Default to open: The story of open source and Red Hat

we started working with Linux and nightie-night originally we wrote the code because we needed a building a kernel really captured the imagine one to sell just another set of proprietary not going away we're not getting any less aggressive or an open source company and we're not going to walk away from that just to make money open source is not new the whole software business effectively was no business and in the beginning it wasn't selling hardware and to run the hardware you needed some sort of software but nobody cared about software you know nobody cared about licensing or selling software that came later with standardization commoditization of hardware where people could exchange software between machines now let's go back to these times 1985 1980 and there is a smart hacker called Richard Matt installment RMS and he's at the MIT Massachusetts Institute of Technology and effectively he's working around the MIT and is a real hacker in the good old sense of hacker at that time the hacker was the guy who sneaked into the office of the professor hacking into his room to get access to the terminal that would connect him to the tide sharing system a lot of papers that's where the tracker originally comes from Richard van der storm we created the free software foundation the gnu general public license which nowadays rules a lot of free software out there and effectively saying you know I don't want software vendors to make a divide between users and developers if I like software I must be able to give it to anyone and share it Richard Stallman was the youngest kid profiled in Steven Lee B's book he was called Little Richard Stallman by the elders of that AI lab now Richard Stallman is the great guru of the free software movement he was a mentor to me so that shows you where I was on the you know on the genealogy of this whole movement it was that time in the late 80s early 90s where if you wanted something you built it and then if you wanted something really special you shared it the GPL caught on especially in the late 80s Early 90s is promulgated by the Free Software Foundation and in particular by Richard Stallman with with help from eben Moglen copyright tells you you have the right to restrict others from copying your work from modifying your work from distributing your work GPL says hey we're going to give you the right to copy it we're going to give you the right to modify it we're going to give you the right to distribute it and the only requirement we've got is that if you do distribute it you have to do it under the same license agreement and that way we ensure that the same benefit that you derived out of GPL license software you're extending to other other parties I first ran into the GPL which is a license that going to public license in the late 80s actually in England and it kind of struck a chord in me but I didn't really get a chance to actually do open source code full-time until after I came to the US and the first job where I was doing really open source and getting paid for it was when I joined Cygnus which is Mike Timmins old company that you guys ended up buying I actually remember that there was quite a stir when Richard Stallman announced project canoe and the GPL I remember people debating whether it's a good idea or a bad idea whether it could possibly work or not possibly work and I remember that there was this thing going on and I learned about the gönül Emacs editor and I was astounded at the idea that something so rich and feature full would be available with source code and I actually started reading the source code of Emacs I was always interested in compilers I excelled at the kind of math and the kind of study that was related to compilers and I began to form in my mind the idea that I was going to write the Great American compiler and on my birthday in 1987 Richard Stallman releases the canoe C compiler and I could have seen that as the glass being shattered not even half empty but just all the water gone out or I could look at that as the glass completely full here is a world-class base of software that I could contribute to and I didn't need to worry about working for a company or licensing it and that was one of the first times I really began to feel that not only is this a lot of fun but the amount of value that could be unlocked by free software was amazing this is the innovation of Michael Tiemann that he realized he read the GPL which is a a very strange document if you first read it it's basically this software license going at about evil software hoarders and stuff and my team is genius was realizing this is a business model and that really was the innovation that kind of founded Cygnus and ultimately Red Hat I think nobody wanted to start the business because while they all thought it was a great idea I thought it would never work and after hearing that for two years that's when I had my crucial insight if everybody thought was a great idea then I was convinced that the capitalistic system would find a way to value it and if nobody thought it would work I realized I'd have no competition what default everything was proprietary so you know if you wanted to do open source work professionally Cygnus was literally the only company that was there was no you know it wasn't like you could do open source work and work for anybody else the goal the company was to prove that this business model was as good as any model that had ever been imagined for software not just in terms of profitability but just overall sustainability one of the things that made this whole free software thing work is that it was not dependent on the single individual when Leena's Torvalds sent out his message his famous message about hey and working in an operating system it's not going to be professional like new obviously this idea of building a kernel really captured the imagination and his timing was perfect and he wanted to call it freaks fre ax so he created a directory called freaks and you wanted to upload the source code there and the system administrator of that FTP server said this is a stupid name this is really complete bollocks so let's rename it your lineage let's call it Linux that's how the name Linux was invented which leads me to the three fundamental theories of the whole IT industry it all happened by accident it was done by amateurs and nothing's really changed in early 1995 I got a call from one of my friends who was still working at Sun Microsystems and he told me that there was this little company in North Carolina that was doing some really amazing stuff and at the time they maybe had dozen 15 people but they had done something really new with free software I could sense there's something interesting and so I brought my two co-founders together and I said you know what I think we ought to do an acquisition I think we should take 10% of our equity and buy them and I did not make the sale five years later they took 10% of their equity and bought us in some ways being acquired by red hat was a redemption because the people at red hat were believers when I met Bob Young I knew that Bob seen the same vision I had Bob had the good fortune to build that vision around a Linux distribution which has major scalable benefits over something like a compiler tool chain I was a big skeptic when I first ran into Linux 91 ninety-two it's a big skeptic I didn't think it could go anywhere with it was just filling a void while you waited for a real operating system to show up on the new 486 machines but yeah I'm an old typewriter sales guy and I look after customers one customer at a time and what I can see in this Linux thing is I had something to sell that if I found the right customer he could not get from anyone else on the planet no volunteer how big they were Marc working out of his spare bedroom down here in in North Carolina over in Durham was doing a Linux distribution which he named after his missing grandfather's lacrosse cap infecting the very first version of his first release and in the opening of the the manual he told the story of this raid lacrosse cap be used to wear between classes and he says if you're in the Philadelphia area and you find my lacrosse cap I'd be grateful if you'd return it to me by the way to this day I believe that's the only bug red hats not been able to track down we go back and forth they say what mark you know a couple of my customers say your distributions better than in other people's and and so you know I'm selling a thousand copies a month of various Linux distributions I should be able to sell a hundred of yours so send me three months supply you know 73 hundred copies dead silence at the end of the phone so I finally get o to mark that he was only thinking of printing 300 copies well I knew how little I was paying him for these coffees so we realized we had a match made in heaven I needed a product and he needed some marketing help so we ended up merging our little businesses my ACC Corp with his sole proprietorship first purchase order of yours - holy cow that's unbelievable and that's actually my handwriting that is my handwriting it is certify can vote you this there is no question we are sort of even somewhat nervous about being able to qualify for office space would a landlord who had office space rented to a company who had no money in the bank and whose business was selling free software and we just looked at it and go do you know I'm not sure I want to fill out that application there are very few companies that ever started being properly funded from the start that were ever successful because the concept of a start-up is is you very much focus your what you spend money on to ensure you get value from and it becomes part of your culture when you have no money my first encounter with Red Hat was that one of the early conferences in North Carolina I it was two small rooms with an immediate kind of walkthrough meet everybody in 30 seconds the second time I went back it was a good deal bigger and they were running out of space they got more space but they still had a very much a fence the kind of the tech culture pronounced that crash there are things like a budget for nerf guns and shooting the management was considered obligatory so fast forward we're now in the spring of of 98 I'm now sitting on a business that Intel wants to partner with that some of the top VC's in Silicon Valley want to partner with I think I might need some help we had a smart team but we did not have a lot of senior industry experience no let me revise that we did that any senior industry experience which is actually part of our secret because we had no industry experience we didn't fall into the bad habits of the industry it is precisely what allowed us to rethink how the industry should work I'm talking to Bill Kaiser at Greylock who is still on the Red Hat board and who deserves a huge amount of respect for his contribution to Red Hat success over the last 10 years Phil you know we need some help we need some high-level I don't want to hire the VP sales I want to bring in the guy who might scale to be the CEO of this thing who do you know in North Carolina says well but to look complicated because he's gainfully employed as the president of a software company that has intentions of going public so I don't think he has any interest in talking to you but I can always make the introduction because maybe he knows something of course it's Matthew Zurich and my line was hey Matthew do you really want to sell just another set of proprietary software to another set of faceless corporate buyers or do you want to come and help us actually reinvent the software industry and materially improve how our society functions by empowering engineers to do the right thing with software game through transparency look at the brand that this company has on a global basis and the industry our industry is just starting around open source software information accessible all people it's very emotional to think that every day more and more people buy into that vision of creating a defining company of the 21st century and Matthew very much was the right guy for red hat in some sense red hat really hit the lottery with their IPO and one of the things that happened with that IPO is its it really did catapult red hat into a position where we had brand equity that was far beyond anything that either our revenues justified or really that we could have ever imagined it was still very much in the peak of the dot-com era and we were able to go public and evaluation that just dwarfed the size of our company at the time and it was a pretty exciting moment there's no question we came back to red hat after being up in New York and doing the roadshow you know being in Goldman Sachs's office when it started to trade you know we went out at $14 and it ended up the first day at $44 everyone was all excited and I go well I guess it's better than going out at 14 and ending up at $10 when redhead was creative the whole business around Linux was just stunning so people were building distributions and carrying them or trying to sell them in et cetera and reddit went into a mode that I would call the heroin phase we were sort of drug dealers and I get it 13 but we've got a hold me for a while every six month you get a fresh shot of Linux a nice new box nice new logo new manual new CDs all wonderful you know we created a lot of articles and journalists reporting about it because a revenue model was quite simple sell boxes Matthew Zillow kept talking to us about we got to get away from the box product and we're all going that's the only place where we make any money right now it was hard to understand what he was telling us at that time yeah in retrospect it's like oh yeah that made a lot of sense at the time not so much the problem started to creep in from the beginning people that run professional systems business critical systems will not update their systems every six months what we did with Red Hat Enterprise Linux from 2002 is saying via customer you're not buying boxes anymore what you now buy is the right to use our software in whatever version that we produce during the runtime of your subscription which is one or three years we retired our most successful product we retired Red Hat Linux there were a lot of other ideas thrown around on how to do the subscription model everything from should we have a proprietary installer - should we have the whole thing proprietary one of the things that we kept coming back to in that process is we're an open source company and we're not going to walk away from that just to make money but because we did it in order to free software when we were able to keep the fight with the community which i think is something some of the other code company stuff as it is like stuff what's also definitely they did to have to read the distributions were the first ones to go into that subscription model every other software company in a planet would love to have been in a subscription model now we have the advantage we're starting with a clean sheet of paper because we didn't really have any Rev back then the benefit of the subscription model is you start spreading the receipt of the money in the recognition of the revenue that you received over the period of time that you're actually maintaining that software we knew the risk we were taking we absolutely bet the farm on on doing that and getting into the enterprise market we by retiring Red Hat Linux spawning Rell then Fedora continuing to give the community in the open-source world that completely free operating system that they wanted and that actually drove everything we did while at the same time having a vehicle like rel that we needed to make money to continue to fuel the company on if we didn't do rel company wouldn't be here right now if we didn't do fedora the company wouldn't be here right now so one important thing that we had to do when we moved from a box product company to an enterprise software company is really rethink how do we go to market from a legal paper perspective there's a thousand different license agreements out there but what we were doing was not creating a software license agreement we had the general public license that was our software license agreement and we had to create a recurring revenue model agreement for software and that had never really been done before we didn't have any models to follow one of the really important things that we knew we had to do to have credibility with the enterprise customers that we wanted to serve with to have applications from independent software vendors certified ported to Red Hat Enterprise Linux and certified to run on Red Hat Enterprise Linux so we had to create a desire in those ISVs to self-certify on our platform and we also had to create a program that companies would be interested in participating in in order to self certify [Music] really from the day one when I joined the company I try to build global business all the not just separate countries and separate regions but people communicating working together I started this euro rebuilding and European operation so always a few inspirations those there were in the Germany in France and in the UK that's it we started operations in Benelux countries Scandinavia started in Eastern Bloc of former Eastern Bloc countries we really cover now the entire European business and it's very substantially asia-pacific but the next and our primarily business was a very beginning in Japan so they expanded their asia-pacific business to China to Korea to India we spend at Ellis Island business and we entered ASEAN countries oh and not really covering the entire Asia Pacific about three years ago we acquired our partner in Latin America and this business in Latin America grew rather dramatically there were fantastic team and the business grew in thousands of percent here from the smaller base but we really becoming a true global company which is good thing to say welcome to the New York Stock Exchange there is a real buzz and excitement around here this morning because we have the privilege to welcome into our family of listed companies Red Hat the world's leading open source and Linux provider it's a great day for Red Hat to be listed on the New York Stock Exchange it's kind of an honor and it's where the big established companies are I think customers and competitors and partners saw that and said while these guys these guys are for real and they've arrived you know there were two acquisitions that that I think were also inflection points for the company JBoss is the first one if we were going to grow the platform we really needed a a world-class runtime environment we really needed a world-class development environment on top of that so that was the impetus for us to go out and bring JBoss and they built a great community they built a great brand they built a great set of products and we felt that the combination of that with the operating system would be killer you know what we try to do is either join you know successful projects or be a steward of new projects to try to point you know the open source model at new areas that Enterprise need and so application space was a natural to be able to there's a lot that can happen if you get worldwide collaboration around you know a Java development platform a really talented bunch in Israel started the KVM project and we watched that very intently and what we saw was what we felt was an architectural e superior next generation virtualization we really saw it as a next-generation a loadable module into the kernel that can Herot all the goodness of the operating system as opposed to a separate layer and separate operating system [Music] open sources move from being you know the domain of a few techies and a few early adopters to truly being ubiquitous you know Gartner today says that the majority of enterprise products will include open source components now as we move forward I certainly expect that in software to continue to move up the stack and broaden out into other categories you know if you look at clouds clouds will be open source clouds will run open source so we are at a fundamental tipping point where computing will be forever changed by the power of open source open source calm is a key initiative inside of Red Hat and I think we have proven the power of participation in software it was open source what I want to do is take those learnings and make sure we can apply it to other areas of human endeavor be those you know academic research be that healthcare be that government and participation in government be that our legal system there's so many opportunities where knowledge building upon knowledge can be valuable basically what we're finding is that if you look at open the over source way is a way of thinking about a protein problem so we have solving problems a way of dealing with the world around you in a different way that you can apply the open source way and all of those facets and what you will get is a result that's different than if you approached it in a more traditional way it's everywhere I mean you look at the growth of open source inside you know some of the you know more risk-averse environs like the federal government you know the open source use and you know the Red Hat business inside the US federal government is is blossoming now it's really around less around open source and more about you know the solutions that open source is built so what we found running open source technologies there's so many eyes on the code it's a collaborative community that we found they're very robust they're quite stable and they're quite secure and well like any code there are may be vulnerabilities but they're discovered fast and they're patch fast so that means in my vulnerability testing the open source technologies always fare very well unless we have the trust of the patient it's really hard to share data so I find that open source and there resulting security is foundational to health care technology if you're the steward of your data and you decide who should see what when in what context it's patient-centered it's protecting privacy and confidentiality that's really the way healthcare should run this whole concept of sharing of participatory democracy if you would in that's embodied in open-source software has started to have an impact on other aspects of our lives so out of this you had the Creative Commons which started into sharing content so free culture refers to a balance of encouragement and freedom for people over their own culture there are protections like copyright necessary in what I think of as a free culture but they're limited and balanced to make sure that they do nothing more than give the incentive they need to creators to create and leave the rest of culture as free as possible these three big things open source open standards and open content and they together form the fundament for the new society that we see nowadays everywhere the community values of free software are incredibly important and the ability to make things happen all over the world there are many organizations and nonprofits in India who believe that the usage of open-source is absolutely essential to bridge the digital divide take computing to the masses and you know démocratie is the use of technology in a country like India so there are organizations which are trying to promote the usage of open-source software in education we have close to 250 million children who need to be educated now if you want to put proprietary software on you know the the computers that you give to these children the cost of education becomes exorbitant you look at things like One Laptop Per child or universities in setting second and kind of data third or countries all of a sudden can afford asking royal so I can really afford to use software and buy software of course we care about the software but we care about the world in which we live as well we care about everything if you get it right if you're able to drive some good changes you know it's not just a small localized dis but it has a phenomenal effect on a lot of people open source as a methodology as a culture it really permeates everything that we do here at Red Hat it so it's very important to me to be a part of something not only building an institution but something that really matters it matters not just to our shareholders but more broadly to the communities where it and Red Hat fits that mission right we truly do have a mission to change the world

Channel: Red Hat

Views: 65,681

Rating: 4.9285712 out of 5

Keywords: Red, Hat, Linux, RHEL, GPL, GCC, Cygnus, open, source, documentary, business, model, free, software, Fedora, Matthew Szulik, Alan Cox, Linus Torvalds, Marc Ewing, Bob Young, Michael Tiemann, Mark Webbink, Jim Whitehurst, Lawrence Lessig, Jan Wildeboer

Id: vhYMRtqvMg8

Length: 27min 2sec (1622 seconds)

Published: Thu Aug 18 2011

Reddit Comments

[u/10waf]

So that was inspiring... Wanna work for RH now

[u/dms_]

I've seen this a long time ago and watched it again. Very interesting to see how things turned out, thought I would share for those who haven't watched it yet :)