Once More unto the Breach

Startup Mechanics: CommunityNext Founders Panel

Guy Kawasaki moderated a panel at CommunityNext entitled “Founders Panel - How They Got to over 5 Million Members and What Is Next”.  In his own words, "This is the most amusing panel that I’ve ever moderated, and the speakers defied many conventions of tech entrepreneurship—in particular the ones that venture capitalists believe are 'proven.'"  The panel includes:

• Akash Garg of hi5
• Sean Suhl of Suicide Girls
• Max Levchin of Slide
• James Hong of HotorNot
• Markus Frind of PlentyofFish
• Drew Curtis of Fark

The hour long video is up on Google.  It is simply awesome.  Each of the panelists is crisp and clear.  They all tell brilliant stories.  The stories all strike home. 

• The panelists all made slightly different references to it, but at the end of the day you have to care about what you're building.  You have to have passion. Build what you know and love. 
• Each company is small and focused and they fret about maintaining the cultural integrity of the team while they grow it.
• Listen to your customers.  They will tell you what needs to be done, especially when they start to know "your product" better than you do.  (There was a great caveat about NOT listening to your customers, but this was more in the context of "how" to listen to your customers.)

Each was asked to tell the story of how they got going.  Apparently drinking is often involved.  If you're involved in a start-up or think you want to be, the video is definitely worth the hour of your time.

Three Things Steve Ballmer (and Brad Smith) Get Wrong about Free and Open Source Software

Enough, Mr. Ballmer, please. 

There have been a rash of articles over the past week on Steve Ballmer's recent statements about open source software and intellectual property during the New York financial analysts presentation.  They follow on other recent related statements around the Novell-Microsoft deal by Brad Smith, and the Progress and Freedom Foundation.  Here's what Ballmer et al get wrong:

• Customers care about patents. (The corollary that vendors sue customers over patents, and that this is why customers need care is patently (sic) false.)
• Free and open source developers don't respect intellectual property.
• People think free and open source software is free.

Let's handle them in reverse order. 

Open Source Software is Free
Wrong.  And no one thinks this.  Mårten Mickos brilliantly observed two years ago that the early community is willing to trade time to save money, and the later community is willing to trade money to save time.  But neither the do-it-yourself users or the pay-as-you-play customers thought anything was "free".   They each made an economic decision based on their particular needs in context.  Anyone that ever paid for a Red Hat Advanced Server installation or a Novell SuSE desktop or MySQL Network knows that the solution isn't free, even if they didn't pay a software license fee.   

Microsoft continues to think that free and open source software sits at one end of a spectrum that has commercial software at the other end.  They apparently still don't realize these two ideas are orthogonal.  Really. 

Free and Open Source Software Developers Don't Respect IP
Wrong.  First, F/OSS licensing is completely dependent on strong IP (copyright) law.  Second, key projects generally have contributors license or assign the rights of their contributions to the project owner.  This is no different than Microsoft licensing third party code for inclusion in Windows or Office.  The terms and conditions bar might be higher for Microsoft because of the business and litigation risk they take, but the legal concept is the same.  Brad Smith suggesting otherwise is disingenuous at best for a lawyer.

Mr. Smith would obviously point out that the sort of licensing Microsoft does includes discussions around patents, something most (but not all) open source software licenses do not discuss.  This is because patents are a vendor-to-vendor discussion, and not all open source software projects are necessarily run by commercial vendors.  (This may explain why vendors with patents also make interesting patent grants to open source projects in which they participate.)

This discussion also flies in the face of the reality of vendors with more mature IP strategies than Microsoft's contributing heavily to free and open source software projects.  These other players seem to be extremely respectful of IP, yet they find their business strategy includes F/OSS.  Makes you wonder more at the lack of imaginative asset strategy at Microsoft. 

Customers (Should) Care about Patents
Wrong.  Patents are tickets to negotiations in vendor-to-vendor discussions.  Customers could care less.  I started this blog two years ago with a short essay titled "When are you going to sue your customers?"  In it I use the following example:

Legal IP tools are important for vendors and certainly relevant in vendor-to-vendor discussions.  The idea that customers care about patents, however, would seem counter-intuitive.  Consider the following: when you last bought an automobile, did you pick the “Honda” over the “Toyota” because the Honda had more patents in it, or more patents per ton of vehicle, or maybe because Honda's intellectual property practices were “better” some how?  Of course not.  You bought the product that met your needs.  It may well have even been the more innovative product by your own subjective measure, but whether or not the manufacturer chose any number of legal tools to protect the innovation wasn't part of your buying consideration.  How the vendor's business process works is of no interest to the customer beyond the actual customer-vendor interface so to speak.

Whether the vendor has a mature IP strategy, applying for patents, trademarks, and copyrights appropriately, choosing to keep some ideas trade secret protected, sharing selected IP with partners or competitors through patent pools and cross licenses, or aggressively publishing some ideas in the face of their competition is of little interest to the customer. The customer only cares that the product serves their needs and provides the value they paid for it.

Next scenario:  you are happily driving your Honda when you receive a letter from Toyota one day telling you that you're infringing their patents. They give you the choice to (a.) cease driving your Honda, or (b.) pay them a license to their patents.  You can essentially “pay twice” for the privilege of driving your car, and for some small sum you can feel free of any concerns that you are infringing Toyota's patent claims ever again.  On this vehicle.  Or for your household.  Or maybe it will be offered to you the customer as an annual license calculated by the number of drivers in the house and the number of Honda vehicles you own, pro-rated over certain uses, unless the patent applies to certain other manufacturers as well. What do you do?  Do you even waste time calling your lawyer to figure this one out?  Or do you call the Honda dealership and tell them quite simply to “fix this.”

Of course this assumes you don't also receive letters from General Motors for their patents (frustrated that North Americans are buying foreign vehicles), Daimler-Chrysler, and Hyundai, so you have the opportunity to “license” your Honda vehicle from many companies and pay for it numerous times. [srw -- this is WHY patents are a vendor-to-vendor discussion.]

The reality, however, is that Toyota is not going to threaten to sue Honda's customers.  They would like the opportunity to switch those Honda customers to Toyota's products, not upset them to the point that no Toyota dealership ever gets a chance at that Honda customer again. 

If anyone sued a customer company for patent infringement over its use of Linux, the company being sued would find a lot of "friends", starting with the Linux Foundation.  One might even imagine the company having a negotiation with IBM over opportunities for IBM to sell in other unrelated areas in return for help on the Linux litigation front.

Jeremy Allison recently mentioned in an interview that "I have had people come up to me and essentially off the record admit that they had been threatened by Microsoft and had got patent cross license and had essentially taken out a license for Microsoft patents on the free software that they were using, which they then cannot redistribute. ... But they’re not telling anyone about it. They’re completely doing it off the record."

This is hugely disturbing.  It means these companies are essentially giving into a market bully.  They certainly aren't serving their share holders.  If Microsoft is so gung-ho on the idea that this is a good thing, then THEY should come forward with the who and the how so we can all take a look.  The fact that this may be happening in secret does not put them in a good light at all. 

The Novell-Microsoft technical co-operation agreement around virtualization, web services, and document formats is no different than any other vendor-to-vendor tech co-op (marketing) agreement.  It's business as usual. 

The Novell-Microsoft "agreement to provide each other’s customers with patent coverage for their respective products" is no different than any other vendor-to-vendor cross license deal at the end of the day.  Microsoft wants to message it around open source software (Linux specifically) and IP and customers, but that's actually irrelevant. 

What other patents do these two companies have?  As much as Microsoft loves to maintain ambiguous IP messaging around Linux and patents or the Novell sponsored mono project and patents, the more interesting question is what historical patents Novell may have that might read on operating systems or file systems.  This scenario would be far more damaging for Microsoft than for Novell in a patent injunction shoot-out on revenue streams.  Cross licensing is just good business for two such vendors.  And customers could care less.

Culture comes from the top.  For all the good work that Bill Hilf's team may be trying to do, Ballmer's message is damning.  Ballmer's is the message that will be carried by the Microsoft field organization.   He's the CEO.  And it's doubly damning because Ballmer's message on this issue has no credibility anymore.

If Microsoft really wants to prove once and for all that customers should really care about paying for patents separate from their solutions, then Microsoft should go sue a customer over Linux systems that allegedly infringe their patents.  It would need to be a customer that clearly has a large installed base of roll-your-own-Linux systems.  They should go sue Google.  Or Bank of America.  Then we can all see how important this really is.

Of course Google may well have interesting patents on things like "search", so it would become a negotiation again.  And Bank of America probably spends a lot of money with Microsoft for other things, and it's unclear Microsoft would want to risk such a revenue stream (since they clearly wouldn't be worried about customer opinion at that point). 

At the end of the day Steve and Brad need a new strategy.  (Or a new PR firm.)  This message is growing old, and makes them look unimaginative (or worse, sneaky) in leading a modern high technology company.  Microsoft continues to stand alone in this space.  It's really too bad. 

The Open Solutions Alliance and CentricCRM?

I'm confused.  I saw Stephen Shankland's CNET article this morning announcing the creation of the Open Solutions Alliance.  CentricCRM is front and center as spokesperson.  The intent of the organization:

The Open Solutions Alliance consists of leading companies dedicated to
making enterprise-class open source software solutions work together. We
help customers put open source solutions to work by enabling application
integration, certifying quality solutions, and promoting cooperation among
open source developers. Membership is open to organizations that provide high-quality, business-ready open source solutions. [Emphasis added.]

I had a little experience with CentricCRM pretending to be an open source company a year ago while I was still at Optaros.  I read their license then, and it hasn't changed.  Here's how it starts:

You may use, copy, modify, and make derivative works from the code for internal use only.
 
You may not redistribute the code, and you may not sublicense copies or
derivatives of the code, either as software or as a service.

This is of course the community version of their "open source" solution.  The complete text is appended at the end of this post so you don't have to drive yourself nuts looking for the license on their web site.

The Open Solutions Alliance Code of Ethics contains the following bit:

Remain committed to open source business practices including supporting user and developer communities, and maintaining access to source code;

I like the Open Source Definition from the Open Source Initiative.  But before it, and even before the Free Software Foundation defined free software, we understood this sort of source code sharing meant: the software source code is always available, and the user is always licensed to modify and redistribute the software without fee, penalty, or the need to ask permission.

I have no problem with closed source companies.  I have no problem paying for software (free, open, or closed).  But CentricCRM is lying to its customers by claiming to be open source software.  The Alliance is launching itself based on a platform of hypocrisy which doesn't bode well for trust building with customers or the community.

Shankland points out that Red Hat, Novell, MySQL, and SugarCRM aren't part of the Alliance.  That makes a lot of sense.  Each has a sufficiently strong position that they need not spend money and time on yet-another-marketing-alliance when they already have the individual partnerships in place that directly serve their customers.  The CentricCRM CMO is quoted in the article saying, "Microsoft knows what we're doing and has expressed interest."  That's unfortunate, because CentricCRM's confused messaging will fit with the Microsoft IP and commercial software confusion too well. 

Here's hoping that either Dark Horse Ventures relicenses CentricCRM properly as open source immediately, or that the Alliance gets them to publicly stop using an open source message that's plainly not true.

Here is the CentricCRM Public License in its entirety:

Copyright (c) 2000-2006 Dark Horse Ventures, LLC.  All rights reserved.

This software is made available by agreeing to the Dark Horse Ventures
Centric Public License and cannot be redistributed outside of this
agreement.
 
The Centric Public License
Version 1, September 2004

Preamble

This Centric Public License is based on United States Copyright law, as defined
by Title 17 of the United States Code.

In particular, our intent is that:

You may use, copy, modify, and make derivative works from the code for internal
use only.

You may not redistribute the code, and you may not sublicense copies or
derivatives of the code, either as software or as a service.

TERMS AND CONDITIONS FOR COPYING, DISTRIBUTION AND MODIFICATION

This License applies to any program or other work which contains a notice placed
by the copyright holder saying it may be distributed under the terms of this
Centric Public License. The "Program", below, refers to any such program or
work, and a "work based on the Program" means either the Program or any
derivative work under copyright law: that is to say, a work containing the
Program or a portion of it, either verbatim or with modifications and/or
translated into another language. (Hereinafter, translation is included without
limitation in the term "modification".) Each licensee is addressed as "you".

By using the software you agree to abide by these terms.

You may modify your copy or copies of the Program or any portion of it, thus
forming a work based on the Program, for internal use only.

If the distribution and/or use of the Program is restricted in certain countries
either by patents or by copyrighted interfaces, Dark Horse Ventures may add an
explicit geographical distribution limitation excluding those countries, so that
distribution is permitted only in or among countries not thus excluded. In such
case, this License incorporates the limitation as if written in the body of this
License.

Dark Horse Ventures may publish revised and/or new versions of the Centric
Public License from time to time. Such new versions will be similar in spirit to
the present version, but may differ in detail to address new problems or concerns.

Each version is given a distinguishing version number. If the Program specifies
a version number of this License which applies to it and "any later version",
you have the option of following the terms and conditions either of that version
or of any later version published by Dark Horse Ventures. If the Program does
not specify a version number of this License, you may choose any version ever
published by Dark Horse Ventures.

If any portion of this license is held invalid or unenforceable under any
particular circumstance, the balance of the license is intended to apply and the
license as a whole is intended to apply in other circumstances.

NO WARRANTY

THERE IS NO WARRANTY FOR THE PROGRAM, TO THE EXTENT PERMITTED BY APPLICABLE LAW. EXCEPT WHEN OTHERWISE STATED IN WRITING THE COPYRIGHT HOLDERS AND/OR OTHER PARTIES PROVIDE THE PROGRAM "AS IS" WITHOUT WARRANTY OF ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. THE ENTIRE RISK AS TO THE QUALITY AND PERFORMANCE OF THE PROGRAM IS WITH YOU. SHOULD THE PROGRAM PROVE DEFECTIVE, YOU ASSUME THE COST OF ALL NECESSARY SERVICING, REPAIR OR CORRECTION.

IN NO EVENT UNLESS REQUIRED BY APPLICABLE LAW OR AGREED TO IN WRITING WILL ANY COPYRIGHT HOLDER BE LIABLE TO YOU FOR DAMAGES, INCLUDING ANY GENERAL, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING OUT OF THE USE OR INABILITY TO USE THE PROGRAM (INCLUDING BUT NOT LIMITED TO LOSS OF DATA OR DATA BEING RENDERED INACCURATE OR LOSSES SUSTAINED BY YOU OR THIRD PARTIES OR A FAILURE OF THE PROGRAM TO OPERATE WITH ANY OTHER PROGRAMS), EVEN IF SUCH HOLDER OR OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

END OF TERMS AND CONDITIONS

Microsoft Whining for Sympathy about OOXML

So what's the real message with Microsoft's open letter whining about IBM and ISO and the Microsoft driven OOXML standard? 

• IBM is out performing us? 
• We need sympathy after our record quarter? 
• People should ignore our anti-ODF lobbying in Massachusetts because that was just business as usual? 

This is professionally embarrassing.  It is certainly not the company for which I used to work.  (CNet article is here.)

Vendor-Speak: Microsoft and OOXML

Peter Galli well covers the current news surrounding proposed ODF adoption in Texas and Minnesota, and the ISO vote on OOXML in its first phase in this article.  There are two quotes in particular that leap out, both from Tom Robertson, Microsoft General Manager of Standards.  Let's look at the latter one first:

But the company supports customer choice and interoperability and urges governments to also support these, he said.

"In that vein, we encourage them to adopt neutral technology procurement practices so that they have the greatest choice among available technologies, and so encourage competition in the marketplace and get the maximum value out of their IT investments," he said. "Mandating a specific document format for government use reduces a government's ability to communicate with its constituents, make the best use of available technology, and promote competition and innovation in the marketplace."

A lawyer's oeuvre, as is a journalist's, is defined by language.  Tom is a lawyer.  There is a wonderful shift in meaning of "a specific document format" as Tom slides through the paragraph.  He is a consummate linguistic professional.

Tom hopes that customers will confuse the standard for a format, a specification in its own right, but one that encourages multiple competing implementations per the customer's goal, with a format for which there is but one implementation, choking off competition.  The statement's irony is indeed rich.  Well done, Tom, but your government customers aren't so easily confused.   

The earlier quote is simply funny in its own right:

Tom Robertson, general manager for interoperability and standards at Microsoft, told eWEEK that there is a competitive situation in the marketplace, with ODF supporters actively trying to stop even the consideration of Open XML as a standard under the ISO's rules. "This is a pure competitive play on the part of ODF supporters like IBM," he said.

This one wins Obvious-Statement-of-the-Week.  Standards happen when a technology space matures to the point that customers are over-served and want choice to encourage competition.  Customers complaining about price is the market signal. Competitors know they can collectively chase the incumbent vendor with a standard at this point, if they pick the right level of collective abstraction to standardize.  This is how standards work in the marketplace.  (I would hope the GM for standards at Microsoft knew this.) 

A sympathy play isn't going to work here.  Customers WANT the standard that encourages multiple implementations.  True Microsoft support for ODF in their Office product suite would have been listening to customers.   Complaining that the marketplace is competitive while shoving your own product specification through a standards forum is naive at best and arrogant in the extreme at worst. 

 

OOXML and ISO: Round 1

Andy Updegrove covers the news (and it's significance) on this first phase of the fast track process for Ecma International's submission of Open Office XML (OOXML) to ISO. 

As Andy observes, there has been a lot of controversial discussion about defining "contradiction" and what might constitute such a thing.  This is what happens when we allow Microsoft lawyers to debate standards, rather than engineers who will need to implement them.  I hear echoes of, "It depends on what the meaning of the words 'is' is."  Not liking the rule, we'll attack the definitions.

With 19 countries offering contradictions to be resolved, it will indeed be fascinating to see how Ecma International handles it all.  The midnight oil will burn brightly in Redmond, which is only fair considering how many countries worked hard to get through the 6000+ page specification by the deadline.  The clock is counting down to 28 February.

I would offer, however, that a contradiction should not be defined as a simple overlap with another standard.  This is economically a poor yardstick to use.  We all saw this coming last Spring.  At the time I observed:

While ISO certainly doesn't like to encourage competing or overlapping standards, they will not necessarily prevent them.  They are a standards development organization in place to ensure that the rules of development are transparent and followed.  It is not their role (nor do you ever want it to be) to manage the marketplace through determining the economic viability of a standard.

By all means send the Ecma International specification back for some of the egregious internal conflicts, and ugly artifacts like date redefinitions.  But let the market decide which standard has the best value proposition to solve customer problems with the most implementations.  [We already know which will win.]  Consider the IEEE 802 standards family.  If they didn't allow standards that overlap in functionality, we would still be living on star LANs.

Copyright javabell, all rights reserved.  Used with permission.

Open Tuesday in Beijing

Tuesday past marked the beginning of Open Tuesday in Beijing.  The inaugural Beijing event begins a number of co-operative efforts around open source investment and research between Finland and China.  Open Tuesday itself was established in Finland to create and co-ordinate networking events around open source developers and business people. 

The event was split roughly into two parts.  The first was very formal with short speeches from the Director of Tekes (Finland's government research funding organization), and representatives from China's Ministry of Science and Technology, and Ministry of Information Industry. 

These short presentations were critically important.  As government officials, they all made very clear public statements supporting free and open source software usage in Finland and China going forward, in a room full of people, with press coverage.  A lot of face will be lost if they change direction at this point.

Mikko Puhakka, one of the founders of Open Tuesday (and an early investor in MySQL AB), and Petri Rasanen, head of Finland's Center for Open Source Software, gave talks, along with a Red Flag vice-president, and I finished the speakers ticket with a short talk on why open source software is important for China's economic growth.

The officials and honoured guests all left to do official and honourable things together, and the buffet was opened to the rest of us.  This second informal half of the evening was great!  Unlike some events where you see one cultural group lined up on one side of the room and the other group lined up across the room, (not unlike boys and girls at a dance), here everyone was talking with everyone and a lot of new relationships were started. 

There were about 80 people attending and it was a great start to what will hopefully become a regular event.  The Beijing event was supported by the Embassy of Finland Trade and Technology Center, China Co-Create Software League, the OSDL, and Turbolinux.  The Finnish Open Tuesday partners include Tekes (the Finnish Funding Agency for Technology and Innovation), COSS (Centre for Open Source Software, Finland), Finpro (Finnish National Agency for Corporate Internationalization), Helsinki University of Technology, Finland UNIX User Group, and Tampere University.   

www.flickr.com stephenrwalli's Open Tuesday, Beijing photoset