsenal beat Bolton. I guess he told her that I screamed (euphoria) when Arsenal scored the winning goal and yell at the players throughout the game because she said,
"Jacob says you really like soccer. It's good to be passionate about something."
I guess that's a compliment. Regardless, it's true.



Anyone can build a proprietary software company. I'm not saying that it's easy to actually make something that people want, but I am saying that open source makes the process doubly interesting - first, you have to build a product that people want, and second, you have to figure out how to give it away and still make money.

Wednesday, February 14, 2007

Off-topic: Arsenal 3, Bolton 1 (FA Cup)

Enough said. (Sorry to post it here, but it was a very emotional match, and posting a reminder that they won is cathartic for me. :-)

Monday, February 12, 2007

Intellectual property as the foundation for collaboration?

Jason is pondering the value of intellectual property rights, postulating that perhaps - just perhaps - IP is good for collaboration. Not collaboration in the "let's work together on this document" sort, but rather in the sense of partnership. He writes:

Do IPRs (intellectual property rights) provide a framework for collaboration? Does it in fact act as a catalyst for collaboration rather than an inhibitor? I am not thinking about collaboration in the free software, or open source context necessarily. I am being broader than that. In any situation where two firms, individuals etc. come together to collaborate, it is critical that there is a trust framework in place. That trust may be built upon the rule of law as much as on the personal relationship.

In open source, the very fact that there is strong copyright protections in place acts as the foundation for why those licensing models work. In VC funding of startups, what protections are in place (e.g. patents) may play a big role in the funding, but the far more important value is in what alliances you have, or in the customers who are paying you - both things greatly supported by the ownership of property that makes your firm or solutions valuable.
I've talked with Jason about this before, and believe he is being genuine in asking this. The odd thing, however, is that the only people I hear talking about this are those with a massive treasure trove of IP rights. You would never hear Startup X talking about how their IP sets a platform of "trust" upon which to work with other companies.

Microsoft has lots of copyrights/patents/etc. So do IBM, Oracle, SAP, etc. These intellectual property rights have very little to do with how valuable and interesting these companies are. Customers are the only thing that really matter. And I don't even buy (pun intended) that these companies wouldn't buy from Microsoft/etc. but for their IP. Customers don't buy IP. They buy solutions to their business problems.

It may be that copyrights and such are necessary for keeping competitors out just long enough for a vendor to establish a lasting relationship with a customer. I can accept that. But the moment in time required to establish that connection is dramatically less than intellectual property law affords. IPRs, to use Jason's parlance, could be shortened to fewer than five years and Microsoft could still make a grundle of money, even after its competitors started to take those rights and use them as their own.

Or, better yet, Microsoft could open source those IPRs under the GPL, which would make it difficult for a competitor to fully profit from them. Others with more benign interest in the IPRs would not have the same repugnance and could use them more freely. Microsoft would not lose, the industry would win, and we'd all be happier.

And probably more trustful, too. I'm not sure that IPRs have anything to do with trust. Probably the opposite, in fact, given that there is no clear way to gauge what IPRs anyone actually has until the lawsuit hits. This is one of the primary problems with Microsoft's current patent deal with Novell. Steve Ballmer can threaten that Microsoft's IP is all over Linux, but how would we know?

Transparency is what is needed for trust, Jason. And transparency does not come through IPRs, which are mostly designed to inhibit transparency. Sharing what one has with one partner leaves all other prospective partners in the dark. (And, as in the case of your patent deal with Novell, there was apparently very little information actually shared, since you sharply disagree with each other as to the value of the patents in question.) Transparency comes through opening things up. Not closing them off.

Tuesday, February 06, 2007

Software is political...the question is, "Why?"

You'd think we have better things to worry about besides software. Most people I know don't care about software. At all. They don't mind email, but don't think of it as software. it's just a service. And it really doesn't matter whether they get it with a Blackberry, Outlook Express, Thunderbird, or whatever.

But those are normal people. The rest of us? We think it matters.

Which is why I find this article from yesterday's Guardian (a UK paper that I quite like) so funny. It's poking fun at people like me, and it's scathingly accurate at times:

I hate Macs. I have always hated Macs. I hate people who use Macs. I even hate people who don't use Macs but sometimes wish they did. Macs are glorified Fisher-Price activity centres for adults; computers for scaredy cats too nervous to learn how proper computers work; computers for people who earnestly believe in feng shui.

PCs are the ramshackle computers of the people. You can build your own from scratch, then customise it into oblivion. Sometimes you have to slap it to make it work properly, just like the Tardis (Doctor Who, incidentally, would definitely use a PC). PCs have charm; Macs ooze pretension. When I sit down to use a Mac, the first thing I think is, "I hate Macs", and then I think, "Why has this rubbish aspirational ornament only got one mouse button?" Losing that second mouse button feels like losing a limb. If the ads were really honest, Webb would be standing there with one arm, struggling to open a packet of peanuts while Mitchell effortlessly tore his apart with both hands. But then, if the ads were really honest, Webb would be dressed in unbelievably po-faced avant-garde clothing with a gigantic glowing apple on his back. And instead of conducting a proper conversation, he would be repeatedly congratulating himself for looking so cool, and banging on about how he was going to use his new laptop to write a novel, without ever getting round to doing it, like a mediocre idiot.
This is particularly funny to me because just five years ago, circa 2002, I hated Macs, too, and hated every Mac user I saw. But then my ThinkPad T42 was backordered, and I gave in to my boss who convinced me to get a Mac.

I've never looked back.

Which is all well and good, but who cares? I mean, at the end of the day, it's just a machine that I type this blog on. One of those blog entries, however, touched off a massive number of comments, with a shocking amount of vitriol thrown in to make reading them a bit sad. It's not as if the Mac/Windows debate is even about something important like freedom (which, arguably, the open source/Microsoft divide is about). It's about the fact that some people really like the Mac, and others think that their machine is like furniture - a commodity that just needs to work (most of the time). So they get a PC.

But it's not like it matters very much. There are business reasons to prefer one over the other, but not deep, religious reasons. Not moral reasons. Yet people act as if software matters for just these reasons.

I like open source software because it works. I think it works better for vendors and customers. I'm not sure the argument needs to run any deeper than that.

Saturday, February 03, 2007

How to spot a successful open source project

I found this graphic in a great InformationWeek article on how to spot good open source projects. The emphasis is on commercial open source, but I think the principles generally apply to all open source projects.

Choosing Commercial Open Source

Thursday, February 01, 2007

Off-topic: iConcertCal rocks

Bryce just sent me an IM introducing me to iConcertCal, a Windows/OS X plug-in for iTunes. It's awesome. Basically, it scans your iTunes library for the bands you listen to, and then maps them against a database of concerts for a given city that you select. You view the concert from within iTunes. Simple.

I travel to London and the Bay Area often, and get around to a range of other cities. I usually only watch soccer when I travel, but this little application is going to make it easy for me to catch Muse, TV on the Radio, Essex Green, or another favorite band instead of parking myself in a hotel room to stare at my laptop all night.

iCalConcert in action

The limit of "free?"

I've been talking with a range of open source vendors lately about the scalability of their business models. It's clear that an open source model can easily get you north of $10M in revenues, with $100M just around the corner. But does a 100% open source model (meaning, no "on-ramp"/hybrid approach) get you to $1B? And beyond?

I want to say 'Yes,' but it's unclear that the primary benefits behind a Red Hat Enterprise Linux subscription (namely, ISV/IHV certifications, security updates, and the ease of its RHN) translate well beyond the operating system, where arguably the stakes aren't as high. What happens when Red Hat hits $1B on the back of Unix replacements? To grow, it's going to need more middleware and applications.

More concerning to me (and maybe you), how do application companies break $100M or $500M with free software models? Do we go the Salesforce route and effectively make the service 100% proprietary, regardless of the underlying source? Or will current models have enough gas in them?

I suspect that we're going to see a new free source model over the next 12 months that will answer the question for me. I hope so. Because I'm not in this to build a $10M or $100M company. I want something that scales well beyond $1B, precisely because so few proprietary companies make it past this range. I want to demonstrate that open source can go farther.