Could Mandrake Sell Stock To Users Who Love It?

An anonymous reader writes: "Tech stocks are in the toilet and the word Linux makes investors curse right now, but Mandrake is talking about an IPO. Business writer Jack Bryar suggests a way Mandrake could go public in spite of Linux's bad rep on Wall Street: by selling shares to loyal users the same way the Green Bay Packers sold shares to local football fans who wanted to 'be part of the team' but didn't necessarily expect to make a profit. Do you think enough people love Manrake enough to make this work? I might buy $1000 worth myself if they did this, just for the hell of it. Would you?" It's an interesting idea, not necessarily limited to Mandrake either, though that does sound like a good first candidate.

Comments

That's kinda how stocks were supposed to work

[xtal]

The stock market per se is just a way to target a more general (and much bigger) audience of investors, some (most) of which who have absolutely no idea what you do, how your product works or is engineered, etc. If you read the all time classic (in what, it's 18th printing?) How to Buy Stocks, back in the day, you knew the people who invested and ran the company.Stocks were a way to measure the amount of the investment to judge who gets what share of the profits/rewards. This has been missed by the markets, somewhere.

Would it work? Well, I'd buy some redhat if I had spare money, because I like the product. I bought a lot of Palm when the stock went down, because I like that product, too, and work with it. Same thing for AMD. Mandrake is just the same thing continued, although I'm not a mandrake user.

People are kinda supposed to understand what they're investing in, which is why I find the market insanity amusing. I buy products I use and like, and I haven't been clobbered for it e.g., 3M car wax.. 3M stickies.. 3M abrasives.. hrmm... 3M.

My advise to investors is, ask yourself: "Do I use this product? Do I like it? Do I understand it? Would I pay money for it? Would anyone else? Does that matter?", and you'll find the answer quite clear. This looks like a good idea to me, though - support a product you use and like to development continue, and you might see a return on it someday.

I'd rather just donate...

[wrinkledshirt]

That way, they can concentrate on making great software instead of what will make the shareholders happy. Mandrake's developed a reputation as a good newbie distro as well as a cutting-edge distro for the not-so-newbie. More importantly, they've garnered their own mindshare within the industry. I think developing a body of shareholders might influence them to go one way or the other. As well, this sort of move might open up the way for other business-centred moves, like (eg) letting themselves get bought out by another company.

I think, if they have a good solid foothold in the industry that can't be usurped by another company, the way Red Hat does, they might want to try going public. Until then, doing so might make them even more vulnerable to the manipulations of the business-minded.

Actually, they can.

[MAXOMENOS]

As the article stated, the SEC would most definitely allow this under Regulation A. Quoth the article:

That doesn't necessarily mean that a Linux company can't have a successful stock offering. In fact, smaller U.S. Linux companies don't need lots of lawyers, or even a terribly convincing bottom line to offer stock. They simply need a community that rabidly supports them, pure financial considerations aside. The best fund-raising vehicle for such companies looking to raise $3 million to $5 million is called a Regulation A offering.

In the caffeine-crazed Pacific Northwest, one of the most successful Reg A filings in recent memory was for Tully's Coffee, a cult-like business that sold common stock back in 1997 at $2.25 a share. Unlike a traditional IPO, Regulation A allows companies to promote their stock offering to their enthusiasts, through radio, direct mail, or other devices. Tully's employees wore buttons that said, "Ask me about our stock," and the company promoted the offering on its coffee cups. Reg A offering tend to work best for companies with an affinity group -- a set of customers who are so loyal they'll buy stock as well as product, essentially underwriting their financial investment by their continued patronage. Regulation A is tailor made for the Linux community. For those companies whose evangelists vastly outnumber their paying customers, this might be a reasonable way to raise needed cash.

I'm thinking that Mandrake could (for example) offer a GPL-version copy of their software and five shares of MandrakeSoft for (say) $80, via their website.

ObJectBridge (GPL'd Java ODMG) needs volunteers.

Huh?

[jasno]

Doesn't that kinda go against the grain of the open source model? If I want to contribute and help out mandrake, shouldn't I be writing code, giving feedback, using the product, writing documentation, etc? Think about the amount of money a professional programmer makes and the amount of money you'd have to give in order to get something done. Why not just contribute? Sure, you may not help them survive as a business, but why is that the goal?

Going public

[sjbe]

There are some good reasons to go public, but sustainable businesses usually wait as long as possible before doing so. There is an obsession with taking a company public early on these days. A few companies have been successful with that strategy but most of the biggest ones were successful concerns long before they sold stock on the public markets.

Selling shares of the company can be a great way to raise cash, but it also introduces a whole different set of constraints on management style. Public companies have to be much more concerned about short term finanical numbers instead of the big picture. The management has to please investors which often forces them into actions that aren't always the most prudent in order to keep the balance sheet in order. This can be a huge distraction for a young company.

Now I'm not saying Mandrake going public is necessarily a bad thing, but I do wonder if it is being done for the good of the company or if it is being done simply to make money for some venture capitalists.

Stocks as currency for wagering on Feature Sets?

[lightware]

Well that would be pretty damn cool, and I would participate, but only under one condition:

Shares could be used as currency to motivate the company to support special features.

How 'bout a special site where stockholders can converge and agree upon features they'd like to see in the distro? They could then pool together in the agreed upon feature set category and wager support by allocating x shares to features they want to see.

14 shares added for journaling file system support
5 shares added for extended wireless networking features
etc

While you may only wager so many shares on a specific feature you'd like to see, if there were enough people that wanted to see that feature supported as well, it could add up.

Not only that, but one could get a visual idea of the support of the distro, and a representation of paying sponsors.