Commentary

Changing Business Models

Posted on by tarus

Matt Aslett has a new post today in which he pointed out that “a significant number of high profile open source-related vendors had stopped using the term open source as an identifying differentiator.”

As I read through his list of 14 companies, it seemed to me the reason that some of them are finally refraining from using open source as a differentiator is that they were never open source companies in the first place. Despite their best efforts to rebrand the term, they failed. Two of them, Groundwork and KnowledgeTree, haven’t had a “community edition” since 2009, so I think we can stop referring to them in any discussion of open source software, except perhaps as an example of what not to do. Red Hat is on the list, but they are still proudly open source and they are also still profitable.

When you get right down to it, profits are a major measure of the success of a company. When I find myself surrounded by VC-types, their measure of profit is often in how much money they made when selling a particular company. If that company does well or poorly after that is no matter to them. That doesn’t make them evil, but it also doesn’t mean they make great businesses.

More often than not, VCs have to make a decision about when to stop funding a company. Many of the companies in Matt’s list have been around for five years or more, and this tends to be the event horizon for VCs to cash out or quit, so I can fully understand why they are trying to rebrand themselves in search of a business plan that works. If they don’t, they die.

The survival of my company, on the other hand, is totally up to us. We adopted a business model that resulted in profits from Day One, and we work hard to keep it that way. Although this doesn’t gain us any respect in the Valley, it doesn’t matter all that much since we don’t need it. And that is kind of the point – the traditional VC model is dying as quickly as the open core model is dying.

Just to be clear, I am thinking of VC-backed software companies. With the rise in true open source solutions and the big growth areas in software coming in the form of inexpensive apps (think Angry Birds) and “freemium” applications (think Farmville), VCs are becoming unnecessary. I still think the VC model can work in areas such as biotechnology where huge startup costs are the norm.

The thing that really excites me these days is seeing how traditional business models are being disrupted. Open source is definitely changing the software industry, and the technologies open source enables are changing things on even a larger scale. I love reading about food trucks that tell customers where they are through Twitter. And I love what Kevin Smith is doing to the movie industry.

The entertainment industry is undergoing huge changes. First, digital distribution means that the cost to deliver content has gone way down. Second, decent home theatre systems are within the reach of many, which means a trip to the local multiplex, with its high costs, talking patrons and sticky floors, is becoming unnecessary. And much like VCs, the movie studios are trying to find a role for themselves in a world that doesn’t need them.

Today, Kevin posted a long rant about his new movie “Red State” (warning – profanity). In it, he has a novel idea for getting people into movie theatres. Instead of just showing a movie, he couples it with a personal appearance after the show for Q&A. Not only are people willing to pay for this, they are willing to pay a premium.

Of course, even a novice VC would look at this and say “it doesn’t scale”. Kevin addresses this in part by proposing using network technology to provide live Q&A over the network or via satellite. Using Twitter, Facebook, SMS, etc. people could still ask questions and interact with the artist.

This new “self distribution” plan has one amazing upside: it’s profitable. By using social media to market, he doesn’t need to spend millions on advertising. By running his art as a business, he’s already in the black – the rest is just gravy. Will “Red State” make as much as “Avatar”? Probably not, but it will net more than “Gulliver’s Travels” did, at least domestically.

And the best part is that most of that money will end up in the pockets of the people who created the content.

The movie studios that survive, like Lionsgate, will adapt and embrace these new models. Those that don’t will be looking for another business plan. Perhaps we’ll see on the cover of Variety a story reading “major studios stop using the term ‘movie production’ as an identifying differentiator.”

Terror and the Cloud

Posted on by tarus

I’m finally finding time to write a little, and I’ve had this post queued up for a some time. It has no OpenNMS specific content, so please skip this one if that’s why you read this blog.

I spent a couple of weeks in Europe at the beginning of the month. Part of it was for the third annual OpenNMS Users Conference – Europe, and part of it was for a holiday.

After the conference, we left Frankfurt for Dresden, where we spent several days with some good friends. Many years ago, one of my friends hosted a foreign exchange student for a year. She was from Dresden, and we got to know her and her family. They treated us like royalty, and I enjoyed lots of dark beer as well as Eierschecke, a wonderful three-layer cake that is a specialty of Saxony.

From there we took a train to Prague. Prague is an extremely beautiful city, but I found it a bit crowded with tourists and the people I met a little cold (even when I struggled with my Czech – I studied Russian for a year and there are some similarities, but obviously not enough). I’m not judging the whole Czech people by this experience, I probably just didn’t make it to where the nice people lived and worked, but it wasn’t the experience I was expecting.

From Prague we went on to Budapest. My grandfather was born there, so perhaps that it why I found it so enjoyable. If you ever get the chance to go, stop by any convenience store and buy a bar of Túró Rudi. This is a chocolate and cheese confection that is simply wonderful, but alas it is not available outside of Hungary.

While in Budapest we visited the House of Terror museum. Despite its kitschy name, it is an amazing place: one part museum, one part art installation, and one part memorial.

This building was home to the secret police under the Nazi occupation (part of the Arrow Cross Party) as well as the secret police under the Soviets. It has three levels, and chronicles the various methods the government used to control the populace. One room that stuck with me contained three tables representing a farmer, a member of the middle class and a member of the bourgeoisie.

The farmer’s table was plain with a single electric bulb above it. On the table was a dissident’s pamphlet that was very simple, with just a few words. The table of the middle class was nicer, with a better light fixture above it, and a more complex pamphlet. The wealthy table was very fine, with a chandelier above it and a tightly worded, nicely written pamphlet.

Members of all three classes were imprisoned, tortured and killed.

The basement housed the cells and execution rooms. One cell was so narrow that the person could only stand. Another was low so they had to crouch. Still another could be partially filled with water in which the prisoner was forced to stand for days.

One of the most profound parts of the exhibition was a video where women who were interned in a prison camp were brought face to face with the woman who watched over them. While the women had recounted many horrible experiences at the hand of this supervisor, she, to this day, believes she did nothing wrong. One of the issues still debated in Hungary is the fact that many of the Hungarians involved with the persecution of dissidents are still alive and have never answered for their actions.

The whole museum deeply affected me.

They display lists of the members of the secret police, judges in the show trials, and their supporters, and I was happy to see the name “Balogh” was absent from them. It was a little more sobering to see Laszlo Balogh as one of the victims who died there.

So, what does this have to do with open source software?

When I returned from my vacation and caught up on the news, there were two main stories that caught my attention. The first was the story of (ex) Representative Anthony Weiner, who was involved in a scandal involving explicit pictures and Twitter (Seriously? Weiner? You can’t make stuff like that up).

The second was the announcement by Apple of the creation of iCloud. While almost all of the reviews were positive, I found the whole idea extremely frightening. Putting all of your mail, contacts, documents, music, etc. into one central repository where you have no control over who has access to it chills me to the bone.

Throughout the House of Terror are little alcoves containing antique telephones. If you pick one up and dial, you’ll hear actual phone conversations recorded by the secret police, some of which were used to detain citizens. One exhibit featured the equipment used to record those conversations. When you see what could be done just by tapping phones, I can’t imagine the potential for misuse that a service like iCloud represents.

Yes, I am writing this on a Macbook. Yes, I own an iPhone. I haven’t switched to Android because I can’t find a way to sync my information without going through Google, which is just as bad. I doubt I’ll end up using any Apple technology that requires iCloud, but there is a good chance I won’t be able to get away from it.

I’ve always viewed the Internet as the great equalizer – a tool for democracy in its purest form. It is very frustrating to see that perverted; to see people freely give up their privacy to places like Facebook and Twitter. When I see people go through the TSA lines at the airport with nary an outcry at this abuse of the fourth amendment, I see a populace that has already been conditioned not to question authority in the name of convenience, and it is only going to get worse.

So what should we do about it? I think that the Open Source Way imposes a moral obligation to fight this. As more information moves from personal computers to handheld devices, it will be harder and harder to control it, especially since there doesn’t really exist a truly free handheld operating system.

We should keep pressure on Google to open up more and more of Android to outside control. I would love to see open source alternatives to iCloud – the technology is cool, especially if you can control or firmly trust the servers on which it runs.

And please, please someone point me to a project that will enable us to sync contacts and calendars from our desktops to an Android phone without involving Google.

As the Weiner debacle demonstrates, we can’t expect our government to understand the technology behind the Internet. We can’t expect them to understand enough about our online privacy to want to protect it. It is up to us.

Alexis de Tocqueville is credited with saying “In every democracy, the people get the government they deserve.” I think we deserve the best, and it is up to us to create it.

Do-it-Yourself Financing

Posted on by tarus

My interest was piqued by an article I read today about Semyon Dukach. He took his company, SMTP (formerly EMUmail) public, but without an underwriter.

I’ve been thinking a lot about ways to finance OpenNMS. We have a wonderful track record, a mature product and lovely customers around the world, and I know just what needs to be done to make the company really take off. The problem is that with our current business model (spend less than you earn) it is hard to finance growth as fast as I would like.

But I am not sure our business lends itself well to the VC model, and I keep being haunted by stories of other companies that were done in by that model. I mean, as of September I will have been working on OpenNMS for 10 years – we’re not exactly a start up – and high growth start ups are what VCs want.

That leaves few other options. I could get a loan, but then I’d have to put up my house as collateral and while I am confident of the success of the business, I am risk adverse enough to want to avoid the slim chance of both losing my job and my residence (just for the record, I have used my house as collateral in the past for OpenNMS).

There is both the idea of public and private placement. A public placement, or IPO, is what SMTP did, but it is usually much more involved. That’s why I was so interested in the story.

A private placement is different. There can be no general solicitation, (i.e. you can put up a sign saying “invest here!” or else that would be a public offering) and the only investors can be institutions or “high net worth” individuals. We had a student in one of our classes ask about this, but it just seems a little risky (as in hard to manage and execute).

We’re talking to some folks now about trying to get together with either a Super Angel or a few angels to take OpenNMS to the next level, but the idea of going public while small really appeals to my bootstrap nature.

Fighting Religious Battles

Posted on by tarus

George Carlin once said:

Religion … is like a lift in your shoe. If you need it for a while, and it makes you walk straight and feel better – fine … I say just don’t ask me to wear your shoes. And let’s not go down and nail lifts onto the natives’ feet.

A newbie to the free and open source software world might think it is weird to talk about religion, but most of us who have been around awhile realize that the equivalent of religious fanaticism is pretty common with FOSS. People feel very emotional about certain technologies. And while this kind of fervor has its place, it doesn’t really work within open source business.

I was on a call today where a friend of mine (and OpenNMS proponent) who was talking about a meeting he was in where a team developing a new management application was presenting their technology assessment. To almost every requirement they stated, he was able to reply “OpenNMS does that”, yet when they presented their final scorecard OpenNMS was rated pretty low.

On further examination, it turns out that while most requirements were rated on a scale of 1 to 5, there was a category that basically said “fun to work with” that had some obscene weighting like 1 to 200. Of course, that meant the development team could basically fix their report anyway they wanted (and in this case it was for a technology based on Javascript).

My response was “oh well”.

I don’t fight religious battles.

Our job at the OpenNMS Group is to help people who want to work with OpenNMS get the most out of it. We don’t spend much time trying to get people to switch. For the most part, if there isn’t an immediate, pending reason why a switch is necessary (such as a large renewal bill for a commercial product coming up or they have outgrown their existing solution) there is little use for us to spend the time.

For example, another big OpenNMS fan got a new job, and he was trying to get OpenNMS in to replace their Spectrum/Netcool solution. He writes:

What the real problem here is that the two main Architects go way back 17-20 years, They fought to get Spectrum here when the shop had Cabletron, then Netcool about 5-6 years ago. Both are very good Perl programmers and have written custom scripts to tightly couple the two systems. Real good work.

But the Spectrum guy won’t go down with out a fight, chewed my tail more then once for even bringing up open source. The Netcool guy doesn’t want OpenNMS in here because it will cut into his turf and he worked hard to get it in here in the first place.

I replied:

I don’t know, man. Sounds like a losing fight from my perspective.

OpenNMS is not a free or low cost solution. It’s a powerful replacement for tools like Spectrum, OpenView and Tivoli. Sure, there are no licensing costs, but it does require just as much expertise as Spectrum to customize in order to get the best value.

Of course, I’d love to see another OpenNMS user, but I’m not sure how much help I can be selling it. Think about it, the best I could reasonably hope for would be a Greenlight Plus contract out of the deal. This would be two weeks on-site and a year of support.

So I send one of my guys out there and they meet your two main Architects. They are hostile and refuse to cooperate (kind of like Congress) and so my guy has a miserable time of it, but still manages to get some stuff done. Then comes support – these guys open ten tickets a day complaining about what OpenNMS can’t do. It costs me a guy just to deal with them.

It ain’t worth it.

When it comes to our mission statement of “Help customers, Have fun, Make money” it is much better to focus on people who really want your help and want to succeed than to try to usurp the incumbent solution. While it may mean a lost opportunity or even losing a client, it’s a win in the long run.

Just a Quick Update

Posted on by tarus

I have just returned from visiting the gang over at the Indiana Linux Fest in preparation for tomorrow’s conference. It looks like it’s going to be a great time, and I am humbled that they asked me to be the keynote speaker. I hope I don’t disappoint.

In other news, I finally have time to comment on a 451 Group post by Matt Aslett this week called “When commercial open source goes bad“.

To me, their new report on proprietary companies going open source (and in some cases failing) echoes some of my sentiment that “fauxpen source” as a business model is dead.

Specifically, I liked this paragraph:

Meanwhile one of the prominent “open source” systems management vendors appears to have removed all mention of its Community Edition software from its website, while the Community Edition itself has not been updated for 15 months. While the project is not officially “dead” it is, to say the least, “pining for the fjords” and the company in question could be said to be open source in name only.

Although they don’t call out Groundwork Open Source by name, some of my three readers may remember my post from last year about Groundwork deciding to stop publishing their “community” or open source version. According to Sourceforge it hasn’t been updated since December of 2009 (so much for release early, release often). Back then, when I asked Tara Spalding, Groundwork’s Chief Marketing Officer, about the rumor that the open source version was dead, she replied:

That is untrue, and the rumor mill is pretty lame.

I’ve noticed that Tara is no longer with Groundwork, and the rumor mill seems to have been validated.

But still, this morning, Roberto Galoppini posted on his blog about “open source webinars” and included Groundwork, when it is obvious that Groundwork can no longer be considered open source in any real fashion. I asked him about it, but my comment is still waiting moderation as I write this so I’m not sure if he’s seen my question.

I think that most proprietary companies will adopt some form of open source in the next few years, but it is one thing to use open source and/or provide some open source code and another to advertise yourself as an open source company. As an end user, you have to ask yourself if you want to use a product by a company whose marketing is that misleading.

I’m betting you won’t.

"Beating" the OpenNMS Community

Posted on by tarus

It was brought to my attention today that Nick Yeates, the new Community Manager at Zenoss, posted a “Lets [sic] Beat the OpenNMS Community” note to the Zenoss forums.

If you’ll remember, a few days ago I posted a notice about the annual LinuxQuestions poll, which included:

If you’re feelin’ the OpenNMS love, please vote. Since OpenNMS appeals to a much smaller, power user class of people than many system and network admins, we rarely win these things, but it is nice to be included in the poll.

Nothing too fancy. Nagios always wins these type of polls anyway (followed closely by MRTG and Cacti) and I wasn’t expecting much, and I even said so in announcing it.

So I found it amusing that a company with US$25 million in venture capital decided to call us out on this particular poll. I mean, if they are feeling threatened by a bunch of guys with no marketing budget, no VC and the backing of a small (yet profitable) company, there is no way they could stand up to an HP or IBM. Ethan Galstad must have them quaking in their shoes, not to mention my buddies over at Zabbix.

It wasn’t the BOSSIE. It wasn’t TechTarget. It was LinuxQuestions.

I wasn’t going to say anything at all, but then the phrase “OpenNMS Community” started to bother me. You are trying to beat my community? Not me personally, or the OGP or the OpenNMS Group, but the OpenNMS community as a whole?

First off, you can’t beat our community. I have never had the privilege of working with a better group of people. These are busy professionals, usually at the top of their field, who care enough to take the time to further our project.

Second, they tend to be too busy to register for polls like this, or care about the results.

Third, while I have serious differences with Zenoss, Inc. calling themselves an open source company, I would never attack the Zenoss community. Time after time I’ve stated that the best software is software that works for you, be it Zenoss, or Nagios, or Solarwinds or Tivoli or, yes, OpenNMS. If using Zenoss gets more people involved in the “open way” then this is a “Good Thing” and I’ll be damned if I’m going to discourage it.

I don’t know what’s happening over in Zenoss-land, but the departures of Mark Hinkle and Matt Ray have obviously left a void.

A Funny Thing Happened on the Way to the Internet …

Posted on by tarus

This morning, as I was browsing through my RSS feeds, I saw an article on Cult of Mac about the VLC media player being removed from Apple’s App Store.

The VLC project is one of those amazing examples where open source is demonstrably better than commercial software. You’d be hard-pressed to find a better media player. Quicktime? Not even close. You have to add Perian just to be able to come near supporting the number of formats VLC can. It seems it would only be a matter of time before someone wanted the power of VLC on iOS, and a company in Paris did just that.

The problem is that VLC is published under the GPL, and Apple’s policies, such as limiting a particular download to just five devices, go against that license. One of the contributors to VLC, Rémi Denis-Courmont, took issue and his complaints caused the app to be pulled.

Now, for iOS lovers this is a bit of a blow, since VLC is such a great piece of software. John Brownlee at Cult of Mac was upset about it, and he posted a pretty vitriolic attack on Denis-Courmont. He also pointed out that Denis-Courmont works for Nokia, an Apple competitor, and thus implied this action might have been driven both by business interests as well as a hatred of Apple.

Most of the true free software people I’ve met encourage the adoption of free software everywhere. Apple wasn’t directly benefiting financially from the inclusion of the software (it was free). Other aspects of the license were maintained, as the developer of the port, Applidium, made all of the sources available. So it is a real grey area as far as the intent of the license goes, but since the GPL expressly forbids adding additional conditions to the license, Apple is indeed in violation, and Denis-Courmont has every right to complain.

I am a fan of Cult of Mac (they featured my original Mac in their 25th anniversary coverage) but I thought Brownlee had expressed his frustration poorly in the ad hominem attack on Denis-Courmont. So I posted a comment pointing it out.

Here’s the funny part, instead of getting slammed by the fanboys, the next three posts agreed with me, and, having had time to chill a bit, Brownlee toned his post way down.

Wow. Calm discourse on the Internet that resulted in a positive change.

How often do you see that happen?

How I Learned to Stop Worrying and Love Canonical

Posted on by tarus

It used to be that Microsoft was considered the antithesis of open source, but now I would claim that Apple represents the opposite of “open” (which is a little ironic considering that the Darwin operating system that forms the basis for Mac OS X is based on BSD). From difficulties in getting software on such devices as the iPhone, to the addition of custom “security” screws on its hardware, Apple is the new icon for monolithic “cathedral-like” development.

Steve Jobs is a master of controlling the conversation, and he has attempted to reframe the “open vs. closed” debate into “integrated vs. fragmented“. There can be no doubt that his “integrated” approach has proven very profitable for Apple (poised to become the most valuable company on the planet this year, passing Exxon) but I don’t believe that his methods are ultimately sustainable. Truly open environments (as exemplified by Andy Rubin’s wonderful tweet in response to Jobs’ comments) can grow and adapt much more quickly than closed systems, and as more people are drawn to them this innovation accelerates.

Part of this may arise from frustration. When the iPad was announced, a friend of mine who uses a Kindle stated that he liked the fact that the Kindle didn’t rotate orientation, so he could read a book in bed on his side without it going into landscape mode. When the iPad came out there was a switch on the side that served as an orientation lock, given the iPad the same functionality.

However, in iOS 4.2, that switch became a mute button, and there is no way to change it. This is extremely annoying to people who use that feature and they have no recourse short of jailbreaking their device.

But the question remains: is it possible to create polished and “integrated” apps using open source? Many people opt for Apple’s products (myself included) because they “just work”. They trade freedom for ease of use, in much the same way that old quote mentions that in a fascist state the trains run on time.

I believe that from the fragmented chaos that is open source, order can arise, but in doing so it needs to adopt some of the methods of people like Steve Jobs. Many open source projects are run by committee. One of my favorite quotes about committees comes from Ferdinand Porsche:

“Committees are, by nature, timid. They are based on the premise of safety in numbers; content to survive inconspicuously, rather than take risks and move independently ahead. Without independence, without the freedom for new ideas to be tried, to fail, and to ultimately succeed, the world will not move ahead, but live in fear of its own potential.”

Now this may fly in the face of what most people think about open source communities, and I’m not saying that every project needs a benevolent dictator, but in any kind of chaotic system order can arise around certain people and ideas.

Take the web, for example. If I am traveling and I want to investigate a particular hotel, there are any number of web sites offering reviews and advice. But I tend to head straight for TripAdvisor. Over the years, that site has built a reputation with me as a great place for information. Even though there is no pay-wall, even though I access it the same way I can access all of those other sites, I go to TripAdvisor.

In much the same way, I expect Apple to start seeing serious competition from solutions based on open source.

To make this happen, the open source community is going to have to come to grips with the idea that certain leaders are going to arise and start making decisions that aren’t popular in order to achieve a high level of integration, where all the apps seamlessly interact and have a similar look and feel. One such person is Mark Shuttleworth of Canonical.

I doubt anyone reading this is unaware of Mark Shuttleworth. I first became aware of him when these “Ubuntu” CDs started appearing like mushrooms after a summer rain a few years back. At a time when the Linux desktop was considered to be all but dead, he put his energy and considerable resources into a new distribution based on Debian with a focus on the desktop experience.

While I rarely see a Linux laptop that isn’t running Ubuntu, Shuttleworth’s efforts have not been without criticism. He decided to include non-free, proprietary drivers in Ubuntu in order to make the user experience easier. There have been some claims that Canonical doesn’t contribute back to the communities of the software they use.

The most recent controversy arose when it was announced that future releases of Ubuntu would use the Unity desktop instead of being based on GNOME.

I got the idea for this, now increasingly, long winded post when I read a note on Jono Bacon’s blog about the need for respect in open source communities. Jono is the community manager for Ubuntu and a Canonical employee, and I can’t help but think that his post arose from the Unity decision.

I think it is quite natural for people in the open source community to be a bit wary of Canonical. There are a lot of people out there who want to exploit open source and even I have wondered about Shuttleworth’s motives. I’m always suspicious of altruism (at least the in the business world) and considering the millions of dollars that Canonical has put into Ubuntu I think we are all waiting for the other shoe to drop.

But, you know, it really doesn’t matter. It’s open source. This is the main reason, while Shuttleworth may create things as good a Jobs, that he will not become the next Jobs. He could decide to change the orientation lock button to a mute button, but it would then be a simple matter to change it back, or at least make it a configurable option.

Awhile back Shuttleworth made a hiring decision that seemed rather strange to me, as this person was kind of the poster child for everything wrong with open source business. At conferences in LA, Oregon and Ohio I asked members of the local Ubuntu communities what they thought about it.

The answer? They didn’t. One guy in LA said quite bluntly that they didn’t care much about what Canonical did. This, more than anything, is why open solutions are more powerful in the long run.

Sure, it takes someone with vision like Shuttleworth to make an Ubuntu, but he doesn’t control it. That is why it has such a rabid following. Prefer KDE? Switch to Kubuntu. Don’t like some aspect of it? Fork it.

Ease of use often means the removal of options. It is one of the reasons I describe OpenNMS as a network management application platform instead of an application. It has so many options that it can be hard for a newcomer to understand how to use it, but once that learning curve is climbed it is truly powerful and empowering. Fewer options would make it easier to use initially, but then you are stuck when, inevitably, a unique problem arises that needs to be addressed. That’s why we see such a migration from other “easier” tools to our project.

Critics of open source may look at our factions and our bickering as reasons why open source will fail. I look at the fact that we can’t all get along as a strength. It allows “ideas to be tried, to fail, and to ultimately succeed” in a way that closed culture simply can not match.