The Thanksgiving holiday has given me the opportunity to consider the critical new role of collaboration in innovation. This role was emphasized to me during a single day, November 17, in Silicon Valley. In the morning, I attended the Cloud Computer Expo and speaker after speaker, from Cisco to HP, discussed how OpenStack software was critical to their success in cloud computing and was transforming cloud computing industry. OpenStack software to enable cloud computing is being developed under the management of the OpenStack Foundation in a collaboration of over 150 companies. The OpenStack project was started by NASA and Rackspace, but was recently reorganized as a foundation to take over the funding and management of the project www.openstack.org (as a matter of transparency, I represent the OpenStack Foundation). I think that such collaborations will be increasingly critical for the future because many business problems are too complicated to be effectively solved by a single company. For example, the auto industry has joined with the consumer electronics industry to form a collaboration for entertainment systems in automobiles, the Genivi Alliance http://www.genivi.org/.
At the end of the day, I attended the Sierrra Ventures CIO Summit cocktail party (yet another good reason to have Sierra Ventures as an investor) and Jed York of the 49ers was discussing the role of technology in the new Santa Clara stadium (it sounds like it will be spectacular). Yet he also focused on the need to encourage collaboration with the Silicon Valley community to take advantage of the possibilities presented by the technology infrastructure of the new stadium.
From cloud computing to sports, collaboration has become central to business success in the 21st century.
We had a great time in Paris at our Third Open Source Think Tank this year! We had over 120 attendees, primarily from Europe http://thinktankeu.olliancegroup.com/index.php.
The two case studies were very different and illuminated the range of the open source market: Airbus and the Danish Government. The Airbus discussion was particularly fascinating as they described a product development cycle of twenty years with a product life cycle of forty years. Software has become critical to their planes, but given these time periods, proprietary software has significant disadvantages: (1) most proprietary software companies are likely to be acquired or go out of business during such a long period and (2) even if the proprietary software company still exists, the technology will be dated and the company may be reluctant to invest in maintaining it. An open source approach overcomes many of these problems.
The Danish Government described their efforts to encourage the use of open source in the government, including developing a forge. They faced many of the same challenges described by the State of California which we discussed at the Open Source think Tank in Napa.
We once again had a great discussion of M&A. This panel was particularly useful for startup CEOs because merger is the exit strategy for over 90% of venture backed startups. The panelists emphasized the need to ensure that the company has clear title to the intellectual property in the product. The failure to do so can result in significant delays and possibly reductions in the purchase price. They also noted that one problem that target companies rarely consider is the negative effect of large potential contract liabilities: the most common problem is unlimited liability for intellectual property infringement. Many acquiring companies will not accept such liability. In one case, the acquiring company structured the transaction as an “asset purchase” rather than a merger (much less favorable from a tax point of view for the acquired company) in order to leave the contract with unlimited liability behind. We also addressed these issues in the legal panel (see our presentation at http://www.scribd.com/doc/40133936/Open-Source-Paris-Think-Tank-2010-Final).
The cloud computing panel was supplemented by a real time poll. The attendees were more optimistic about the effect of cloud computing on the use of open source software than the attendees in the Napa Open Source Think Tank in the Spring. A large majority stated that the advance of cloud computing has not effected the adoption of open source software. Both groups agreed that security was the most significant barrier to the adoption of cloud computing. I am sure that this topic will continue to be important at future Open Source Think Tanks.
After the last presentation, we joined attendees of the Open World Forum for a cocktail party in the Paris City Hall and then had a wonderful dinner on a barge on the Seine. We look forward to seeing you next year.
I have just finished attending the Fifth Annual Open Source Think Tank, hosted by Andrew Aitken and I at Meritage in Napa Valley. Andrew and his team did a great job of organizing the event. The Think Tank is a great forum for discussing the important questions facing the industry, but equally important, we have structured the Think Tank to provide plenty of time to meet and get to know other attendees (more on that later!). Colin Bodell, VP Web Platforms for Amazon, said it best: he always leaves with a thick sheaf of new cards and many new relationships. I provided my annual summary of Open Source Legal Developments, including both 2009 and 2010 (you can see the powerpoint at http://www.docstoc.com/docs/34875054/Open-Source-Think-Tank-2010-Legal-Issues)
This year, we focused the discussions on commercial problems through the use of three formal “business cases” with detailed facts and questions:
1. Public Sector: How should the State of California adopt and manage open source?
2. Mobile Sector: Selecting a Mobile Platform for Application Development
3. Cloud Computing and Open Source
Much of the discussion was focused on the cloud and how it will effect open source. The opinions ranged across the spectrum: many participants saw the cloud as a great opportunity for open source, but a smaller (but vocal) group noted that the cloud could be a major problem for the open source model. In particular, the concern is that with cloud vendors taking responsibility for the “software stack” customers will be less concerned about open source advantages, leaving such issues to the cloud vendor. As more companies move to the cloud, the customers of open source companies will shift from end users to cloud vendors: consequently, open source companies could have fewer and more sophisticated customers.
Another challenge for open source vendors is the more sophisticated response of commercial software vendors: commercial software vendors are building entire “software stacks” and providing such stacks as a comprehensive solution to end users, thus reducing the need for open source applications. The commercial software vendors are also using “cross subsidies” between the different parts of the stacks to compete with open source vendors selling a single application.
The cloud also poses new legal challenges. The interpretation of open source licenses (and commercial licenses) in this new environment is just beginning and lawyers in the industry have very different opinions on the issues. Some of the issues under discussion at Think Tank include: (1) is provisioning software in the cloud a “distribution” under open source licenses and, thus, triggering obligations under GPLv2, GPLv3, MPL, EPL and other “copyleft” licenses and (2) are software stacks in the cloud an “aggregate” as defined the GPL family of licenses and, thus, not a derivative work (a derivative work might require making source code of all of the programs available if the programs are distributed under the GPL type of licenses).
We also had plenty of opportunity to get to know the other attendees: we had a winetasting on Thursday night in the “cave” at Meritage (including tasting Port brought directly from Portugal by one of the attendees). After the winetasting sponsored by Scott Collison of Geeknet, we moved on to the bar at the Meritage where we shared our experience over stronger potations until well past midnight. On Friday, after the morning discussion and a wine tasting in the afternoon (or golf), we had a dinner at Artesa http://www.artesawinery.com/index1.html hosted by Microsoft. We tasted the Artesa champagne, chardonnay and cabernet sauvignon. The site was magnificent with great views from a hilltop across the green hills of Carnaros and the wines were very good. After dinner, we enjoyed using a telescope to scan the night sky (I saw the rings of Saturn for the first time!).
The Think Tank was a great mix of fun and work. Olliance Group will be summarizing the conclusions, so stay tuned!