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it.can presentation on open source

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I gave a speech, along with Thomas Prowse (Genband) and Fred Dixon (Blindside Networks) at the IT.Can Annual Conference (PDF) in Montreal last week. The following is the paper that went along with the presentation, for whatever it’s worth. Not particularly earth-shattering but an approach that is a little different than user/purchaser centric approach I usually see about the topic in other papers and presentations, at least within the realm of those addressed to lawyers. Also in Word format: IT.Can 2010 open source (paper) v2.

Many other great presentations as well, by some of the leading IT practitioners in Canada. Not a member? Consider joining. Well worth it.

OPEN SOURCE BUSINESS MODELS

by David Ma[1]

1.                  INTRODUCTION

This paper will: (a) review some of the more common business models used to exploit intellectual property; (b) describe, in brief, what open source is; and (c) identify characteristics of open source licenses as they pertain to those business models.

It is oriented primarily to owners or developers of intellectual property that are contemplating the alternatives available to them in the commercial exploitation of that IP. The general context on which this paper focuses is the development and exploitation of software. However, some or all of the principles described below may be applied in other contexts, and we describe some of these briefly toward the end of the paper.

The intent of this paper is not to advocate open source business models as the definitive way to undertake such a venture. Rather, it is to familiarize the reader with the underpinnings of what is becoming an increasingly prevalent approach to exploiting IP which warrants serious consideration as an alternative to more traditional methods – namely, a proprietary licensing model which emphasizes the treatment of underlying source code as a trade secret. It may well be that the particular circumstances of a business undertaking do not lend themselves to such models. However, it would be, in the author’s opinion, inadvisable not to give them due consideration.

Read more it.can presentation on open source ›

fusenet’s employment/entrepreneur program

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A very interesting story in IT World Canada about a company called Fusenet that has put into place a novel approach to business. In effect, it is empowering its employees to become entrepreneurs and giving them equity in their creations. Fascinating approach. Inevitably comparisons can be drawn with a similar program Google runs, but as far as I’m aware Google retains ownership of everything created by its employees. Not so with Fusenet’s model. From the article:

Every Friday, the Pet Project Program (P3) goes into effect. “If you’ve been approved into the program, on Friday, we don’t expect to see you at your desk. You’ll be in our lab or you’ll be collaborating with other people,” said Singhal.

The P3 model is codified into employee agreements and the intellectual property developed during this time does not belong to Fusenet, he said.

If an employee spends three months working every Friday to develop a new technology for better video compression, for example, and then presents it to the company, the idea still belongs to the employee, said Singhal.

Fusenet will ask the employee how much they want to sell the idea for or whether they want to start a company that will sell or license the product, he said. “We’ll help you market that and say, ‘We’ll take 50 per cent of the equity, you take the other 50 per cent,’” he said.

“We will help you with money, we will give you all the resources you need – marketing, customer service, R&D – but you get to keep a significant chunk of the equity in the business as opposed to having just the pride of being able to say you started it,” he said.

The policy applies to all employees, but it’s the software developers who are most likely to come up with the ideas, said Singhal. “We thought this was an interesting model … 99 per cent of the companies out there will take the software,” he said.

Fusenet has experienced one major success, one emerging success and two failures as a result of the model, said Singhal. Another five projects are currently in the R&D stage, he said.

Of course there is a caveat noted in the story about how such an arrangement must be carefully documented. I could also see a few risks associated with this as far as delineation of IP and who owns what. Very often, when new ideas spring up, they may be closely related to some existing intellectual property or based upon it. The question then is where the dividing line is or should be drawn and how that is set out in the documents. Not an insurmountable issue but one that does warrant a bit of thought.

I certainly admire Fusenet for having the vision and courage to adopt such a model. Of course, it’s no guarantee for success but certainly puts all the right incentives in place to have an environment conducive to that. I really do hope to see some interesting things come out of their shop in the near future. They will, after all, be very likely to attract the right sort of folks with this program.

when not to use technology

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I came across a link to a story where a South African company was using homing pigeons to transport data because it was faster than their broadband connection:

Workers will attach a memory card containing the data to bird’s leg and let nature take its course.

Experts believe the specially-trained 11-month-old pigeon will complete the flight in just 45 minutes – and at a fraction of the cost.

To send four gigabytes of encrypted information takes around six hours on a good day. If we get bad weather and the service goes down then it can up to two days to get through.

If you’re curious, doing the math on that works out to roughly 1.5 Mbps for the broadband connection and, if a 4GB card is used with the pigeon, just under 12 Mbps for the pigeon.

Of course, such a solution isn’t without risk:

‘With modern computer hacking, we’re confident well-encrypted data attached to a pigeon is as secure as information sent down a phone line anyway.

‘There are other problems, of course. Winston [the pigeon] is vulnerable to the weather and predators such as hawks. Obviously he will have to take his chances, but we’re confident this system can work for us.’

Though the story is amusing, the point it reinforces is I think a helpful one – namely, that the use of particular technology might not necessarily be the best solution to a business problem. It may just be due to the area I work in, but I have seen instances where organizations are so focused on the use of technology (or in some cases a particular type of technology) that they don’t consider alternatives that may achieve their goals better, cheaper or faster.

Certainly not necessarily advocating the widespread use of PigeonNets, but the story is an amusing example of someone overcoming the law of the golden hammer.

being an employee and a (potential) entrepreneur

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Apologies to my loyal readers for the extended blog absence. What can I say – I was perhaps discouraged by the recent pronouncement in wired that blogging was dead – and that twitter is the Next Big Thing.

In any event, I was reading Dilbert this morning. As those who follow the strip know, there has been a running series about how Dilbert started his own business on his company’s time. (As an aside, it was called dilbertfiles.com and is actually a real site that Scott Adams set up for file sharing).

So today, Dilbert gets some bad news:

Dilbert.com

Funny, but true, unfortunately. One of the things that I admire about Dilbert is the way it conveys some simple truths, such as the one above, with a bit of humour. And it never ceases to amaze me that some entrepreneurs do continue to find themselves barfing in their box full of junk. To wit: The founders of MGA Entertainment – the company that was very successful in marketing a line of dolls called “Bratz”. Apparently, the person who came up with the concept and drawings for the Bratz dolls did so while still in the employ of Mattel. Because of that, Mattel claimed that it owned the rights to the Bratz concept. The court agreed, and gave ownership to Mattel, which then wasted no time in seeking (and obtaining) a court order that effectively shut down MGA’s Bratz business and handed the keys over to Mattel. The folks at MGA likely barfed in their box of junk to the tune of several hundred million dollars. Not good.

The fact of the matter is that if you are a budding entrepreneur who still has a job, unless you have a written agreement with your employer that you will personally retain ownership of certain IP that you come up with, then in all probability whatever you create in the course of your employment will in fact be the property of your employer. So think twice about creating that little side software project on your work computer. Or, for that matter, that really cool blog. Otherwise, you may find yourself handing it over when it’s worth quite a bit more.

chrome a windows killer? i doubt it

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Read an article in eWeek that left me scratching my head a bit. The nub below:

Google may be treading lightly with Chrome now, but the browser, combined with Google’s search and Apps, could end up being a big threat to Microsoft Windows’ market share.

Then later:

When Google accidentally leaked its Chrome comic book Sept. 1, reporters and analysts, including yours truly and my colleague Joe Wilcox, argued that Google could make Chrome the premier Web operating system by combining it with its market-leading search engine and increasingly popular SAAS (software as a service) applications. This would eventually constitute a threat to Windows.

And that would spell doom for Microsoft. It’s one thing to squeeze Microsoft out of the Internet game by dominating search and Web services. It’s another entirely to come after the software giant’s core operating system business, wielding the Web as your platform.

Must admit I have a lot of trouble seeing that, as I would have thought in order to supplant Windows, it would need to be gone, and to go from a browser that sits on an o/s to replacing the o/s seems to be a rather large leap. A huge leap, actually.

What they’re suggesting might happen is already a possibility today. There is definitely something that can supplant Windows altogether, and provide access to all the web-oriented apps, etc. that Google offers. Its cheap (sometimes free), stable and has pretty good UIs – in fact, a selection of UIs and different flavours. Its called Linux. However, for a variety reasons, it hasn’t kicked Microsoft’s ass yet (at least on the desktop – there are a few areas where it definitely does, such as web and other server functions).

To suggest, then, that, because Google has come out with a browser, that that will lead to the supplanting of Windows seems, IMHO, to be a bit far-fetched. I’m not suggesting that Google wouldn’t have the wherewithal to try to go after the desktop. They may do so. Though I’m not sure if they’d want to – they have a pretty good business model already…

Anyway, if and when they do something like that it will be so much larger an undertaking than Chrome that the links between that and Chrome would be tenuous at best, other than possibly bundling Chrome within whatever o/s they create.

Even possibly on the application front, I can see Google putting some pressure on MS, and how this might tie with Chrome. But not the o/s on which the whole thing runs.

So I think for the time being, Bill and Steve probably don’t have much to worry about with Chrome’s introduction, at least when it comes to the o/s business (IE on the other hand, is another matter altogether…).

taking the fun out of blogging

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As a lawyer, I understand the need for policies, procedures, practices, etc. when running a business, managing vendors, employees, etc. Of course. Sure. That’s part of work – both my work and the work of my clients. But when I see an article entitled “Blogging Policies and Best Practices for Lawyers and Law Firms” well, gotta say, my eyes start glazing over.

Not that there’s anything particularly bad or wrong about the article. In fact, it offers some good advice on avoiding “ethical minefields”, creating “powerful marketing tools” and ensuring you realize a good return on your “investment”.

Ugh. To be perfectly honest one of the primary reasons I blog is not to realize a return on investment, or to create a powerful marketing tool, but rather just to offer casual observations (or ruminations) on my work or things related to my work. In other words, its a bit of fun, as compared, for example, to writing a formal research paper, journal article, or a 100 page outsourcing contract. For those types of writing, there are many, many rules, requirements and policies to remember and adhere to, amongst other considerations. And relatively speaking, its not quite as much writing that stuff as it is posting what are ostensibly meandering ramblings about the next new thing. Don’t get me wrong, its certainly interesting and challenging work, but its not the type of thing one typically does to relax.

I guess what I’m getting at is along the same lines as the previous post about making blogging part of someone’s job. Its kind of like saying that its part of your job to chat up your friends at work on a regular basis. Its kind of like saying that there should be internal policies governing who you go to lunch with, and what you talk about over lunch. In other words, to me, it seems to take all the fun out of it. It makes it seem like work. It puts you in the mindset that it is work. And, to be perfectly honest, I think it makes it less interesting, because you’re too worried about the time being put into it. Too worried about whether you’re writing for your “target market”. Too worried about “visualizing and addressing your market”. Too worried on making your blog sound “informal and conversational”. Too worried about this, that and the other thing, none of which have much to do with the subject matter of what you’re writing about.

Of course, this is just my take on blogging and what I hope to achieve (or perhaps rather not to achieve) by doing it.

enterprise 2.0

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One of the very interesting events that will be part of Toronto Tech Week is Enterprise 2.0. In the words of Thomas Purves, one of the organizers of the event:

The plan is to bring together the worlds of the leading minds from the technology and consulting side of Enterprise2.0 with business leaders (CxO’s, executives and IT/HR professionals) to bring a practical and real-world perspective to these ideas.

Sounds very interesting indeed. From what I can see in Wikipedia, the term Enterprise 2.0 was coined by someone from Harvard Business School and refers to the use of social networking stuff in the enterprise – i.e. Web 2.0 as applied to business – just to be clear, not as a business, but applied to business.

I was chatting with Mark Kuznicki who mentioned a great example of this described in Wikinomics – Goldcorp and how it took social networking and open-source type tactics to develop a very interesting approach (and very rewarding and profitable solution) to difficulties it had faced. I can’t do the topic justice here – check out the book or have a chat with Mark – its quite an interesting tale.

Similarly compelling tales can be found in a recent article in Wired on crowdsourcing, which I found very, very compelling. Take a look at Eli Lilly’s InnoCentive program or Marketocracy, both of which are mentioned in the Wired article – pretty tough to argue with the results.

So, if you’re a business person, this event would be well worth your time. So go. Then please try to convince the powers that be at my firm to adopt some of this stuff!

Just noted one quote from Wired that I thought captured one of the principles quite nicely:

4. The crowd produces mostly crap

Networks like InnoCentive, Mechanical Turk, and iStockphoto don’t increase the amount of talent – they make it possible to find and leverage that talent. Any open call for submissions – whether for scientific solutions, new product designs, or funny home videos – will elicit mostly junk. Smart companies install cheap, effective filters to separate the wheat from the chaff.

The Virtues and Evils of Open Source

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Yes, I know, I’ve been behind lately. A ton of very interesting things to catch up on. But I’d like to put in one quick note about open source code. I recently came across an article, written last year by a lawyer, generally advising development companies not to use open source. I don’t quite recall where it was (if I did I’d link to it) but I do remember it being quite clear in stating that using open source is A Bad Thing and to avoid it altogether – not just to be careful, but rather to treat it as one would radioactive waste.

With respect, I don’t quite agree. I certainly advise my clients to take a great deal of caution in using open source code, particularly the GPL variety, and very particularly if they have a desire to keep some or all of their own secret, proprietary code secret and proprietary. That being said, I do have many, many clients who have used open source code to great advantage in various ways. Some have simply used existing open source code to avoid reinventing the wheel (and saving on costs), while taking care to keep viral elements out of their proprietary code. Others have been more aggressive with the open source model and have intentionally decided to use open source as the basis for their business model and making their very own code, or parts of it, either open source or subject to a dual-licensing model. As the Red Hats, JBosses, Sleepycats, MySQLs etc. etc. of the world have demonstrated, you can go open source and still have a pretty viable business. And, of course, there are the “old world” companies like IBM who have decided to go open source (in some limited ways – e.g. IBM’s DB2 Express-C thing).

Of course, this is not to suggest that anyone through caution to the wind and just start pulling down stuff from Sourceforge and whacking it into your product. Use of open source definitely requires some planning ahead and consideration of what the business model and value proposition of your business will be. Optimally, enlist the help of a lawyer who’s familiar with open source licenses to discuss what you plan to do and the packages you plan to use. Or, if that’s not feasible, try at least to read the applicable licenses yourself and ensure you comply with them, because if you don’t think that anyone will notice, or that no one will actually sue you, you may want to pay a visit to the GPL Violations Site and reconsider, in addition to the questions that will be asked of you when the due diligence starts on your next round of financing or, even worse, your (aborted) exit event. Can badly managed open source usage (and I emphasize badly managed, not simply open source usage) kill a deal? Definitely.

In short – I don’t think open source is necessarily a bad thing. In fact, it can be a pretty good thing, not just in the social good sense and all that, but also as a business. But it need to be used taking into account its terms of use and ensuring that its consistent with the strategy you plan to take.

If perhaps there’s one thing I’d recommend it would be for shops to make absolutely sure they have a disciplined approach in tracking where code comes from and the terms under which its being used and why its being used. That applies not only to open source stuff, but also, for example, your programmers taking neat snippets of code from Dr. Dobbs or something else, or coming across a nice little script somewhere on the Web and saying “Gee, that’s neat, let’s use it in our product”.

Anyway, if I remember where the article was I’ll update this to include a link.

Pretexting, Canadian Style

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From one of my very smart colleagues at the firm – a recent Canadian case involving “pretexting” like activity a la HP.

The short story: A company hires an investigator to see what some former employees are up to, since they’ve started a competing business. Based on what they find out, they sue the employees. In discovery (in rough terms, the process through which each party gets to look at the information that the other side has supporting their case), the employees find out that the investigator has obtained their phone records and also has recorded them on video at their business premises, in both cases without their consent and without a court order.

Sound somewhat familiar?

So the employees countersue the company and the investigator. It turns our that the company wasn’t aware of the methods used by the investigator and so is left off the hook, but the action against the investigators is given the green light.

Whether or not the claim of the employees will succeed remains to be seen. In the meantime, folks thinking of using investigators, for whatever purpose, would be wise to give serious consideration to the nature of information that they want to collect.

Of Search Engines and Competition (Part II)

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Read a very interesting article on the weekend on how Yahoo! blew it. No, they’re not really a search engine, or rather weren’t really a search engine, but thought I’d mention it given my previous musings on search engines. The article, I think, demonstrates pretty clearly how quickly things can change in the online world, and how the balance of economic power can very quickly change so that the one puny underdog can become the king of the junkyard, so to speak. Not that Yahoo! is exactly the picture of abject failure. But, relative to Google, they certainly have some catching up to do. And if Google isn’t very, very, very careful, they may very well be in the same position a few years from now – struggling to catch up with the brash young upstart that has come up with the Next Big Thing…