PC Forum Follow-up Notes

Overview

Linux is extremely hot. The word alone is probably worth millions. For this and more substantial reasons (e.g. it exists, makes money and has a following), Linux Journal — and perhaps the whole SSC apparatus — is in a seller's market.

Item from Jay Walker, the Priceline founder: "We are witnessing the death of me-tooism. The best way to succeed is by inventing whole new business models, not just new businesses with old models."

Background:

  1. It is clear that Linux and other open source products are building materials for business, and that programmers are architectural and building trade professionals. They like Linux because they can work with it. This has profound implications for development itself, and (more importantly) for its effects: better, faster, more efficient business.
  2. Much of Microsoft's success owes to its developer support, which involves supplying an endless variety of tools and help with using those tools. Microsoft tools, however, are limited by the closed nature of their source code, and the complete absence of any conversation around the development of the tools themselves (though not of their use). This is key. Programmers like to tinker with tools. With Microsoft's tools, they can't. Worse, they have to cope with Microsoft’s other agendas, which mostly have nothing to do with tool utility. Worst of all, help comes mostly from one central place — less so from other code builders. Open source tools, on the other hand, have no agendas other than being the best possible tools. Big difference.
  3. Eric Raymond’s involvement is critical in whatever we do. He adds enormous value, to say the least. In fact, he moves worlds. It was Eric's thinking that moved Jim Barksdale to suggest open source for the Netscape browser – a move that both energized and legitimized the open source movement. Eric is many, many things, including the only source of practical economic thinking on open source development. He is a rock star to programmers, and he is almost unbelievably influential with the press. And he was a star at PC Forum. It is critically important, from Kleiner's perspective, that Eric get on board, in some way.
  4. Eric right now is weighing an offer from VA Research to become its director of development. He'll probably turn it down, because it would involve compromising his independence. But he would probably NOT turn down an offer to occupy the same kind of position with a new company the purpose of which is to husband and drive the whole open source movement.
  5. Eric has eight business cases for open source. All to some degree are predicated on this point: most software development is for use value rather than sale value. Like the Internet, its greatest value is not as a thing in itself, but as means to ends old and new.
  6. To a VC who said he wasn't interested in funding open source projects because they probably don't promise nearly immediate 40X returns on investment, Eric said any strategy that expected sale-value software to return 40x on investment is broken.
  7. What Eric hasn't been saying (but easily could) is that open source's much faster, more reliable and ultimately more widespread development model can do for application (and business) developent what the Internet did for both once already – but can do it in an even bigger way.
  8. In fact, it is best to understand the Internet itself as the first major open source project. Many more will follow, once this new development model is legitimized and institutionalized either by an existing company like Red Hat (or set of companies, e.g. Red Hat, VA Research + AOL), or by a new company arising from and centered around the open source conversation itself. It has to start there. And SSC has been there since Day 0.
  9. Supporting open source – in other words, supporting a whole new development model based on relatively free and openly modifiable tools and building materials – will do to Microsoft's whole business what Microsoft did to Netscape's browser business. Although I don't want to fall into the Microsoft gravity well, one cannot discount the appeal of saying "payback time."

Opportunity Review

  1. Funding (private, venture, investment bank, internet IPO...)
  2. Acquisition (two parties are very interested, right now)
  3. Partnering (in too many ways to describe)

The questions are:

  • Do we want to drive up the values of SSC properties before we sell, or even partner?
  • Do we have time?
  • Which do we ramp up first, how fast, and in what ways?
  • What properties do we offer?
  • What kind of prep do we want to do first, and how fast?

    • Potential Acquisitors

    EarthWeb:

  • Jack Hidary ([email protected]) and his brother (Jacob?). Both young. Both Americans, but of Syrian descent. We bonded over talk about middle eastern soul food.
  • Best background page is here
  • Interested in several possibilities. Key choices:
    • Partnering to sell magazines and books
    • Acquiring the whole thing
  • Already have monster Web site(s) with many, many things for sale, including books. You can read parts of books, then buy the rest.
  • They just bought a library of nearly every mother board ever made – a Hong Kong company
  • They are already public, with a current valuation $380 million
  • They will make $200 million in acquisitions this year; have already made $20+ million
  • They just hired away IDG's guy who did the Linux World conference. He will run the new EarthWeb event, Open Source Bazaar.
  • Downside: Eric Raymond never heard of them

    • TechRepublic:

  • Tom Cottingham, [email protected]
  • Tom cofounded The Cobb Group, back in the 80s. Sold to Ziff-Davis. Very good at building circulation, building loyalty, knitting in with communities. Good at getting maximum for each pub. Subscriptions run in the $X00s per year. Windows Support Professional is $178/yr. SAP Strategy Letter is $995.
  • Interested in immediate action. They plan an IPO – or something equally decisive – soon
  • A "narrowcasting" company. They believe in many narrow niche publications.
  • Tom sold hard and repeatedly. They want LJ, bad.
  • Name used to be Narrowsomething.

    • Potential Funding Sources

    Four serious ones.

  • John Doerr, Kleiner Perkins. [email protected]
  • Giles McNamee, Hambrecht & Quist
  • Morgan C. Frank, Hollis Capital Management
  • Dan Lynch, Lynch Enterprises

    •  

    Players and possibilities

    Kleiner Perkins

  • John Doerr is very positive on open source. And he wants to talk, ASAP.
  • John clearly wants to do something with or about open source. In fact, I sense that John thinks nothing is more important and strategic than open source. It was the Kleiner Kieretsu tgat broke ground with open source when Netscape made the first major mainstream open source adoption move; and now Marc has big plans to do the same within AOL – something that, as far as I know, he has told few people (since there has been zero press on the issue). Significantly, Marc made this disclosure to me, and wants to talk more about it.
  • Quotes from John:

    "A network of relationships is important. Though it is easy to start a new ventue, i is hareder than ever to build an important, durable enterprise – particularly without allies."

    "To compete, you need strong alliances. No single company offers a complete solution."

    "Network effects are what really matter. They're everywhere, changing everything. Open Source is one example. eBay is another. viral marketing is another. Word of mouth matters."

    "Strategy is easy, but execution is everything. You need to creae a resilient, pervasive, adaptable culture. You need lots of really smart people who 'get' the culture and can inspire, inculcate it in others. Jim Barksdale is a great example of an exceptional leader."

    "The new network economy is an attentoin economy. There is a worldwide time famine. We're all time-starved and competing for attentoin. So in cyberspace we rely more on brands for confidence and to save time. Think hard about the networks that really matter to you, the network of relationships that sustains your friendships, your family, he networks esential to growing your business."

    •

    I suggest we (Phil, Joyce, Doc, Noreen) get together with John Doerr —

    1. Pitch him first on our vision of open source and how we see real markets developing around it.
    2. Pitch him next on one or both of two things:
      1. A new business, based on Eric's thinking (plus our own)
      2. A way to turn a set of existing businesses into a whole new Kieretsu (VA, RH, AOL, Sun and some other existing Kleiner members) – held together and driven forward by publications both on and off the Web that give shape and substance to the market conversation itself.
    3. Make the case that SSC and LJ are among the most indigenous, networked and therefore credible open source conversation and business drivers.
    4. Test it first on Noreen.
    5. Suggest bringing in Marc Andreessen and Jim Barksdale as well, preferably for the second meeting. (And perhaps talk first with Marc.)

    Action Items

      1. Contact Giles McNamee about two things: 1) following up on funding possibilities; and 2) getting his Meta Group numbers on Linux adoption Contact John Berard of Fleishman Hillard. [email protected] (he was at table with Giles, works with Giles and eTrust and Lori Fena)
      2. Send email to Marc Andreessen to follow up on several items: what AOL will do with Open Source, what Marc will do at AOL, how to fuel the opensource conversation.
      3. Send email to emauel rosen: [email protected] (emanuel is about to publish a book about word of mouth. I gave him two cluetrain-related items)
      4. Send email to John Mihalec of IBM. He will get a software person to call about IBM's Linux strategy. [email protected]
      5. Send email to Dennis Bennie of XDL Capital Group – [email protected]. He will contact Zoomit. Write to Kim and Andy too.
      6. Contact James Wiebe of Newer about Linux story. [email protected]
      7. Contact Matthew Klapman of Motorola about Linux story. Matt is director of user interface tech for cell phones
      8. Conact Joseph Levy of CIO. Forget why. [email protected]
      9. Transcribe Eric Raymond's talk at PC Forum.
      10. Contact David L Sifry of LinuxCare
      11. Line up lunch with Richard Miller. [email protected]