Red Hat IPO Rumors on news.com

fruviad sent us a link to a story over at news.com talking about Red Hat's New COO that will be starting Monday, and talks about unconfirmed IPO rumors for what they call the "Darling of the Linux world".

Comments

So true

[Codifex Maximus]

But... RedHat already has commercial investors that in turn have their investors. At this point in the game, I think most investors involved are knowledgeable about the alternative to a level playing field in the OS game. Extinction! They are investing in something that is a real or potential benefit to their continued survival.

Going "Public", on the other hand, is a different animal altogether. The positive aspects of which would be pubilc involvement in the free and open source community, the availability of an investment point for those interested in Linux's continued growth and their own personal profit, the influx of cash that could provide a boost to R&D, the increased competition to provide for better and more widespread services for Linux customers. The negative aspects could be the alteration of the decision making process as others have pointed out and the proprietization of certain components of commercial distributions - however, in well run companies, a market analysis is done to determine the customer makeup - and if RedHat's customers are expecting adhereance to free and open software standards then that is *HOPEFULLY* what the CEO will ensure.

Microsoft used to have a very large - very technical userbase. To a degree, they still have a goodly mindshare but only because of the profit motive. Many of the technical protagonists that Microsoft used to depend on as customers have literally *Migrated* to Linux and become antagonists. Is such a migration something that a profit minded RedHat is willing to endure? Who knows?

On the flip side, look at Caldera. For the longest time, they have been marketing to the business crowd and succeeding on a moderate scale; now they are targeting a different market segment with their newest release - newbies. They may lose some technical users but gain many non-technical ones. They are a corporation that is looking for profit!

Money for Linux can't be a bad thing... It may change the goals of some companies but as long as they sell a product based on GPL work, it can't be all bad. The whole community benefits from modifications they make that in turn get used by other corporations who make modifications that in turn get released to the community and so on ad-infinitum. The best possible benefit *I* can see is corporate sponsorship of Free Software/Open Source projects and additional hiring of programmers to work on such projects. I consider getting paid to work on Open Source projects to be a kind of sponsorship; creating more time for Open Source work - accelerating the process.

Are we sure we want Red Hat to go public?

[Mike_Miller]

Keep in mind a good point that JWZ mentioned in http://www.jwz.org/gruntle/aol.html :

Bear in mind that, for a publicly-traded company, if a CEO makes a decision because it's the right thing rather than because it's the most profitable thing for the shareholders, he will lose his job, and possibly be sued into oblivion. That's the way the rules work.

If Red Hat goes public, things might not change for the better.

Just something to think about...

Safe Bet

[Cjoh]

It is interesting, even if there are only a couple posts so far, to see what people have to say about this.


It is interesting because I remember reading usenet posts back in the day, about Yahoo! going public. People said "Yahoo's revenue will be smaller than that of any magazine or newspaper. It would never get as much advertising revenue as say, any of the major CABLE networks." and "How can people invest in Yahoo when they give everything away for free!"



I think Redhat's comments bear striking similarities. But the fact is, Linux, from a market standpoint, doesn't have a set business model. It took a couple years AFTER the Internet hit the big commercial time for people to get it all figured out, and we still don't know what the heck we're doing.



But Open Source Software, much like the Internet before it, is due very soon for investor success. It may not be adopted as early and as quickly as YAhoo! and Netscape were, but believe me, the parallels as to what was going in in the early 90s for the Internet, and what is going on in OSS world now are strikingly similar.



Heck, we all learned that the stock market is a spiral from Pi, right?



--Clay
http://www.knowpost.com

Back up a second

[edhall]

Startup companies go through perilous periods of growth--and statistics show that a majority fail to make such transitions. RedHat is at such a stage.

I've been through several startups, both successful and not, and the two most perilous times are

1. bringing the initial product to market, and
2. making the transition from "lean and mean" to "well-organized."

The latter is the stage that RedHat is at: too many employees to organize informally, but much danger from instituting more formal "rules and procedures" inappropriately. It really is a phase change (like from liquid to solid) in the life of a company when informally organized groups of dedicated individuals are no longer enough to hold a company together.

Those of us who work as drones for corporations (like I currently do) often are isolated from the organizational needs of a company as it grows beyond the everybody-knows-everybody-else stage. There is a bit of black art about bringing many groups of people with wildly divergent world views into focus upon a common goal. Many more people are bad at melding the combination of leadership, support, and organization than are good at it. Companies will pay people big bucks just on the vague notion that someone has such skills.

It's unnatural to treat people a bit like objects, organizing them according to their attributes, yet still allowing them to remain human and develop their abilities as well as contribute them. Yet that's what makes companies successful. It's especially hard in technological areas, where each developer is more of an expert in her/his specialty than the manager is--but where the overall product forms the goal, and not any particular expert's view of it.

The sad thing is that many of us have never worked for a good manager--or worse, we have, but our current manager is compentent in nothing beyond sucking up to superiors. A good manager is a rare breed. Now think of how rare a good manager of managers must be! Yet companies die for the want of such people. I've seen it happen right before my eyes. And this is the saddest thing of all: to see the effort of good people wasted because management sucked. Almost everyone reading this will see it, if they stay in the industry long enough.

Although I doubt I've swayed many (if any) management-haters among us, my point is: RedHat needs someone with a special set of skills and experiences. Private and public corporations both need the same things from their upper management. The fact that RedHat hired someone who has worked as an upper manager in public corporations says nothing about their intentions for going public. But it's a good sign that they are preparing for their own growth by hiring someone who has been through this difficult phase several times before.

Redhat IP.. what if someone bought majority

[cybrthng]

Now one thing is on my mind


If Redhat did file an IPO, i would assume the
current companies already investing in redhat would be the first to jump in the game..
but what if say Microsoft or IBM or Apple bought majority shares in the company.
wouldn't it be ironic for microsoft to own the baby company of the operating system thats trying to compete against its very own Windows platform?
hmm.. I would be happy to own a chunk of RedHat and i know redhat nor anyone owns "Linux" as we know it.. but filing for an IPO would enable a company with lots of money to direct the linux market in a goofy way..


i don't see the server side changing much, admins know and understand the product.. but if microsoft bought majority, slapped in some developers and put its interface on it, integrated it into its current os's and gave it out to the consumer.. wouldn't that kinda null and void the many reasons to support linux, or redhat for that matter? after all out hard work would in one fashion or another be owned by a bunch of investors and the last thing i want to see is more lawyers and licensing involved..


i should just start my own organization.. called As Is Software.. and have no licensing at all and just support truely free and truely open software.. that way if someone uses it, more power to em.. and that way technology will move quickly and rapidly because lawyers and biggots won't be there to slow me down.

So true

[eyepeepackets]

>But... RedHat already has commercial investors that in turn have their investors.
>

Yes, you're very right. MS, by focusing on making money instead of making quality product, has in fact created a huge vacuum in the OS market -- apparently markets hate vacuums as much as nature. Are Redhat's investors acting in their own best interest by supporting Redhat with investment dollars? Yes, I agree that's true. MS has shown time and again how foolish it is to expect to do well working with MS in an MS-dominated marketplace. GNU/Linux is a more-than-adequate alternative to MS product and these companies see that most clearly.

> Going "Public", on the other hand, is a different animal altogether.
>

Again, you're very right -- it's a totally different game when and if Redhat goes public. I'm not so sure that would work. (See further comments in a separate reply message, same string, posted earlier.)

> On the flip side, look at Caldera.
>

Yes, Caldera may prove to be another great example of how to blend the profit motive into the GNU/Linux community providing Caldera feeds back into the community to keep it alive and growing. What does Caldera provide the community besides another for-profit distribution? I'm asking because I don't know.

> Money for Linux can't be a bad thing.
>

No, I don't think money is a bad thing at all, in fact it's very necessary (I'm not a socialist; my politics are Libertarian and have been for a many years now.) The problem arises when money in the form of profit takes precedence over quality and this happens to businesses _so_ often. MS makes up for quality with slick heavy-handed marketing and by driving (or buying) any competition out of business. I like to think of GNU/Linux, the DoJ suit and a ton of bad press as being white corpuscles attacking a bad germ (granted, a gooey metaphor, but a good one (Oy, that pun even makes me wince.))

Thus far Redhat has provided the best example of how a profit driven company might deal with the quality driven GNU/Linux community. They give back support for important development projects by funding those projects. The amount of goodwill Redhat has in this community is phenomenal and well earned at that. I can't think of any other business which, within the context of their potential-customer community, has the same amount of respect as Redhat has in the GNU/Linux community. Even people who don't use their distro and don't like the RPM package management format don't bad mouth Redhat the company. This works to generate even more profits for Redhat -- that's the way you do it.

Two Comments...

[prolix]

1. A cool company does not necessarily make a wise investment. Good technology investments are companies with a unique product or service, and one that is in high demand and will continue to be in high demand. Niche companies are usually not wise investments, as they may not have the "staying power" of non-niche companies. Niche companies generally file for IPOs for two reasons: a. Majority shareholders get rich; and b. To increase available capital for expansion into new or larger markets. Option a. is a possibility here, obviously with the media paying attention to Linux and Red Hat in particular, uninformed investors (like many people here... "buy RH, it's cool") pour money into an RH IPO, increasing the equity net worth of majority shareholders. Option b. doesn't make a lot of sense, unless RH is planning some top-secret new market penetration move.

That said, I think this is only a rumor anyway... because:

2. The legal duty of the CEO of a publically-traded company is to make decisions based on the greatest profitability for company shareholders. (I could quote SEC regulations, but I can't think of the numbers at the moment). As has been shown time and time again, profits and OSS don't mix.

I for one hope things stay the way they are.

Oh, and by the way, a COO usually has nothing to do with an IPO... that falls under the duties of a CFO.