August 2, 2002

A business column finale

Author: JT Smith

- by Jack Bryar -

All things must come to an end. After nearly 200 columns we're
retiring my weekly business column at OSDN and NewsForge. One person can only
rant so long without running out of things to say. This column, and to a
lesser extent, OSDN began in the belief that business activity drove the
global culture to a much greater extent than any decision coming from a
government office. We felt that the IT industry was the most powerful cultural and
business force at the end of the 20th century. These are not necessarily
good things, but they remain true, for better or for worse.
These essays began when OSDN was a guerrilla technology Web zine called
the Andover News Network. The editor at the time, Steve Heiser, drafted me. He
had seen my work on a private electronic newsletter targeted to corporate
CEOs, called Forces@Work. He thought I could write a business column with a
bit of an edge.

At his urging I began an Andover column called TICKS. This stood for
the Technology Industry's Corporate Kindergarten. The title represented my amazement at the childish behavior that distinguished the corporate cultures at so many emerging technology companies. I began the column by wondering why this behavior was tolerated, even celebrated by stockholders and board officers. I worried that these immature "visionaries" had neither the social skills nor the maturity needed to execute their visions.

Too often, those visions seemed more like hallucinations. For almost
five years, I kept a clipping from the Wall Street Journal called, "The
latest craze, crazy management." It described a phenomenon I saw all around
me. Many of the driven, obsessive, charismatic personality traits popularly
thought to mark someone as executive material also perfectly described manic depressive psychosis. It has been no secret that a significant number of CEOs in the new
economy had prescriptions for Lithium and a closet full of similar
medications, but no one seemed to care. As for me, I worked at two firms run by such
characters, and the results were disastrous in both cases.

After watching these new CEOs abandon such "old economy" ideas as
fiscal discipline, business planning and market research, I had a hard time
believing that entire sectors of the IT community weren't going to go off a
cliff. But, for years, nothing happened. The Internet phenomenon seemed
even crazier. In my column, I wrote about the insanity of a pair of
19-year-olds who suddenly found, their hobby Web site, was being valued at over a billion dollars. In another column I said I found it insane that Amazon's Jeff Bezos would decide to walk away from a deal that would let him take over the
largest book distributor in the world (A real business! That made money!) for
less than 10% of his hyper-inflated stock. After a generating a series of
columns with titles such as "Netscape investors, are you out of your
minds?" I got tired of writing them.

When Red Hat decided to go public, however, I lost my cool. Acting on a
wire service article that erroneously added a couple of digits to the
company's most recent losses, I suggested that the tech bubble had finally become
indefensible. I heaped scorn on the very idea that a company based on Free Software could have any
future. Imagine my surprise when Robin Miller, who became Andover's editor in chief a few days after that column ran, informed me that my numbers were wrong, and our publication was going to re-focus on Open Source. After I recovered from the shock, I joked with Andover's then-president, Bruce Twickler, that
I thought there was a lot more money to be made writing about Open Source
than could ever be generated trying to sell the stuff.

It's been interesting. I came to believe that the Open Source
phenomenon was for real, even if I remained unsure about some Linux businesses. As the codebase matured, it has become impossible to argue that Linux
isn't a great substitute for Unix, and a reasonable alternative to
Microsoft's enterprise products. However, unlike most businesses, the majority of
Linux vendors began life with no marketing programs worthy of the name. Most
didn't understand that the price of the software had little to do with the
total cost of ownership (TCO) for most companies. By emphasizing all
the money they would make in services, Linux vendors actually frightened
many potential clients into worrying that Open Source meant unfinished code
and unending service costs. In an article called "How much does free cost,"
I suggested that a compelling business case for Open Source could be made
-- and that most Linux vendors had failed to make it. The issue was picked
up by a variety of analysts and the
TCO debate
has been going on ever since.

I thought that two most socially significant aspects of the Open Source
movement was that it was exposing the flaws in the broader IT industry and that
it wasn't a particularly American phenomenon. I apologize for writing
dozens of articles about Linux in Peru, China, India and Germany. Based on the
readership of those pieces, it isn't a subject American readers find
terribly interesting. But the fact that Linux is not another American export is
one of the reasons so many people outside North America find it so
compelling. If the platform truly emerges as a mainstream alternative to Microsoft,
it will happen last in the United States.

In many ways, the Open Source community's greatest value was its
puncturing the IT bubble. Somewhere during the mid-'90s, even as the market
for IT products continued to escalate, the business went sterile. Instead
of generating truly new products, software CEOs focused on extending the
shelf life of their old intellectual property through a mix of political influence peddling, patent claim jumping and impenetrable software design. This "innovation stall" gave
Open Source enthusiasts the time they needed to catch up. By all
rights, this should have been impossible. Could you imagine a group of
volunteers creating a better class of cars than Toyota or a loose association of
enthusiasts outperforming Enron as an energy company? (Actually you might.) In any
case, the Open Source community has succeeded. By providing a plausible
alternative, Linux has imploded the value propositions of many software developers,
and knocked the IT industry on its ear. Steve Ballmer was right when he called
Open Source a "cancer" that endangered the proprietary software business. But the patient had already been sick for a long time.

I have come to respect the sincerity and zeal of many Linux
enthusiasts. Although most of the email I've received has come from 17-year -olds
who had yet to write a line of code and who were unfamiliar with how to
use a spell checker, I was impressed by the sincerity and talent of the
volunteer hackers I encountered. Many were truly dedicated to creating a movement
as well as an operating platform. Their zeal reminded me of the old New
England Puritans who set out to change the world a few centuries back. I
suggested that their example was instructive. With time would come compromise and
diminished enthusiasm. I suggested that Linux vendors and enthusiasts would have
to learn to accept a "half-way covenant" with closed source software developers, much in the way those old
Puritans had to covenant with those who didn't share their vision. Almost two
years later, as Turbolinux, Caldera and others incorporated closed-source elements, that compromise has occurred.

This change may have been inevitable, but it has made it difficult to
justify weekly essays about Linux-only pioneers as a distinct and exciting set of
businesses. To be sure, there are still some interesting firms out there. Several
companies are going to continue to focus on Open Source. Some old veterans like
Borland and upstarts like Linux NetworX look like they have defensible business
plans and perhaps a sound fiscal foundation. Many traditional IT vendors, such
as IBM and Sun, are poised to succeed with a mix of proprietary and Open
Source elements. These firms look like they will come to dominate the
commercial market.

However, the majority of Linux companies look like they are going to
flounder for a while. It is true that these pioneers may continue to have an
immense influence on the software market and on the broader culture. The Open
Source movement they represent has been and continues to be a profound social
force. Despite their social significance, the pioneers that popularized Open
Source are, and have been, small, struggling, and in some cases, not very
interesting enterprises. In an old column, I once compared a leading Open Source
distributor to a local grocery store chain in my corner of Vermont. By every normal
measurement -- employees, annual revenue, even yearly growth, that local grocer had
a more significant enterprise. Yet, no one would have considered writing
a weekly column about it. Since then the grocer has closed up
shop. The reason we heard was that the business didn't seem all that
compelling anymore.

I understand those sentiments.

I will continue to read NewsForge. I expect to track its coverage of
Open Source movement as a social, technical and possibly a business
phenomenon. I may occasionally show up in print here and elsewhere. But a weekly
column on Linux-focused companies is an idea whose time has come and gone, at
least for me, at least for now. But it was fun while it lasted.

Thank you Steve, Robin, Adam and Grant. Thank you all.


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