Free for All, Peter Wayner [my miracle luna book free read .TXT] 📗

various trusts for his children. Still, this cut adds up to about $468 million. Marc Ewing, executive vice president and chief technology officer, also ended up with a similar amount of money divided between trusts and his own pocket. Matthew Sulzik, the president, who joined in November 1998, got a bit less (2,736,248 shares) in his pot, but he was a relative newcomer. The big investors, Greylock IX Limited Partnership, Benchmark Capital Partners II, and Intel, split up the big part of the rest of the shares.

Now, what happened to the boys who wrote the code? Did Richard Stallman get any of it? Did Linus Torvalds? Some of the major developers like Alan Cox and David Miller already work for Red Hat, so they probably drew shares out of the employee pool. There are thousands of names, however, who aren't on anyone's radar screen. They've written many lines of code for naught.

Red Hat tried to alleviate some of the trouble by allocating 800,000 shares to "directors, officers and employees of Red Hat and to open source software developers and other persons that Red Hat believes have contributed to the success of the open source software community and the growth of Red Hat." This group, occasionally known as the "friends and family," was a way to reward buddies. Red Hat drew up a list of major contributors to the open source distribution and sent out invitations.

"Dear open source community member," began the e-mail letter that Red Hat sent to about 1,000 people.

In appreciation of your contribution to the open source community, Red Hat is pleased to offer you this personal, non-transferable, opportunity.. .. Red Hat couldn't have grown this far without the ongoing help and support of the open source community, therefore, we have reserved a portion of the stock in our offering for distribution online to certain members of the open source community. We invite you to participate.

Many programmers and developers were touched by the thoughtfulness. The list probably wasn't long enough or inclusive enough to pull everyone into the circle, but it did do a good job of spreading the wealth around. The plan began to backfire, however, when ETrade began to parcel out the shares. Everyone who made it onto the list filled out a form listing their net worth, and ETrade attempted to decide who was a sophisticated investor and who wasn't. Some folks who had little money (perhaps because they spent too much time writing free software) were locked out.

One contributor, C. Scott Ananian, wrote about his rejection in Salon magazine, "I filled out the eligibility questionnaire myself. I knew they were trying to weed out inexperienced investors, so on every question that related to experience, I asserted the maximum possible. I knew what I was doing. And it was my money, anyway--I had a God-given right to risk it on as foolhardy a venture as I liked."

The article drew plenty of flack and murmurs of a class action lawsuit from the disenfranchised. A discussion broke out on Slashdot, the hardcore site for nerds. Some defended ETrade and pointed out that a Red Hat IPO was not a lock or a guarantee of wealth. Too many grandmothers had been burned by slick-talking stock salesmen in the past. ETrade had to block out the little guys for their own protection. Stock can go down as well as up.

Steve Gilliard, a "media operative" at the website NetSlaves, wrote, "If the Red Hat friends and family group were judged by normal standards, there is no brokerage in the U.S. which would let many of them buy into an IPO. In many cases, they would be denied a brokerage account. Poor people are usually encouraged to make other investments, like paying off Visa and Master Card."

Others saw it as a trick to weed out the pool and make sure that E*Trade could allocate the shares to its buddies. The more the small guys were excluded, the more the big guys would get for their funds. In the end, the complaints reached some ears. More people were able to sneak in, but the circle was never big enough for all.

20.1 WORLD DOMINATION PRETTY SOON?

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Red Hat's big pool of money created more than jealousy in the hearts and minds of the open source world. Jealousy was an emotional response. Fear of a new Microsoft was the rational response that came from the mind. Red Hat's pool of cash was unprecedented in the open source community. People saw what the pile of money and the stock options did to Bill Gates. Everyone began to wonder if the same would happen to Red Hat.

On the face of it, most open source developers have little to worry about. All the code on the Red Hat disk is covered with a General Protection License and isn't going to become proprietary. Robert Young has been very open about his promise to make sure that everything Red Hat ships falls under the GPL. That includes the distribution tools it writes in-house.

The GPL is a powerful force that prevents Red Hat from making many unilateral decisions. There are plenty of distributions that would like to take over the mantle of the most popular version of Linux. It's not hard. The source code is all there.

But more savvy insiders whisper about a velvet-gloved version of Microsoft's "embrace and extend." The company first gains control by stroking the egos and padding the wallets of the most important developers.

In time, other Red Hat employees will gradually become the most important developers. They're paid to work on open source projects all day. They'll gradually supplant the people who have day jobs. They'll pick up mindshare. Such a silent coup could guarantee that Red Hat will continue to receive large influxes of cash from people who buy the CD-ROMs.

There are parts of this conspiracy theory that are already true. Red Hat does dominate the United States market for Linux and it controls a great deal of the mindshare. Their careful growth supported by an influx of cash ensured a strong position in the marketplace.

In November 1999, Red Hat purchased Cygnus Solutions, the other major commercial developer of GPL-protected software, which specialized in maintaining and extending the compiler, GCC. Red Hat had 235 employees at the time and Cygnus Solutions had 181. That's a huge fraction of the open source developers under one roof. The Cygnus press release came with the headline, RED HAT TO ACQUIRE CYGNUS AND CREATE OPEN SOURCE POWERHOUSE.

To make matters worse, one of the founders of Cygnus, Michael Tiemann, likes to brag that the open source software prevents competitors from rising up to threaten Cygnus. The GPL guarantees that the competitors will also have to publish their source, giving Cygnus a chance to stay ahead. In this model, any company with the money and stamina to achieve market dominance isn't going to be knocked down by some kids in a garage.

Those are scary confluences. Let's imagine that the conspiracy theory is completely borne out. Let's imagine that all of the other distributions wither away as corporate and consumer clients rush head over heels to put Red Hat on their machines. Red Hat becomes the default in much the same way that Microsoft is the default today. Will Red Hat have the power that Microsoft has today?

Will they be able to force everyone to have a Red Hat Network logon button on their desktop? Perhaps. Many people are going to trust Red Hat to create a good default installation. Getting software to be loaded by default will give them some power.

Can they squeeze their partners by charging different rates for Linux? Microsoft is known to offer lower Windows prices to their friends. This is unlikely. Anyone can just buy a single Red Hat CDROM from a duplicator like CheapBytes. This power play won't work.

Can they duplicate the code of a rival and give it away in much the same way that Microsoft created Internet Explorer and "integrated" it into their browser? You bet they can. They're going to take the best ideas they can get. If they're open source, they'll get sucked into the Red Hat orbit. If they're not, then they'll get someone to clone them.

Can they force people to pay a "Red Hat tax" just to upgrade to the latest software? Not likely. Red Hat is going to be a service company, and they're going to compete on having the best service for their customers. Their real competitor will be companies that sell support contracts like LinuxCare. Service industries are hard work. Every customer needs perfect care or they'll go somewhere else next time. Red Hat's honeymoon with the IPO cash will only last so long. Eventually, they're going to have to earn the money to get a return on the investment. They're going to be answering a lot of phone calls and e-mails.

NEW

Most of this book frames the entire free source movement as something new and novel. The notion of giving away free source code is something that seems strange and counterintuitive. But despite all of the gloss and excitement about serious folks doing serious work and then just giving it away like great philanthropists, it's pretty easy to argue that this has all been done before. The software world is just rediscovering secrets that the rest of the world learned long ago.

Giving things away isn't a radical idea. People have been generous since, well, the snake gave Eve that apple. Businesses love to give things away in the hope of snagging customers. Paper towel manufacturers give away towel hardware that only accepts paper in a proprietary size. Food companies give coolers and freezers to stores if the stores agree not to stock rival brands in them.

In fact, most industries do more than just give away free gifts to lure customers. Most share ideas, strategies, and plans between competitors because cooperation lets them all blossom. Stereo companies make components that interoperate because they adhere to the same standard. Lawyers, engineers, and doctors are just some of the people who constantly trade ideas and solutions with each other despite the fact that they work as competitors. A broad, central, unowned pool of knowledge benefits everyone in much the same way that it helps the free software community.

The real question is not "Who do these pseudo-commie pinkos think they are?" It's "What took the software industry so long to figure this out?" How did the programmers who are supposedly a bunch of whip-smart, hard-core libertarians let a bunch of lawyers lead them down a path that put them in a cubicle farm and prevented them from talking to each other?

Recipes are one of the closest things to software in the material world, and many restaurants now share them widely. While chefs once treated them like industrial secrets, they now frequently give copies to magazines and newspapers as a form of publicity. The free advertisement is worth more than the possibility that someone will start cloning the recipe. The restaurants recognized that they were selling more than unique food. Ambiance, service, and quality control are often more in demand than a particular recipe.

When the free software industry succeeds by sharing the source code now, it's capitalizing on the fact that most people don't want to use the source code to set up a take-no-prisoners rivalry. Most people just want to get their work done. The cost of sharing source code is so low that it doesn't take much gain to make it worth the trouble. One bug fix or tiny feature could pay for it.

21.1 SHAREWARE IS NOT OPEN SOURCE AND OPEN SOURCE ISN'T FREE

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The software industry has been flirting with how to make money off of the low cost of distributing