 Questions? Good. I'll give you another shot at the end of the talk if you have any questions on anything I present. My name is Bob Waldy for the next 20 minutes. I'll give you a talk on, as we saw before, building successful and unsuccessful businesses based on open source foundations and unfortunately I have had experience in both, a taste of both. I know which one I enjoy most and I'll do that by, can I send that down to get rid of the crackle or is that fine? Okay. I'll do that by just giving you a quick introduction on myself so you can discount or see what colours what I say. Then I'll just share some lessons from specific personal experience I've had of both success and lack thereof in building businesses that have been based on open source foundations. It's not necessarily selling an open source solution but with the open source was the key element, the key success factor or not success factor in the business. And then maybe share with you my thoughts and observations what I see of changes in the general open source and Linux environment in the industry since I've been involved in it over the last 15 years or so. I was going to finish with some sequence of success when I originally wrote these presentations that I really struggled to think of those little gems I was going to throw so maybe over the next 20 minutes something a little gel and I'll conclude with that. Again, while I said there'll be questions at the end feel free at any stage if you have a question just put your hand up and I really would like to have dialogue as much as pitch. That's my, I forgot to push my timer here so I don't go over time so give me two seconds. Start. End of presentation. Very good. Okay. Okay. Welcome to Brisbane. I said I'm not a coder. I am an engineer by training but I've, and I was not a particularly excellent engineer admit, I've subsequently had MBA lobotomies and so really I'm not a technologist. I have the fortune to be able to spot good technologists and that's actually been a good useful tool over the years. And I live in the embedded space so the products we've developed principally have been appliance products, hardware products they've been built on at the intellectual property that's associated with those fundamentally has been the software that's embedded. But we had delivered them wrapped rather than on a CD or a download wrapped or a service wrapped in a hardware object. And I said I've been making money out of open source technology since 1995. The first company that I set up was a company called Morton Bay Ventures then and it fundamentally was an open source technology company based on UC Linux. Two of the drivers here of the UC Linux platform are Greg Unger and Dave McCulloch were founders of the company. We sold a whole range of development platforms and that was sort of the first of a series of open source ventures that I've been involved with. I spent a couple of years in the states working for a company I'll talk about a little bit later, Linneo, whose mission in life was in the embedded world to do what Red Hat's done successfully in the Linux world. Their mission was to be a billion dollar embedded Linux distribution companies, services and tools but software was not successful. And my current company Open Gear, again another startup, we again have got a, we've got a SLA hardware management platform but it's totally based on embedded open source tools, things like Nagios, we use the management nut, network UPS tools and managing power devices and the like and it's an open source play. So I'm pleased to be able to speak after Paul although I am sort of a little bit overshadowed by the quality of his slides and the quantity of his slides I've got five. That's because unlike that one billion dollar corporation that Red Hat's going to become this year, we're a four million dollar business so we're in the earlier stages but come a look and see an Open Gear presentation in five or 10 years time and you'll see 30 slides up there as we head towards the billion dollar stage. So I said this is largely very experiential, it's not meant to be, this isn't based on any structured analytics sort of view of the markets and things. So I'll just quickly touch on some successes and not successes that I've had in commercialization of intellectual property experiences. The Morton Bay Venture Company, which was the MBV platform, it was the first startup I've been involved in in the open source world and what we specifically set out to do at the time was develop ARM platforms, ARM processor platforms that people could use then for developing their products and their projects using open source Linux tools. Again, built on the UC Linux platform that we were leading the development of. The catch with that business was actually coming up with the business model that worked. Again, we did not want to be a tools and development platform vendor forever because that's a really hard model to scale and capitalise. It's only one or two winners in that sort of space. Like currently you've got the Wind River, Intel and MBV players. It's just very hard to do that. So the business model we were pursuing there was actually trying to come up with generic platforms, focus on specific areas, do some custom bespoke designs for people and get some services revenue in, slowly aggregate some expertise and particular niches and start to build up value added and expertise in niche markets. That was the business model which we had that was behind the Morton Bay Venture activity. It was successful. We rolled it up to a few million dollars in revenues. We got bought and had a reasonable capital return to the investors. So it was a good example of a successful model. But again, we started out with a view of what's the capital play we're doing here with this thing? What's something that's going to scale? It doesn't just create revenues, but creates a capital exit for the investors and for all the stakeholders, which is all the staff. That was my first taste of success in commercialising open source. My first taste in failure came very soon after, which was the linear business model, which is down here on the other side. I said Lineo was a company in the States that was well funded, had 48 million dollars in venture capital funding, had aggregated, had bought a bunch of companies around the world who were open source technology and tools providers and their goal was to create, exactly like Red Hat, to productise and add service layers and all those things in the embedded open source world. Although we struggled over a period of, and this all happened just pre-2000, which is in a terrible era in the IT history when, well, it had seed funding, the market collapsed before it could IPO and get sustaining funding. But it was a real struggle in a business, trying to create a revenue stream in a business when you were trying to sell software, selling better software that people were used to getting for free. And when you were selling tools that were at the very early stages of their creation. So we struggled hard and a lot of companies struggle now. We are involved with Nagios as one of the open source software products that we support. It's been around very popular. Has anyone here used Nagios? Many? Oh, good. Okay. It's been around for a long time. So we support, since we started Open Gear, we give them money every year just as a sponsor to keep it going. Met with Ethan and they've been looking at how they move from being a generic community open source project to how they commercialise. And it's difficult how you career, what choice you take for your revenue stream and how you actually crystallise and you keep your community interest at the same time as creating real tangible value in the market to customers. So linear was an example I had. I was COO over there for a while and I really got to taste the embarrassment of a great failure. My next failure event, an unsuccessful event for Tains to Open Gear. We actually started this company six years ago. I got together with the guys who had started previous open source ventures within Brisbane and we sat down and we looked for some market opportunities where we could develop a new open source business. I'd made some money, I'd retired, I'd found having a farm and growing grapes and cows, they're really boring. So I decided to get back into the, you know, let's start a business again. And we spotted a, what we thought was a really good boom area which was the KVM Keyville Video Mouse technology space. It was a market we profiled, $600 million market, found the players, looked at parameters, figured we could go in there and develop an open source, and it's all proprietary, proprietary hardware, proprietary software. And we thought we could go in there and develop a fully open source software and open source hardware equivalent and actually go over there and disrupt the market and take that on, you know, head on. That was the decision. At the same time we've come from an old serial comms board background in the the stallion days, so what went hand in hand with KVM device is a console server. So we thought as well as doing, you know, commoditising the, not commoditising, opening the KVM world, we'd open up the console server market at the same time. So we started another open source source forage project where we said here's how you can get the equivalent of what you currently pay $4,000 for recyclades, you know, an old Cisco box or a recyclage terminal server. Now you can go along and buy a $200 multi-foot board, put it on a PC and we'll have a Hizzle, a software that'll do all the bits that you need and you can roll your own device. We thought that would also take off and we had to talk to a couple of people about this and we believed it was true. So got some funding together, developers sat down, best part of it, not six months or so, developed some great products, trade shows, went to market and suddenly realised this was totally, totally wrong. The two things we're approaching to do, the KVM market, doing open source hardware and trying to commercialise that is just real hard yards. Our goal was to find a bunch of hardware chip vendors that we'd put software stacks on them and we'd say here's your chip and we had some, we did the layouts of the boards, test them, got them certified and said here it is, here's the solution. But going to talk to hardware people about putting open sourcing up the drivers and getting too close with open technology into their hardware layers is a real challenge to get the, to get, particularly in the graphics chips domain. It's just really difficult to get there. So we ended up saying we've got one chip vendor we came with, from Japan we were working with and we had one platform and that was okay, so it wasn't generic. So that was our KVM play, didn't actually get the multi-platform validity. On the console server side, we suddenly found that for system administrators cost is important but that's not the issue. They're, you know, system administrators is fundamentally a risk mitigator and that's so, they don't want to be rolling up things that are reconfigurable and changeable and flexible. They want something that's rock solid. They also want something, they don't want something that's cost a hundred dollars or two hundred dollars based on a PC footprint. They want something that takes one RU or less because rack space costs lots of dollars and these are all the sort of go-to-market things we learn. Unfortunately, afterwards started the business. After we'd invested in the technology, we had a great technology, it's still out there, great open source project, we still get a few people asking for it but so we sat down after a year and a half of open gears, you know, beginning in life and thought okay, well we're clever, we've got the money, we've started, what do we do now? And that's when we've, we've continued on our current business plan and I think the current, okay, the current business plan we're doing with open gears, we're actually developed these little one RU console service compete with Cyclades. We developed little remote management boxes, we've taken the same technology, we've embodied it, embodied it into products, we've got a product plan now but the original open source mission we started the company with has changed radically. I think the last piece down the bottom I've got a no community STT. One of the other things we had in our open gear business is that everything we did, we decided we're going to do fully open source and we had some little Java client management client software we developed and we decided we'd open source that and again start a STT project and we got some traction in terms of community following but not enough to really justify doing it in open source, in a full open source GPL manner. We would have been much better doing it the way saying we're happy to share the source with you Mr. Kustman if ever you ask, but we won't go through all the compliance issues and the update issues and that because we, there wasn't tangible customer benefit and what we're doing now we've got, within our open gear business we've developed some central management platforms that extend on Nagios and do some accessing device between firewalls and the like and our intention is to open all that up but we're looking a way to open it up in a way that doesn't necessarily involve putting it in a GPL tag on it. I'm quite happy to do that but I know the minute I do that, okay thank you, paranoia prevails when you get to cry here but I know the minute that you open it up and you put the GPL tag and I think every two months or three months someone's going to send me five dollars and ask for a CD with the current cut and there's lots of nuisance compliance cost things and unless you've got a big community of users that are feeding back and you're creating something of wealth it's not necessarily the right way to open, to share the value of openness. I think the key thing is I think we should be getting to a point now where open source is a great start. The value prop is not really the open source and the regular regulation that goes with it, it's the notion of openness that the customers want and that's the not jump the end, okay. So I move on to what I see as I said the transitions that we've seen in the Linux world and the open source world over the last 15 years. I think the first one is the major one that open source is now an integrated part of the proprietary world we live in. I think that if you think of which of the most successful commercializers of open source companies in the around the markets today who's got some what's the release of the red hat? Apple? Okay, Apple. Google? Okay, okay, so good and that there the answers. It's Apple, it's Google, it's Facebook, it's companies that have built businesses, built Zoomy wealth-creating businesses totally on open source platforms but you go on Facebook and look to see open source advocacy and they don't. They've got open source interface, an SDK if you want to indicate interface to androids and iPhones and the like and these companies I think that are successfully commercializing open source today are doing so often by actually using and levering off the value of open source without necessarily taking it out the forefront and taking a head-on advocacy saying here's my open source, you know, jumla-drupal versus your closed source product, product is being done underneath the infrastructure level and providing value to use. So I think that's probably one what I see as the biggest change is as open source, because I think open source is just one the game, the infrastructure within the internet today, it's a lamp infrastructure that we're building our IT world on. So now it's, I think, we need to be successfully, to successfully commercialize. We don't want to be out there championing open source mantras. We want to be out there finding that, yeah. So I'm chairing the open source mantras. Yes. But there is quite a successful companies that are doing that, although the Drupal community, Acquia, for example, is a very successful IT promotes open source, it also promotes the fact that it's the community that makes it, and also one of the main reasons that, you know, Acquia and Acquia sit up was also to help fund and put money back into that community space as well. So they're seeing their business model as being directly chimed into the fact that they're open source. Okay. And then it's done and it's tested. Yeah, and not questioning that, sorry. I'd say, okay, so you don't, I didn't mean you don't want to. I meant you don't need to. Because what I'm saying is I think that the biggest successes now within open source have come from, are coming from companies that are deploying open source technologies and deploying them to create revenue streams that aren't linked directly to the open source licenses at all, that aren't linked at all to services related to the open source technologies. They're using those technologies to provide the customer with the openness to remove vendor lock-in fears to these things. Then they've got some other value prop, which is their Google. It doesn't get themselves advertising. Here we are. Linux generates advertising revenues. That's the business model that's been deployed. I'm not questioning there's lots of successful companies and good growth opportunities there, but that's not where we're moving. I see where we're moving now. If you look at the people who are writing the code in big business is funding Linux. The Linux foundation lists of who's writing the code that goes in the Linux. 70% of people writing code are working for companies, as paid employees paid to write open source code. 12% of those 70% work for Red Hat. It's 19% that work in this notional, and it's not this distributed community who are doing things out of ours and for different reasons. There's nothing wrong with that, but that's where we're migrated. You know, some people might see it as open source or so. And then there is other companies that are arguing it. There's corporations that are actually, the fact that it is open source technology is the reason why they're attacking it. Because there's this thing that you have to work in the corporations called agile and open source is the only way that you can really justify like getting to an agile project. So you can't do that in a provide instructions. So, but anyway just So, again, I'm not arguing that there's a spectrum of solutions. The question is, where are we moving? Where are we moving globally? I think that's my sense of things now is that is, and it isn't companies who are using open source and not contributing back to it. These are companies that are funded businesses creating wealth and their object is commercialized open source. That is their mission. Their mission is actually to create wealth, dollar wealth, out of open source technology. So that's the, and I think we have migrated. That was the next one. We've migrated largely from a general community driven, development community driven open source model to where we are now, which is generally a vendor driven a development model where it's vendors, it's companies that are getting the funding to do the development, to take the initiatives, to take these projects forward. And that I think's got, again, as part of you think you've had, you know, where do I play a role and how do I commercialize ideas I have. And I think it's a different model to what we had five, 10, 15 years ago. The other part I said before that I said before I think the other part that's emerging is that the revenue that successful open source commercialization has arrived is increasingly not being derived from just selling licenses or even selling services linked to those licenses. Now being sold is it's indirect revenue streams that people are being more successful. Software as a service, you know restructuring the delivery models. And so I guess my general sense is that I look at things open, I don't see the purity in the open source. Well, we use, we use sugar CRM for our contact records. Who else uses sugar here? No one. Oh, no more. But we do also look to, look to commercial tools, look to Salesforce which is one of the popular sales management tools out there. You go into Salesforce which is the hub of proprietary software services, hosted services. They've got their apps market area where users put apps in. They've got a whole bunch of open source people putting open source apps into this proprietary world. I guess that's where I see, aside from each license issue, migration, boundary issues, right? That's where I see a lot more emergence of the successful open source opportunities now maybe not developing an open source alternative to something that's proprietary but more actually developing an open source add on or extension to something that remains proprietary. Having said that, the last bit was actually going back to what you were saying. I think there still is a lot of substantial success with companies based on, based on the original model of pure open source GPL and there's real tangible benefits that come with robust technology that comes from a rich developer pool, the fact that Sorry, just to the curse to me, Irene, are you sort of feeding the beast there? I mean, you mentioned the idea of Salesforce. So, you know, the total lock-in, data lock-in, platform lock-in, are we really doing ourselves a long-term service by building an open source plug-in community around a proprietary platform? Isn't that kind of like the only one who's actually benefiting there is Salesforce? Or doesn't it matter? Is that? Well, I guess I I would think that Ignore it if it's big time. No, it isn't. No, it isn't. I spend aside from what I do is with the business. I'm also an angel investor and I'm involved in some VC things. I look at startups and so I do tend to have that horrible return on investment, how do I put on things on how you judge success? Because I think that my measure of success is if you can create wealth, that's the best thing you can do in life because that lifts our standards, that makes hospitals, old people a little longer, start to think that's more important. And that's a good thing. Now, there's some other sort of zealot, there's other dimensions to the openness argument and I'm supportive of them with my commercial hat on. I look at what generates the most wealth-creating outcome. And again, if you look at Google, here's their open source layer buried in their androids. Marketplace with a sort of a semi-open sort of interface on the top and then there's a stack of applications, mostly proprietary, but maybe there's a great opportunity for a fully open source suite of applications living there. And that, I think, is the sort of world that I see we've moved to. We've got some open pillars mixed in with proprietary pieces and that's what the net is. It's exactly that complex fabric of open and proprietary and it all sits on a proprietary hardware base. So it's not... Yeah, just... Yeah, sure. ...that supports Oracle. It works fine with Oracle. We have about a 10 second change. We can make it work with Postgres, MySQL, whatever. And it just means that we provide software that works in the proprietary world and still play that game. But we can very easily jump into other domains. So we provide a Salesforce button in theory as only drivers can also work with some great high model. So what you're saying is that that's not necessary which was the best... That's, to me, how your business has been in and around this company. It's not effective to go around denying it. It's also not giving back to anyone in the community or not even when you talk about it. It's the fact that you're then going, here's this great open source product and its main use is this. And he said, you know what, for that small percentage of people that might want to plug into Oracle or this free with that growth you send in that option is there for them. And I don't think... Not... I'm going to tell you what's wrong, I think, to me, that's what I sell for corporations. That's why corporations get me in there is because I'm the open source person. Because I've been talking about open source. I've been talking about how they can get into the community, how they can contribute models and things like that. So I just... Okay. That's not really the point that I'm hearing though. No, yeah. I don't know how to use that. And it's about making money, the use of that source rather than making money. Making money. That's correct. And I said, we've got at Open Gear, we use Open Essence... Open Essence as our main communications thing. One of the successful ventures are things like successful commercialization items I had there I didn't talk about is we actually sponsored last year for it to get... For the last version of Open Essence to get FIPS compliant. Now, a lot of people have done it for their products but rather than doing for our products we sponsored it to do... Paid for it to get done for the platform. And what that did is we got... Where's the company? So it was just sunk money. Tens of that, not a hundred, just a hundred. And what that got is I got invited to go along for an Open SSI, Industry Body Association in the States that actually sit there with the SVP of Sun and the guys from the DOD and our little company sit over here saying we're an open source advocate. We advocate by giving money to areas that we see as important. 70% of the community that you talk about that companies aren't giving it back. 70% of the community is actually companies. The community are the companies. There's companies like us like Sun, like Google, like Apple. That is the community nowadays. It's people who are employees of big companies and that's the big change. It's not... It's moved out of its... You know, it's not basements and it doesn't have the same sort of, you know, great origins that have. I'm not going to defend Microsoft. Okay, I'll... Yes, sorry. Yes, I'm not going to defend Microsoft. I'm not going to... I'm just... Yes, yes. Any other... I love being right with capitalism. It's a refreshing contrast and storming us kind of. It is. And I just know that... So we started this an open source company. I fully believe in this open source. I'll happily... So we made enough money. That's not the goal. The goal is to make it be successful. But I think now that you need to be successful and open source, you need to sell the value of openness to the customer and deliver the value of openness to the customer. And often it's an incremental value, not a core value. Right? Deliver the value. And don't... And let's stop pitching open source. Because I think as a thing, all right, it's a great tool, but the power lies in the openness that you're actually... That's the liberating thing. You're giving people control of their own supporting... They can support themselves. All the... All the benefits that we sell will be sell open source. I think we should just move it to the next level. So if there are no more questions... Yes? Go on. The front page of it is not... Don't need to use the whole financing, I'll start. So I realise you've been on those sides of that to tell the thing. Do you have any views on that? In terms of the sense of getting businesses going, what are the... What are the other views that don't surround that to go on? That's the deal. See, I'm one of the few... I'm one of the few people in life that I actually... When we started Open Gear Up, what I also did was... Even though the people who were in the team, we had the funding to do the business. First thing I did was worked out what's our outside funding piece in our puzzle. And we got some East Coast, USA, East Coast, BC guys that I knew from previous lives. They set up a little business, put some money in it that funded us because I think there's real benefit and enterprise having these outside funding piece in your founding equation to keep you on track, to help connect you. There's lots of good leverage that goes with it. So I advocate it's got great value. It's really hard to get. That's the... And it's particularly hard to get if this is your first-time venture. And it's particularly hard to get if this is your second or third or fourth and you haven't failed yet because your odds of this being the one you fail on is higher because at some stage you're going to go up and down. That's that. But it's... And so I'm involved with Brisbane Angels and there's lots of... That's a different talk. I don't have any... And I'm not... But I'm not certain though that what used to be an issue in the VC world, what was an issue where we used to sell ourselves some time ago is where's the intellectual property? Where's the core IP value under running this business? People aren't... I don't see that as being the barrier anymore. That's part of... We've transcended that model. Now it's more what's the value delivered to customer? How are you protecting that? What's your branding? What's your unfair advantage? All those things. But the IPPs and the fact that it's open source versus proprietary is far less of a problem. So as a company... Yes. ...it's good to be a new start. Yes. One of the big risks is to look whether they'll be there in a year or two or whether the projects are open and effective. Yes, yes, yes. Me, that funding model is really, really... I'm... That's... ...the guarantee of the long term. Which is why we'll be a billion dollar company like Red Hat because there are scale issues that get you into it. Yeah, you're right. There's lots of others. Now, in my position as a corporate consumer it's really good to go and get some people involved with some of these smaller ones like the real... ...the real risk is a lot of them don't get the financial thing right and you can see that they're just not going to be there for a long time. The technology's off the list. It doesn't even get purchased and absorbed to something else and just disappeared. Yeah, yeah, yeah. And that's why there's value right from the day one. Not just the financial structures but all the governance that goes with which need to get right, you know, your IP or your contract governance. One last question at the back. Yes. So is it pursuing a level of external funding? Is that just adding a base load of stress that you may not necessarily... may not necessarily be necessary for a business? And why assume that you need it if you may not... if you may not? I don't know. I just... I guess I just do this experientially, right? I find it's great value that I like most people particularly like most Australians where satiate is not maximizes. And if you're quite happy having a business that's a good comfortable business goes on for 10 years or 20 years then you don't need to put VC in. If you want to guarantee yourself that you're never going to have a comfortable business that goes on for 10 or 20 years that you're already going to go fast and be, you know, give it a real go, right? Or you're going to go bust, right? That's the game you want to play. Then VC's... that outside capital is a good crystal to put right at the beginning to give to... to set that agenda for you because otherwise you do this. And you become an SMB... nothing wrong with being an SMB and passing the business to your daughter and there's nothing wrong with that model at all. If you want to... outside funding is a key success factor generally in... I find in maintaining ramp pressure. And I don't like outside venture capital so I don't... those people I've done it... I don't have a capital but I think it's a useful age in the equation. That was a... I think I should stop because I'm running out of time. Thank you very much. I forgot to say... I forgot to say the last thing was... but if you do think that... I had a slide that showed a map of Australia we've got great open source potential here. We haven't had enough successful commercial ventures. We do actually have an industry association open source industry association which is reformed and it's something I'd advocate anyone who's looking for successful commercialization to participate in. I think it's osia.org.au .net.au Sorry, okay. Thanks.