New professional challenges

129 days since my last post in this blog. The earth has completed one third of a circle around the sun. 44 million people have been born and 20 million people have died on earth. Around 18.000 species have disappeared on the planet. And there is a new president at the White House. All of this and much more happened since my last post.

But what could keep me so long for posting? Work, it couldn’t be otherwise. Over a year ago we considered that eBox had already enough entity to become a company by itself, so we span it out from Warp, creating eBox Technologies S.L., getting some seed funding and starting to develop its own business model. Well, the whole past twelve months have been focused mostly on building the new organization and hiring the right people. By December, when I wrote my last post, we had already an excellent technical team (lead by our beloved CTO, Javier Uruen) and we started the enormous task of forming the management team, which until then consisted basically on I, me and myself. Now, it is up and running, and it looks really promising, with Javi Vázquez as our operations officer, Heidi as our marketing officer, Koke as our IT officer and (last but not least) Esther as our happiness officer.

However, that was not the only professional challenge I have been facing. By the same time when we founded eBox Technologies, the companies in the region decided to join and founded an association of open source businesses, where I was chosen the president. It sounds very glamorous but I can assure that being the president of a just born association means a lot of work and no glamor at all. So, we created CESLA, defined a strategic plan during 2008 and in the last few months we have been putting this plan into practice, launching the first projects and organizing the first CESLA event.

Moreover, being the main responsible for CESLA included also a site on the board of AEIA, the regional IT association. During the last few months AEIA has suffered a full renovation, including board, strategy, management, statute and even name and logo. It will be all presented in ten days, so stay tuned

And finally, right after its foundation CESLA got integrated in Asolif, the federation of open source businesses in Spain, which guarantees a site on the board for the president of each regional association. Asolif was founded around the same time as CESLA, so it needed a similar effort to be launched. Now it is finally organized and with a growing activity, thanks to the actions taken by its president Dani and its new manager Agustín.

So many things have happened in the past months. I have learned a lot and met a bunch of interesting people. My context, goals and responsibilities have changed. My points of view have evolved. I think this is a good moment to start a new stage as a blogger, close this blog and start a new one with a different approach, lined up with the new challenges I am currently facing. More information in my next (and last) post in this blog

And eBox 1.0(rc1) was presented

As I announced previously, eBox 1.0 (the first release candidate of 1.0, to be more accurate) was publicly presented last Tuesday in an event hosted at the Aragon Institute of Technology in front of some 120 managers and professionals of the IT industry in the region. During the event we unveiled the commercial strategy and the business development plan that we are following with eBox. We also explained how and why we have separated eBox from Warp, founding a new spin-off to get to the market and continue its development. From the feedback that I heard at the end of the event, people were surprised and impressed about eBox, both because of the level of its innovation and because of the business approach and results that we are having already now. It was also quite impressive (and emotional) to hear the representatives of the Government of Aragon and the City of Zaragoza praising both Warp and eBox as two great show cases

The event has had a lot of media coverage in the printed regional papers and on the online sites, such as europapress, aragoninvestiga, cenatic, opensourceworldconference or somoslibres.org among many others.

But this was not the only interesting activity on the week: on Saturday the City of Zaragoza organized (with the support from Warp) the Day of Free Software, an event combining a didactic conference with an install party. It was a great success and some 3,000 CDs of Ubuntu were given for free. It was quite a new sensation to see people queuing with their computers waiting for help to install Ubuntu in their machines.

And now I am at Malaga at the Open Source World Conference which very probably is going to be a very interesting event

Back from the first OSTTEurope

During the past 21st – 23rd September there was the first European edition of the Open Source Think Tank at Paris Hilton (I mean the hotel at Paris, not the public female-buffoon). I had heard so many good comments about its past editions at Napa Valley, CA, that I wanted to see it with my own eyes. And I was not disappointed.

I loved the format. It was an invitation-only conference gathering a relatively small group of 60-70 business people who belonged to companies strongly related to open source (vendors, system integrators, investors, end customers, etc). We were divided in groups of 6-10 people and had several brainstorming sessions during which we had to discuss a subject and to present our conclusions. It was an excellent way to learn and get everyone involved in generating the knowledge instead of sitting and getting a lecture. Moreover, the networking was much more effective, as during the brainstorming sessions you already had a glimpse on the other people’s ideas.

I learned a lot of business practices of other open source vendors and many opinions about the current situation and where we are heading to. The attendants were a mixture of Europeans and Americans so the variety of opinions was pretty rich, but anyway there were clear patterns and differences between both sides of the Atlantic. In Europe open source has a strong ideological meaning and it is seen as a way to avoid vendor lock-in and to foster local innovation; its adoption is lead mainly by the public sector; OSS vendors look for service-based models and have a channel approach to market. On the other hand, in America the open source adoption is lead by businesses wanting to cut costs; there is an obsession with license compliance and copyright issues; vendors have a product-centric approach to market and dual license is the de facto business model for open source. You can see an excellent summary of these differences in Larry Augustin’s blog, who was also in the think tank.

It was a good conference, one of the few where you can be sure to learn new things and make valuable contacts. I think I can already start booking for the next edition

Linux finding its place in the desktop

It feels weird not to have written anything in the blog for a whole month. Well, the August holidays (which I used to take a tour around a bunch of beaches: Northern Portugal, Vigo – where Javi was an excellent host -, Zaragoza – yes, we too have a nice little beach! -, Barcelona and Peñiscola) together with some business trips and hectic time before and after the holidays explain mostly this inactivity.

As usual, my return to work was focused on answering emails and reading news, a lot of them regarding Chrome, Google’s last novelty. Although I believe it is good to have another browser in the market and that Chrome has some nice innovations, I do think there is way too much hype with it, as with almost anything coming from the Googleplex.

However, I found some news that went almost unnoticed during August: according to Gartner Linux market share is now 4% of the desktop and it has a fast-grow opportunity in the netbooks (also known as ultra-low-cost notebooks). This should be terrifying news for Redmond. Last year we witnessed how Mac was winning the high-end of the desktop market and this year Linux seems to have good chances to succeed in the low-end. That would leave Windows with the never-attractive middle position: not good enough to compete in differentiation, not efficient enough to compete in costs. By the moment Windows is by far the dominant player of the market and it has lots of financial resources to compete, but its future looks gloomier every day.

Linux has been around for many years and it has managed to reach a first-class position in the server market but, though there have been continuous efforts to push it in the desktop, it has never really succeeded there. The question popping up to our minds is “why now?”. In my opinion there are four major trends converging right now that are lowering or eliminating the main barriers for Linux in the desktop:

1. Linux easiness and usability has improved enormously since Ubuntu entered the game and focused on desktop users. For an average user it is theoretically much easier to work on Ubuntu now than on Windows Vista. But usability alone does not make users to switch massively, right?
2. Desktop applications are moving to the Internet and the operative system is becoming just the platform to run our browser. Window’s greatest value (and the highest barrier for competitors) has always been the ecosystem of applications compatible with its environment, but this value is shrinking fast and moving to the web.
3. The use of Firefox is spreading like wildfire, becoming the #1 browser in some countries. This is forcing web developers to comply with the standards and not create web sites only for Internet Explorer, removing thus another serious barrier for Linux.
4. These trends have allowed hardware vendors to seriously drop prices in their desktop offerings, as users do not require the state-of-the-art in hardware but just an easy and economic way to access the Internet. The results are extremely cheap small laptops designed with connectivity in mind and with a relatively low computer power, which are given even for free by some distributors! The natural choice of the operative system is definitely Linux. Windows Vista is not an option, firstly because it does not allow distributors to create their own brands and customize the look-and-feel of the desktop; secondly, because it would increase the costs of netbooks in some 25%; and thirdly and more important because it would not run properly on such “underequipped” hardware. Moreover, the current economic crisis is going to help this trend and make users more price sensitive.

Interesting times for the desktop market, which in a relatively short time might leave its monopolistic structure and become a more complex environment with very different players.

Untangle tangling with eBox

A few days ago Isaac posted about Untangle’s new marketing strategy, which is to aim for the words ‘ebox’ and ‘ebox-platform’ with Google ads (nothing new so far) and expressly mention eBox in the ad’s headline (Wow! That’s new!). Here is a sample:

Well, tactically there is nothing wrong with it, though in my opinion it is a major strategical error for several reasons:

1. eBox and Untangle are not direct competitors. Untangle is a network access and security software, carefully packaged to be easy to deploy and targeting small organizations. On the other hand, eBox covers many more features such as user, resources, communication and infrastructure management. It is not only carefully packaged but it also implements a very tight integration of different services, automating most of the tasks and avoiding the possibility of misconfiguring the network. It has a development framework and a web services interface to easily extend its functionality and connect with other applications. Finally, current eBox users range from home offices (eBox in a single installation) to large organizations with several thousands of users (eBox installed in several machines optimized for different tasks). In short, Untangle is a niche product, eBox is a multi-niche technology.
2. Efforts should be aimed to compete with close source solutions, already focused in rich segments of the market. There is a load of competitors with a similar market target than Untangle, such as SonicWall, Fortinet, Watchguard or Juniper, and being their open source alternative could be easy to position and a good long-term move.
3. Untangle is a California-based company with almost 20 M$ funds in series A and B. eBox is a self-funded startup in Spain. With such ads Untangle is positioning itself at a similar level than eBox from a market point of view. Technically there is no doubt that eBox is superior in most aspects, but Untangle has way more funds to develop a more established market position than eBox. However, they choose to show to the market that we are at a similar level. I have nothing against it but I do not think it is very clever to do so. In fact, I feel flattered and they have given us a good story to tell investors, like “Hey! Without any external funds we made a 20 M$ backed, California-based company feel threatened. Don’t you think we might be a good investment opportunity?”. Thanks, dudes!

Iron Sky teaser trailer released

Last month Energia Productions released the teaser trailer of Iron Sky, their new movie and it looks really promising. Energia Productions is a Finnish production company founded by the creators of Star Wreck, the first full-length “free” movie, released under a Creative Commons license and developed by a group of Finnish students during seven years in the same way as most open source projects do. They were supported by a worldwide community of fans helped making it the most popular Finnish film of all time, with around 4 million viewers.
After their huge success of Star Wreck, which was shown on Finnish national television YLE TV2, on the Belgian national television channel Canvas, and Italian TV-channel Jimmy, they are back with their new project, Iron Sky. This time they have funds backing their project and the contribution of the award-winning Finnish author Johanna Sinisalo. And the plot could not be better:

As World War II comes to an end in 1945, Hans Kammler and other German scientists make a breakthrough in anti-gravity research. Nazi spaceships are sent to the dark side of the Moon to found the military base Schwarze Sonne (Black Sun). Their plan is to build a powerful fleet and return to conquer Earth. The film is set in the year 2018 when their descendants finally return.

But apart from their new movie the most exciting outcome is that, if Energia Productions succeeds in developing a sustainable and profitable organization based on their free model, they can revolutionize the whole film industry and show a business model that can be replicated by other studios elsewhere.

ServOSS Seminar

Last Tuesday there was a seminar at Helsinki hosted by COSS and organized within the context of the ServOSS project. ServOSS is a research project lead by Nina Helander (Tampere University of Technology) and Mikko Puhakka (Helsinki University of Technology) aiming at analysing young companies with open source business models in order to extract some conclusions that can help to better understand how to launch sustainable open source based companies.

As a founding member of Warp and eBox I was invited to participate in the seminar and talk about some lessons on open source we learned in the four years since we started, both from a systems integrator’s point of view such as Warp as well as from a product based business’ such as eBox. It seems people liked very much about my presentation and they found it interesting. Seeing Finns asking so many questions in a conference was a new experience to me

Jing Jing Helles made a very interesting presentation, giving some hints about how the Chinese software market works and what should be the right approach to enter that market. I particularly liked a Chinese proverb she mentioned, which summarizes one of the main ideas pretty well:

Government policy is like the moon. It is different in the middle of the month than it is on the first day of the month. Government policy is also like the sun. When it shines on you, you flourish.

There were also presentations from other Finnish companies explaining their views and experiences with their open source based businesses, such as IBM (Finnish office), Mediamaisteri, Nemein and Cubical Solutions. Unfortunatelly, with my poor Finnish I could not understand all of them, but I still managed to catch a few ideas, about the customers perception on open source and how to overcome their fears, about the way they organized their companies internally, about their challenges of partnering with an open source vendor, … I was quite surprised by the level of internationalisation that all these companies seem to have, at least regarding their customers, so different to the regional focus in most Spanish startups.
This has been a very interesting trip to Finland, and also pretty nice, as the weather seems to be much better than in Spain

III Día do Emprendedor

Last week I was invited to participate as a speaker in the Entrepreneur Day at Galicia (día do emprendedor in Galician) to explain the different ways we have used to finance the foundation and growth at Warp and the development of eBox.

The Entrepreneur Day consists of a series of events celebrated in each region in Spain to encourage entrepreneurship among youth. In these events the main structure, materials and funding are provided by the Ministry of Industry but the way it is organized depends on each region. I think the formula is pretty good because the economical, demographical and social context can be very different from one region to another. Moreover, this way new ideas can be tested and reused in following editions.

As far as I know, Galicia is the only region that programmed a session focused on describing open source models and showing examples of companies that have succeeded based on collaborative technologies and open source software. It was great that Javi Vazquez, the CEO of Igalia and the one responsible for the open source session, managed to bring together interesting people such as Juan Freire, Eduardo Manchon or Dani Armendariz among others, sharing great stories with the audience.

The next day I was invited to attend a meeting of AGASOL, the Galician association of open source companies, where I could meet more players of our industry and learn about the ways they coordinate and get organized over there. With more than 20 companies registered in AGASOL and getting new members every month, it looks like there is something brewing in Galicia and I think they can teach quite a few lessons to the rest of Spain.

With all this pro open source environment, together with the natural kindness of Galicians, the beautiful old town and the night life at Santiago, Galicia has won me over

Update: other bloggers have also their summaries of the event, like Juan Freire, Alfredo Romeo or Andres Maneiro.

The MySQL Model

I have always considered MySQL as the best model for open source companies. Their approach to the market, the execution of different business models, their relation with the community or the way their work internally as a virtual organization have shown an innovative and successful example of how an IT company in the 21st century can be managed.

The agreement with Sun, announced last January, was the crowning point of all the efforts put in the company since the beginning, proving the success of their innovative model. Since then I have been trying to put some order in my ideas about their model and summarize them in a few blocks that could serve as a quick guide to emulate their success. I discussed my ideas with Henrik Ingo, a friend of mine who joined MySQL recently, and he has helped greatly bringing his experience and insights on the matter. Here are the 10 points that resulted from our discussion about the MySQL model:

1) Market focus

Ignacio: Most open source startups face a similar dilemma when going to market. Should they become the open source, cheap alternative to the expensive, overfunctional and well-established competitors? Or should they do things differently and focus on unattended needs or new users? The first option is usually the easiest way because the market and conditions are already defined. MySQL chose the second option, riskier but more exciting and fun. Instead of competing directly with IBM, Oracle, and Microsoft in the
high end database market, it cleverly focused on the new flourishing markets of the Internet applications. Mårten is insisting on this point at every chance he gets with his motto “The Best Online Database”. It was a risky bet then but now MySQL is definitely the Web 2.0 database, and from their huge user base there have arisen some large customers, such as Google, Youtube or Yahoo!, with massive deployments and great success cases.

Henrik: Mårten always says that MySQL shouldn’t be a technology driven and not even a customer driven company, but market driven. It took me a long time to understand what that means – especially that being too focused on your current customers could potentially be a bad thing too. By focusing on a new and rapidly growing market, you don’t have to compete against any incumbents, and better yet, by just keeping your market share you are growing every year. Most importantly, MySQL has in fact been part of defining the Web and Web2.0 markets – not just playing the game by its rules but creating the rules!

2) Revenue model

Ignacio: MySQL is definitely one of the pioneers in the difficult task of making money with software that is free. During its 13-year history, the company has followed virtually all the known revenue models in the open source world. From a dual license for OEMs, to support, consulting and training services or the more recent subscription model, MySQL is continuously finding the optimal combination with the familiar and not-so-familiar models.

Henrik: Being different is hard enough (most people just lack the imagination required) but being different and still profitable, this is one of the hardest things in this list I think. From the outside most people don’t realise how much experimentation and development is put into the business model. It seems like from the start MySQL has tried a new business model each year.

For instance, MySQL wasn’t even GPL’d before 2001 (I think). Before that Monty and David used a system where Linux users got it for free but Windows users should pay. More like shareware than pure Open Source I guess? When changing to GPL the revenues dropped to a fifth of what they were previously (as many Windows users stopped paying). Yet, soon thereafter revenues grew faster than ever before – it turned out to be the right thing to do.

Kaj always likes to say that MySQL is like building an airplane and flying it at the same time.

3) Marketing and sales model

Ignacio: I must admit I am not an expert in this field but I think it is not too hard to realize that MySQL’s sales model differs substantially from other more traditional IT companies. The thing that marvels me the most is the intensive use of the Internet to find leads, to strengthen the word-to-mouth effect of the community, to tightly coordinate with partners or to increase awareness of MySQL’s capabilities, for example with their free on-line seminars. Well, this should be natural for any open source company, but it is not easy to align the views of the marketing and sales team with a virtual, collaborative model.

Some time ago, somewhere, I read that MySQL spends only 10% of its annual budget in marketing, whereas Microsoft spends 50% (I might be wrong in the exact amounts, so don’t use this as a reference). On the other hand, MySQL’s revenue has been doubling every year, whereas MS’s increase has been around 10%. I know they are not comparable companies, and that it is harder to double your size when you are a $50 Bn company than when your revenue is 1,000 times lower. But still, it is undoubtedly clear that MySQL’s marketing expenditure is far more effective than MS’s.

4) Distribution and integration with other technologies

Henrik: As long as I can remember, MySQL always was there – and there are many angles here.

Basically in the Open Source and/or Linux world the battle was between 2 players, MySQL and PostgreSQL. However, MySQL (until some years ago) was the only alternative that was also available for Windows. And when 90% of Web servers were running Linux but 90% of web developers used Windows at home, MySQL was their favorite choice. And remember, they used modems, so most of the time the developer was disconnected from the server, so running MySQL, PHP and Apache also on Windows was a must to get things done. Most people I talk to don’t agree with this, but I think the availability on Windows may have been the decisive factor in MySQL becoming the nr 1 Open Source and Web database.

Then MySQL was also the choice of most web hotels. In fact, in 2001 or so I was a Postgres fan and did all DB development on Postgres. But then I had to make some projects where the database was going to be hosted by a web hotel, and it turned out all of them just offered MySQL and very few had Postgres. So I had to start using MySQL, and I was quite ok with that, but in the beginning it really was a choice that was done for me.

And then finally of course MySQL has been the default choice in so many CMS and other web applications, tutorials and so on, beginning with Perl and immediately after with PHP.

Ignacio: I totally agree. The integration with Windows helped decisively to enter the new market of web developers. Actually, the Windows version of MySQL still accounts for over 40 percent of the downloads, almost half of the total.

On the other hand, a lot of MySQL installations on Linux are not downloaded from the web site but come embedded in a distribution. In my opinion, the decision of releasing the code under the GPL helped greatly in getting integrated in every Linux distribution, fostering its adoption by the open source community and ultimately leading to the creation of the LAMP stack. The integration with Linux, Apache and PHP was the right choice, both from the technical and from the market point of view. Being in the middle of the LAMP stack (great name, by the way) gave instant and global visibility and it positioned MySQL immediately in the desired segment of the market.

5) Internal organization

Ignacio: The thing I admire the most in the MySQL model is that the whole organization works virtually. The way it is managed in every aspect with 70% of its employees working from home in around 30 different countries is just amazing. But I do think it is the way to go nowadays and MySQL is showing the path.

Six months ago I shared a dining table with Monty (one of MySQL’s founders) in a conference in Finland and he was eager to explain in detail the company’s internal organization as a virtual entity. The idea behind it is to be able to hire the best people in the world wherever they live. As Monty said, if someone is good, it’s worth doing anything to hire him/her, even if it means to increase complexity in the administration or to found a sister company in a new country just for that employee.

Many people think that the main idea behind a virtual company is to reduce structural costs. In fact I thought so before meeting Monty. But the truth, as he explained, is that costs stay in the same level that in a traditional organization, because people need to meet in person twice or thrice every year, and traveling becomes expensive. But you definitely get an increase in motivation and productivity, which, from the facts that I understood, can be estimated in at least a 15% increase.

Henrik: There is a thrilling story in the MySQL history book employees received this year, which is about MySQL’s first Non-Scandinavian employee, Sinisa from Belgrad, Serbia. Sinisa was on-call for support and was giving phone support to one of MySQL’s customers, a US defense contractor. The thrilling part of the story is, at the same time, US Navy Jets were dropping bombs into Belgrade!

But this story highlights the international and global nature of MySQL’s organisation at a very early stage already. This is of course not uncommon to any other Open Source project either.

6) HR policy

Henrik: One thing that struck me when starting to work for MySQL was he high level of seniority throughout all employees. When Monty says that the point of a virtual company is to hire the best people in the world – yes, they mean it. You could already see this when looking at the open job positions, Senior Engineer this, Architect that. As a rule, when people join MySQL they already have several years of experience, often from some other database company like Oracle or Sybase.

Recruiting is hard – I know that myself from my previous jobs. How do you know which are good? The obvious way obviously is that engineers are mostly hired from the Open Source community and often specifically the MySQL community itself, so they already have shown their talent publicly when they are hired. But there are many positions where this isn’t possible. Even in such cases it seems to me that a good way to get hired with MySQL has been to somehow be known already: Be related to someone, be a friend of someone, or even just being Scandinavian might help, anything. I also know of several cases where someone joining MySQL has previously been a customer.

Being a virtual company, it is my understanding that MySQL never hired people without meeting them though. This is important to understand, because it typically means the cost of a job interview will be hundreds of Euros due to flight tickets.

MySQL also seems to rely on the technique I’ve myself seen to work well, which is to have as many people as possible interview a candidate. On the other hand I don’t think there were any tests or such, at least for me there weren’t. Again, candidates were selected on the basis of already being known to be as good as they claim to be.

For HR policies I think MySQL was best known for its Scandinavian 5 week vacation applied worldwide. Of course, being a Scandinavian myself, there wasn’t anything special in it for me, but I think it again highlights an aspect of being a virtual company. While the employment legislation realities may be different across countries, MySQL tried to treat all nationalities equally. Indeed, in some countries people were employed but in some countries the employees were actually contractors. But internally you couldn’t tell which were which, contractors were never treated as “externals” or anything.

7) Partners ecosystem

Ignacio: We have been MySQL training partner for more than two years now. What we have learned from that experience is that the kind of relation you can get with MySQL as a partner is almost as feeling an integral part of the company itself. From the direct contact, close collaboration and share of revenue it is easy to realize that MySQL seeks a long-term relation with its partners, and it is ready to sacrifice some short-term profits in order to drive opportunities for its partners.

Moreover, the whole MySQL’s Conference & Expo is clearly an event especially organized to increase visibility for partners. It is really an ecosystem where you get the opportunity to grow and develop as a part of a bigger entity.

Henrik: Even for big companies having a good partner network is essential, nobody can do everything by themselves in this world. For a small company it is even more true, of course. One way to think of this is, when do you remember first thinking of MySQL as a significant player in the database world? I think for me it was 2000-2001. For some “significant” may have been later. Yet the company behind MySQL was ~10 persons in 2000 and ~100 in 2003. (And of course, by the more conservative standards, MySQL was too small to be significant even right until the Sun acquisition.) In fact what inspires me about MySQL is the fact it has been able to act as a global player with such a small team, providing consulting and training to customers around the world. This is not only thanks to the partners, but also a testament how Internet and globalisation in general has changed the world.

Development model

Ignacio: There are many ways to organize a community around an open source project, but they all require a strong leadership. MySQL chose to keep the development in-house, which is the natural decision in a company basing its business entirely on the product. It has the main advantages of keeping a standard coding style and avoiding copyright issues. On the other hand, by ensuring the openness of the code it gets quickly the main benefits of an open source project, namely bug reports, documentation and visibility. Moreover, a bunch of extra developments, such as connectors, UIs or patches, where coded by members of the community, which apart from completing the product became a good source for recruiting.

Henrik: This is an interesting topic right now, because it is also relevant to many other Sun projects. The fact is, MySQL is developed in-house to a higher degree, and we may in fact be missing out on something. Of course, the fact that the product is sold through a dual licensing model may deter some Community contributors, but in my understanding this is not a significant problem – most Open Source
contributors are quite ok with others making money out of your contributions anyway. In fact, there are patches out there at this very moment that we are not able to absorb for various reasons – so the problem is the exact opposite as you’d assume. The reasons are plentifold, legal (contributor agreement could be better), non-modular codebase and the fact that a lot of development talk tends to gravitate to company internal mailing lists.

I think a good benchmark for MySQL should be the Linux Kernel, of which there is a good whitepaper by the Linux Foundation. What are we missing out on? 14% of contributions from non-paid hobbyists is a good start. We should have at least that amount of community contributions too!

All this being said, the commercial driven development has been good for MySQL, and the product has benefited significantly from the growth of the business enabling the company to hire more great coders. In fact, the prime reason why the MySQL community is so small is that MySQL constantly kept hiring all community members – I’m sure we all agree this is a GOOD THING.

9) Relation with community

Ignacio: In spite of being a company, which sometimes raises mistrust in some community movements, MySQL has so far managed to keep a very good relation with the open source community. Even when it launched the Enterprise version, a closed fork of the database, it managed to explain well its decision and avoided a lot of critics. In my opinion, the reason it managed so well was because it kept a the same functionality available for both versions. There are other aspects that help explaining its good relation, such as the presence in the blogger ecosystem, the sponsoring of some contributors to present their developments at the MySQL Conference or the fluent communication between core developers and community. However, there is now a big challenge, as MySQL announced plans to publish some very demanded functionality only for paying customers. This is raising concerns in the community, even outrage, and can damage seriously their relation. Anyway, I am confident MySQL will listen to its users and get to a compromise solution good enough for everybody.

Henrik: For me personally this is an interesting part of being in Open Source business, the feedback and close ties with your users is so much stronger than it was in Pre-Internet times. So in effect a good manager in an Open Source company has to have some understanding and active practition even in issues like ethics and philosophy, and let’s be honest, also populism The issues are not black and white or rational, but you do need to know how to live by them. Note by the way the strong language used by these otherwise quiet nerds! It’s like “cheating on your wife”: bad; “Doing closed source code”: unethical!

10) Time frame

Ignacio: Something many new entrepreneurs forget when trying to emulate the MySQL model is that its $1Bn value was not built in a day, but it took 13 years of hard work and step-by-step evolution. Of course there are examples of huge valuations in really young companies (Youtube, Facebook, Xensource, …), but for each success case there are thousands of failures. The way to really follow MySQL’s model, is about adding real value today, not about thinking of how to sell the company tomorrow.

Henrik: Even with MySQL there was an option to “get rich quick”. Monty, David and Allan were offered around 50M$ to sell the company during the dotcom bubble. While, according to Monty, it was hard to say no thanks to such amounts of money, they chose to continue looking for an investor that let them stay in control as majority owners. Now after the Sun deal, these guys are even richer than 50M$, but guess what – they intend to stay with their original mission: providing superior database technology available and affordable to all, now with an added boost from one of the biggest IT companies in the world.

You can find this same 10 points in Henrik’s blog.

Update by Henrik: We are getting some feedback regarding the factual correctness of my last point here, so I just want to point out that while these “during the bubble…” stories are always entertaining to hear, the real point is not how much money possibly was offered for MySQL, but rather that the founders were reluctant to sell away majority too early. One reason even being that it is hard being a revolutionary if you’re not even in control of your own business. (This point came up during an interview I did with Monty at the May 2008 Open Tuesday event in Helsinki last week, which I promise to blog about real soon now, honest…) The irony of course is that if “being a revolutionary” was the prime motivator, it is funny that in the end the founders ended up with even more money than a quick sell would have given them. This is a correlation I strongly believe in by the way (Linus Torvalds…).

Windows losing share

A recently published Forrester Research report states that during the year 2007 Windows lost 3.7% of its enterprise desktop market. On the other hand, Mac mounted to 4.2% and Linux to a meager 0.6%. This should be not too bad news for a company holding still more than 95% of the market, except for the fact that Mac more than tripled its share and Linux multiplied its by six… in just one year! In the meanwhile, Windows Vista, Microsoft’s biggest hope in maintaining its share in the long run, has managed to get just 6.3% of the market.

Now, this could be considered as a temporally slump before users are forced to Vista by the nature of the market or before Microsoft releases its new Windows version. The situation becomes more challenging when considering an Evans Data report on developer’s trends: it seems that less than 65% of software developers targeted Windows as their platform as opposed to 74% in 2006, while the targeting of Linux by developers increased by 34 percent.

Microsoft is in crisis and is risking a major collapse. So, what is Redmond’s response?

1. Starting to embrace open development models: this is a step in the right direction but not enough, as long as it does not adapt its revenue model
2. Discontinue support for XP to force migration to Vista while the development of Windows 7 is sped up: wrong, wrong, wrong. Windows is not anymore the only viable option in the desktop market so going against what users want is not anymore reasonable from a business point of view
3. Press OOXML as an ISO standard without any clear improvement to existing ODF standard and by using very questionable tactics: again wrong. When losing market share and working to gain the developer community’s support, the most logical strategy does not seem to be to seriously damage one’s image and credibility. It is just the best way to start losing large and influential customers.

I could continue, but I think I made my point clear. Microsoft will not disappear any time soon but it is in a very serious crisis and its reaction does not seem to be up to scratch, which can only make the situation worse for Redmond.

At the OSBC 2008

Last week, after the 2nd Annual Microsoft Open Source ISV Forum, I attended the Open Source Business Conference 2008. I consider the OSBC one of the most interesting conferences in this sector, mainly because it is one of the few events where you actually learn something new in the sessions. In fact, the OSBC is the only event for which I am ready to travel 10,000 kms

This year was no disappointment. I particularly enjoyed Rob Bearden’s session (Benchmark Capital), where he linked the concepts of adoption and completeness of the offering with monetization. He also defended the subscription model, analyzing the different subscriptions offered by current OS vendors. I also loved Larry Augustin’s presentation (Augustin Ventures), where he gave an excellent analysis with good tips about how to go commercial.

I discovered r0ml Lefkowitz, an excellent speaker whom I would describe as an IT professional, philosopher and amateur historian. He gives very interesting and original points of view on what open source implies, and you always have something new to think about after every conversation with him.

I am used to attend the sessions for the CEO/CMO, and I would say that the general level of knowledge in the conference has improved from last year. For example, the patent matter was almost completely ignored and there came new suggestions for OS business, such as keeping the same binary for community and commercial versions or not to start a business until the community is strong enough.

Finally, I was invited to attend the MySQL-Sun party, a great event with lots of familiar faces, billiard tables, free T-shirts, pizza and beers. Heaven in Earth

At the 2nd Annual Microsoft Open Source ISV Forum

I am at this moment at San Francisco, after a very enjoyable Easter Holiday with my wife, driving around the US East Coast Now it is my working week at the West Coast for this year’s Open Source Business Conference. Prior to that I decided to attend 2nd Annual Microsoft Open Source ISV Forum, from which I am reporting at this very moment.

The event is on its final sessions and the main messages have already been delivered. I must admit I am impressed by Microsoft’s message, so different to what we are used to hear since open source became mainstream. It seems Microsoft is now very centered in increasing interoperability and opening access to their closed protocols and code base. They also seem to be willing to focus in the infrastructure layer (Windows Server, MS Office, SQL Server, Active Directory, …), leaving the value added applications for other vendors.

This is great news for open source and the IT industry. It looks like they finally understood that open source is here to stay, that it offers great benefits for the development of software and that going open and integrate with other technologies is the only way to stay in the market. This is a mayor shift from the messages Microsoft was delivering just one year ago.
However, I don’t think Microsoft fully understands how this shift should affect their way of doing business. No surprise they plan to continue charging for their licenses on Windows, Office, Server and so on. The surprise in their presentation came when they announced their plans to charge for patent royalties to users and vendors who use/sell products based on their Open Source Code Repository. So, “commercial” users who implement MS-based open source solutions in testing environments don’t have to pay, but if they start using them in production environments then they should pay patent royalties to keep lawyers at bay. A similar thing goes for software distributors: if they distribute the software for free there is no cost, but if they charge for it then they better pay the patent royalties.

This is quite confusing as in practice there is not a clear line dividing these cases. For example, RedHat sells services bundled on their software. They are not charging for the software itself, but they get payed every time their software is distributed. I think Microsoft still did not evaluate the null value that royalties and licenses bring to customers.
Anyway, the most important conclusion is not that Microsoft needs still a new shift in their open source approach, but that their relation with the open source ecosystem is evolving to a more cooperative way. Just one year ago it would have been inconceivable to see in a Microsoft presentation that “Open Source is a first class citizen”.