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Don't be taken over, take over!

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memenode's picture
User offline. Last seen 10 weeks 4 days ago. Offline
Joined: 2004-07-12

Isn't it interesting how humble can the Free Software economy corporations be? Sun Microsystem admitting its past mistakes and turning to the community with full respect, and now RedHat advising startup firms to grow instead of just being taken over by a bigger corporation like Google, while humbly admitting that even RedHat is still learning how to scale.

RedHat? They are a synonym for a pure Free Software business success. I think that of all big corporations currently involved with Free Software RedHat is the only one which grew purely from the Free Software business and who employed any proprietary software strategies the least! And today it is huge, and hugely imitated at that (just look at Novell and Oracle for example).

And now its CEO comes out and say they're still learning? Isn't that refreshing? Smiling

Anyway, enough soaping around.. I think he has a very good advice to give. Starting a business only to make it attractive to Google, Yahoo, Microsoft or whoever to buy it out is just feeding the existing beasts. It does result in innovation as startups strive to make something new and big corporations are then attracted to it and want to move it further, but imagine if more of those startups passed the offers of being bought out and strived to grow into new Googles, RedHat's, Novell's, Suns, the big players, the ones who will be able to buy others out instead of being bought out themselves.

That gives the existing big players enough incentive to keep on their toes. If they can just buy out all the competition they can easily turn into stale big players similar to Microsoft. But when small players grow into serious competition, everyone is kept awake, and the industry moves faster.

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User offline. Last seen 11 years 27 weeks ago. Offline
Joined: 2007-02-09
I guess, considering the

I guess, considering the mentalities of people who frequent here, I figured this was a MS vs Libre thing. Smiling

It was a refreshingly false assumption.

I think there's something said, if you read between the lines, about these statements. Both were said of companies that hae a strong Open Source and actually in both cases, Libre, presence.

When something other than profit drives you, you can be profitable.

Passion is a wonderful thing. Smiling

User offline. Last seen 12 years 2 weeks ago. Offline
Joined: 2006-03-10
After RedHat spent big bucks

After RedHat spent big bucks on JBoss (2006-Apr-10), I guess that made investors really shaky about the company and they walked. They may have wondered why the heck they would care about spending cash on a J2EE Server product -- what benefit it would give them in the long run. Why no one seems to make big news about this, I'll never know. It got so bad that they were DELISTED from NASDAQ (2006-Dec-12) and they had to re-enroll with NYSE in order to stay as a public company, and I'm sure that cost them a pretty penny and made them really nervous.

Red Hat Profit Falls

As well, the owner of JBoss, Marc Fleury, didn't like working for RedHat and something happened. No one knows the absolute truth on that, but there were news reports that Marc didn't leave RedHat on a good note.

Additionally, RedHat reported lower earnings this quarter and when you look to find out why, you see that RedHat had trouble getting cash from sales of training and update subscriptions. (Makes you wonder if that's the only way that RedHat is making money these days, rather than selling their free software or selling consulting for their free software.)

So, all and all, perhaps the JBoss acquisition was a bit foolish. Not to say that we didn't all ooh and ahh about it and wish it were us taking those golden parachutes.

I mean, Marc Fleury had a heck of a lot of sweat equity in that business. His wife was pregnant when he got laid off from Sun. They lost their house from that. The market around 9/11 timeframe was terrible. They were forced to move in with his wife's parents. So he's floundering around wondering what to do and what does he do? He says, "I'm going to get a community together and we're going to build an entire development product, a massive thing, and give it away for free. Then, I'm going to charge for everything else or charge if they want me to burn it on the CDR for them." Marc's wife, a bit reluctant of course, said, "Okay, here's the deal. You need to make $70K from the first year of this." Sure enough, come Christmas, he tallied it up and proved to her that he had earned $100K. Therefore, she jumped on board and was intrumental in managing the company tech support. They grew the business rapidly after that and took it into a multimillion dollar company with 10-15 employees, I believe. They were rolling along, bringing in tens of millions, and then RedHat wants to buy out this company for a phenomenal price of $350M in cash and stock.

So, Marc did very well, but RedHat didn't fair so well. Perhaps they learned from this.

memenode's picture
User offline. Last seen 10 weeks 4 days ago. Offline
Joined: 2004-07-12
They buy out a company, end

They buy out a company, end up not doing so well with that and then advise others not to be bought out? It's kind of weird if you look at it as a possibly retrospective advice to JBoss not to let RedHat buy them. It's funny too. Smiling

But that's gotta be speculation. I guess if we are looking for some practical explanations involving some RedHat's interests behind their CEO's advice we could as well say that after acquiring JBoss and not doing so well they don't care about acquisitions anymore and hence don't care if small companies do or don't want to be acquired, unlike before, and hence get themselves a bit of a good reputation by advising startups not to sell out (well knowing that some of these startups could be their big future competitors).

Whatever the motivation behind it, advice on its own is a good one for reasons already mentioned.

And another thing that stands valuable on its own is the whole JBoss story, the passion, ambition and open mindedness (towards a different way of developing software) of Marc Fleury.

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