Default_to_Open.srt

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We've started working with Linux by 1992.

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--originally we wrote the code because we need it--

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--this idea of writing kernel really captured the imagination--

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--do really want to sell just another set of proprietary software to another set--

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--we're not going away. We not getting any less aggressive-- and a--

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We're open source company and we are not going to walk away from that

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just to make money.

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[in the BEGINNING]

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Opensource is not new. The whole software business effectively was not business.

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And in beginning it was selling hardware.

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And to run hardware you need some sort of software

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But nobody cared about software. No, nobody cared about licensing or selling software.

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That became later by standartization, commoditization of hardware

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where people could exchange software between machines.

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Now let's get back to this times. 1985, 1980.

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And there is smart hacker called Richard Stallman, rms.

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And he is-- at MIT, Massachusetts Institute of Technology

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in effectively he is working around MIT and he's a real hacker.

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The good old sense of hacker. At that time hacker was the guy who

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sneak into the office of the professor, hacking into his room.

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To get access to the terminal that was connected to the time sharing system.

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[Hey, look! Testpapers!]

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That where term hacker originally comes from.

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Richard Mattew Stallmann. He created the Free Software Foundation,

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the GNU General Public License, which nowadays rules a lot of free software out there.

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And effectively saying, you know, "I don't want software vendors

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to make a divide between users and developers.

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If I like software, I must be able to give it to anyone and share it."

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Richard Stallman was the youngest kid profiled

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in Steven Levy book. He was called little Richard Stallman by

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the elders of that AI lab

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Now Richard Stallman the great guru of Free Software movement.

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He was a mentor to me. So that shows you where I was on the

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you know, on the genealogy of this whole movement.

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It was-- that time on the late 80-s, early 90-s. Where if you wanted something

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you built it. And if wanted something really special, you shared it.

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The GPL caugth on especially in the late 80-s, early 90-s.

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Promulgated by the Free Software Foundation and in particular by Richard Stallman

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with help from Eben Moglen.

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Copyright tells you, you have the right restrict other from copying your work

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from modifying your work. From distributing your work,

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GPL says, "hey, we gonna give you the right to copy it, we gonna give you the right to modify it

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gonna give you the right to distribute it.

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And the only requirement we've got, if you do distribute it,

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you ahve to do it under the same license agreement.

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And that's way we ensure that the same benefit that you derived out of GPL license software

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you're extending to other-- other parties.

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I first ran into a-- the GPL which is a license, the GNU Public License

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in the late eighties actually, in England.

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And-- it kind of stricker caught (dimly) in me.

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But I didn't get a chance to actually do opensource code fulltime

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until after I came to the US.

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And the first job where I was doing really open source and getting paid for it

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was when I joined Cygnus, which is Michael Tiemann's company that you guy ended up buying.

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I actually remember that were quite astir when Richard Stallman announced project GNU. And the GPL.

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I remember people debating whether it was good idea or bad idea.

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Whether it could possibly work or not possibly work.

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And I remember there this thing going on

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and I learned about GNU Emacs editor and I was astounded at the idea that something so

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reach and featureful could be available with source code.

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And I actually started reading the source code of Emacs.

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I was always interested in compilers.

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I exceled at the kind of math, at the kind of study that was related to compilers

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and I began to form in my mind the idea that I was going to write The Great American Compiler.

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And on my birthday, in 1987, Richard Stallman releases the GNU C Compiler.

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I could have seen that as glass been shattered. Not even half-empty but just

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all the water gone out. Or I could at that as glass completely full.

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Here is a world class piece of software that I could contribute to

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And I didn't need to worry about working for a company or licensing it.

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and that was a first time I really began to feel that not only is this a lot of fun

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but the amount of value that could be unlocked by free software, was amazing.

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This is the innovation of Michael Tiemann that he realized-- he read the GPL which is a

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a very strange document if you first read it.

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it's basically the software license going at about evil software holders and stuff.

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And Mike Tiemann's genius was realizing, "This is a business model!"

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And that really was the innovation that can found a Cygnus and ultimately ran in, I think.

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Nobody wants start the business because while they all thought it was a great idea

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they thought, it will never work.

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And after hearing that for two years, that's when I had my crucial insight

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If everybody thought it was great idea then I was convinced

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that the capitallists succeed to find a way to evaluate it.

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And if everybody thought it will work, I realize I've had no competition.

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By default everything was proprietary

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so, you know, if you wanted to do open source work professionally,

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Cygnus was the literally the only company that was.

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There was no, you know, it wasn't like you could do open source work and work for anybody else.

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The goal of the company was to prove that this business model was as good as any model

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that had ever been imagined for software. Not just in terms of profitability but just overall sustainability.

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[enter LINUS TORVALDS]

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One of the things that made this whole free software thing work

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is that it was not dependent on the single individual.

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When Linus Torvalds sent out his message, his famous message about,

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"Hey, I'm working on an operating system. It's not gonna be professional like GNU--"

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Obviously this idea of building a kernel really captured the imagination. And his timing was perfect.

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And he wanted to call it "freax", f-r-e-a-x.

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So he created directory called freax and he wanted to upload source code there.

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And the system administrator of that ftp service said, "This is a stupid name.

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This is really complete bullets, so lets rename it. You're Linus, lets call it Linux.

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That's how the name Linux was invented.

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Which leads me to the three fundamental theories of the whole IT industry.

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It all happened by accident. It was done by amateurs. And nothing really change.

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[BOB meets MARC]

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In early 1995, I've got a call from one of my friends who was still working at Sun Microsystems

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And he told me that there is a little company in North Carolina

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that was doing some really amazing stuff

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And at the time they maybe had dozen, fifteen people.

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But they had done something really new with free software.

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I could sense there is something interesting.

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And so I brought my two co-founders together and I said, "You know what?

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I think we have to do an acquisition.

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I think we should take ten percent of our equity and buy them."

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And I did not make the sale.

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Five years later they took ten percent of their equity and bought us.

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In some ways being acquired by Red Hat was a redemption

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because people at Red Hat were believers.

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When I met Bob Young, I knew

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that Bob seen same vision I had.

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Bob had the good fortune to build envision

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around a Linux distribution which has

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major scalable benefits over something like a compiler toolchain.

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I was a big skeptic when I first ran into Linux

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91-92, as a big skeptic. I didn't think it go anyway.

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It was filling a void while you waiting for real operating system to show up

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on the new 486 machines.

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But there are no more (dimly) sales guy.

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And I looked after customers one customer at a time

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What I could see in this Linux that I have something to sell.

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Bit if I found the right customer he could not get

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from anyone else on the planet no bounder how big were. (dimly)

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Marc working out his spare bedroom down here in North Carolina over in dorm.

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Was doing a Linux distribution which he named after his missing

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grandfather's lacrosse cap. In fact in this the very first version of his first release.

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In the opening of the manual he told the story of this

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red lacrosse cap he used to wore between classes.

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And he says, "If you in the Philadelphia area and you find my lacrosse cap,

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it'd be grateful if you'd return it to me."

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By the way to this day I believe that's the only bug Red Hat's not be able to track down.

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We go back and forth and say on (dimly)

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Marc-- couple of my customers says your distributions better then

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other people's, and so, you know

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I'm selling a thousand copies a month of various Linux distributions

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I should be able to sell hundreds of yours

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So send me three month supply and send me three hundreds copies

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Dead silence at the end of the phone.

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So we finally get out of Marc that he was only thinking of printing 300 copies

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And I knew how little I was paying him for this copies.

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So we realized we have match made in heaven.

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I needed a product and he needed some marketing help.

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So we ended up merging our little businesses, my ACC Corp. with his sole proprietorship

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[We actually have done a pad of first purchase order of yours too]

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Holy cow! That's unbelievable!

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That's actually my handwriting.

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[Is it?]\nIt's my handwriting.

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[So it's certif (dimly)]

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It is certif I can vouch! There is no question.

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We sort of even somewhat nervous about to being able to qualify for office space

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Were'd a landlord who has office space rented to a company

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who had no money in the bank and whose business was selling free software.

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And we just looked down and go

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"Ooh, you know, I'm not sure I want fill out that application"

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There are very few companies that ever started

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been properly funded from the start that were ever successful.

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Because the concept of a startup is

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is you very much focused what you spent money onto

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until insure you get value from it, becomes part of your culture when you have no money.

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My first encounter with Red Hat was one of the little city of North Carolina

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There was two small rooms, we has a meet

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Can a walk through meter (dimly)

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The second time on my back it was good deal, bigger.

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They got running out of space, they got more space.

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But they still had pretty much. I--

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I first (dimly) the tech culture preannounced that crash (dimly)

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There is things like I budget from 'nuff guns and shooting the managers sitting on blindage. (dimly)

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[an OPEN BUSINESS MODEL]

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So fast we are on the spring of 98.

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I'm now sitting on the business that in tells the partner with

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Some of the top VCs in Silicon Valley want a partner with

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I think I might need some help with this.

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We had a smart team but we did not have a lot of senior industry experience.

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No, let me revise that. We did not have <b>any</b> serious industry experience.

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Which is actually part of our secret.

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Because we have no industry experience we didn't fall into bad habits of the industry.

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It is precisely what allowed us to rethink how the industry should work.

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From talking to Bill Kaiser at Greylock, who is still on the Red Hat board and

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who deserves a huge amount of a respect for his contribution to the Red Hat success over the last ten years.

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"Bill, we need some help. We need some high level help. I don't want a higher VP sales.

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I wanna bring in the guy who might scaled to be a CEO of this thing.

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Who do you know in North Carolina?"

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He says, "What so look complicated because he is gainfully employed

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as the president of the software company that has intentions of going public.

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So I don't (dimly) any interest in talking to-- but I can always make the introduction

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'cause maybe he knows something. No course he's Metthew Szulik. (dimly)

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And my line was, "Hey, Mett, do you really want to sell just another set of proprietary software

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to another set of faceless corporate buyers?

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Or do you wanna come and help us actually reinvent the software industry and materially improve

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how our society functions by empowering engineers to do the right thing with software and gain true transparency?

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Look at a brand this company has on the global basis.

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And the industry, our industries just starting around open source software.

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We continue wanna make information accessible to other people.

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It's very emotional to think that every day people-- more, more people buy into that vision

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of creating and defining company of the 21st century.

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And Matthew very much was the right guy for Red Hat

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[going PUBLIC]

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In some sense Red Hat really hit the lottery with the IPO.

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And one of the things happened with that IPO, that's it really did

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Catapulted Red Hat into a position where we had brand equity.

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That was far beyond anything that either a revenues justified

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or really what we could of ever imagined.

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It was still very much on the peak of dotcom era and we're able to go public at evaluation

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that just dwarf (dimly) the size of our company at the time

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And it was pretty exciting moment. There is no question.

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We came back to Red Hat after being up in New York and doing a road show

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And, you know, being in (dimly) office when it starts to trade-in.

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You know, we were (dimly) $14 and it ended up the first day $44.

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Everyone was all excited and I go, "Well, I guess it's better than going out with 14 and ending up at $10."

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[the SUBSCRIPTION MODEL]

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When Red Hat was created the whole business around Linux was just starting.

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So people were building distributions and sharing them or trying to sell them and etc.

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And Red Hat went to a mode that I would call the heroine face. We're sort of drug dealers.

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[That's right kid, first teen bucks. You sort of hold me for a while.]

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Every six month you get a fresh shot of Linux. You know, nice new box, nice new logo, new manual, new CDs.

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All wonderful. You know, we created a lot of articles. And journalist reporting about it

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because a revenue model was quite simple: sell boxes.

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Matt usually keep talking to us about, "We gotta get away from box product."

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And we (dimly) gone, "That's the only place where we make any money right now!"

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That was hard to understand what he was telling us at that time.

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You know, in retrospective is like, "Oh, year! That made a lot of sense."

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At that time, no so much.

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The problem started to creeping (dimly) from the beginning.

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People that run professional systems, business critical systems will not update the systems every six months.

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What we did with Red Hat Enterprise Linux from 2002 is saying, "You're customer, you not buying boxes anymore.

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What you now buy is to right to use a software whatever version that we produce during

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run time of your subscription which in one or three years."

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We retired our most successful product.

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We retired Red Hat Linux.

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There were lots of other ideas thrown around on how to do the subscription model.

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Everything from "should we have proprietary installer" to "should we have the whole thing proprietary."

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One of the things that we kept coming back to in that process is

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We an open source company and we not going to walk away from that just to make money.

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But because we did it, the free software line we able to keep community

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We just thinking some other companies stumbled on it because they did stuff like source code jam

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They didn't have community distribution in parallel.

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We're the first ones to go on to that subscription model.

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Every other software company on the planet would love to be on the subscription model.

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Now we have the advantage we're starting with the clean sheet of paper because we didn't have any revenue back then.

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The benefit of the subscription model is you start spreading the receive of the money

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in the recognition of the revenue that you received

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over period of time you actually maintaining that software.

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We knew the risks we were taking. We absolutely better firm

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on doing that and getting in to the enterprise market.

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By retiring Red Hat Linux, spawning RHEL

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Then fedora continuing to give the community and the open source world

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that completely free operating system that they wanted and that actually drove everything we did.

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While at the same time having a vehicle like RHEL that we needed to make money to continue to fuel the company on.

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If we didn't do RHEL, the company wouldn't be here right now.

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If we didn't do fedora, the company wouldn't be here right now.

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So one important thing that we had to do while we move from a box product company to an enterprise software company

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is really rethink how do we go to market from a legal paper perspective.

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There is thousand different license agreements out there

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but what we were doing was not creating software license agreement.

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We have the General Public License that was our software license agreement.

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And we have to create a recurring revenue model agreement for software.

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And that have never been done before. We didn't have any models to follow.

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One of the really important things that's we knew we had to do to have credibility

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with enterprise customers that we wanted to serve.

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Was to have applications from independent software vendors certified, ported to Red Hat Enterprise Linux.

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And certified to run on Red Hat Enterprise Linux.

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So we had to create a desire in those ISVs to self-certify on our platform.

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And we also had to create a program that companies will be interested and participated in

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in order to self-certify.

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[a growing COMPANY]

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Really from the day one when I joined the company I tried to build a global business.

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Not just separate countries and separate regions but people communicating, working together.

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I started with Europe, building European operations.

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European operations was there, in Germany

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in France and in UK

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that's it. We started operations in Benelux countries, Scandinavia

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We started in Eastern Bloc, or former Eastern Bloc countries

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We really cover now the entire European business

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And it's grew substantially

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Asia Pacific what the next. And our primarily business very beginning in Japan

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So we expanded then Asia Pacific business to China, to Korea, to India

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We expanded our Australian business and entered Asian countries

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Now we really covered the entire Asia Pacific

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About three years ago we acquired our partner in Latin America

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And this business in Latin America grew rather dramatically

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fantastic team and business grew in thousands of percents

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Fill from the smaller base, but we really becoming a true global company

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Which is good thing to see.

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[Welcome to the New York Stock Exchange. There is a real buzz and excitement around here this morning.]

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[Because we have the privilege to welcoming to family of listed companies.]

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[Red Hat, the world leading open source and Linux provider.]

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This is a great day for Red Hat to be listed on New York Stock Exchange.

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It's kind of an honor. And it's where biggest establish companies are.

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I think customers and competitors and partners saw that

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and said, "Whoa, this guys. This guys are for real and they've arrived."

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[JBOSS and QUMRANET]

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You know, there are two acquisitions that I think were also inflexion points for the company.

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JBOSS in the first one.

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If we gonna grow platform we really needed world-class runtime environment,

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we really need world-class development environment on top of that.

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So that was the impedance for us to go out and bring JBOSS.

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And they built a great community, they built a great brand, they built a great set of products.

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And we felt that on the combination of that with the operation system would be killer.

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You know, what we tried to do is either joined, you know, successful projects.

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We be a steward of new projects to try to point, you know, the open source model at

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new areas enterprise need.

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So application space was a natural to be able to--

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there is latec happen if (dimly) wide collaboration around Java development platform.

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A really talented bunch in Israel started the KVM project.

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and we watched that very intently and what we saw was, what we felt was

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an architecturally superior next generation virtualization.

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We really saw a next generation loadable module into the kernel that can

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here it all the goodness of the operating system

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as opposed to the separate layer and separate operating system.

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[the FUTURE OF OPEN SOURCE]

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Open source is moved from being the domain of a few techies and a few early adopters

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to truly being ubiquitous.

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Gartner today says that the majority of enterprise products will include open source components.

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Now, as we move forwards I certainly expect that in software we continue move up the stack

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in broad now into other categories.

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You know, if you look at cloud, clouds will be open source, clouds will run open source.

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So we're here at the fundamental tipping point where computing will be

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forever changed by the power of open source.

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Opensource.com is the key initiative inside Red Hat. And I think we've proven the power

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of participation in software at with open source.

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What I wanna do is take those learnings and make sure we can apply it to other areas of human endeavor.

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Be those academic research, be that health care,

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be that government and participation government, be that legal system.

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There is so many opportunities where knowledge building upon knowledge can be valuable.

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Basically what we finding is that if you look at open source way

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as a way of thinking about approaching problems, a way of solving problems.

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A way of dealing with the world around you in a different way.

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Did you gonna apply open source way and all of its assets.

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And what you will get is a result that's different than if approach it more traditional way.

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It's everywhere, I mean look at growth of open source inside, you know, some of the

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you know, more risk aversive environments that the federal government.

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Open source use, the Red Hat business inside the US federal government is blossoming.

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Now it's really around, less around open source and more about solutions that open sources is built.

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So we find on the open source technology is that so many eyes on the code.

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It's a collaborative community that we found very robust.

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A quite stable and a quite secure.

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Well, like any code there may be vulnerabilities but they're discovered fast and they're patch fast.

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So that mean in my vulnerability testing the open source technologies always fair very well.

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And at last we have the trust of the patient. It's really hard to share data.

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So I find open source and the resulting security is foundational to health care technology.

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The few disturbed to your data and you decide who should see what when and what context.

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It's patient center. It's protecting privacy and confidentiality.

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That's really the way health care should run.

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This whole concept of sharing of-- participatory democracy if you would

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that's embodied the open source software

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has started to have a impact on other aspects of our lives.

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So other issue is the Creative Commons which started into sharing content.

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So free culture refers to

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a balance of

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encouragement

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and freedom

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for people over their own culture.

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There are protections like copyright necessary

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in what I thinks is of a free culture

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but they are limited and balanced

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to make sure that they do nothing more that give the incentive they need

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to creators to create and leave the rest of culture as free as possible.

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This three big things, open source, open standards, and open content.

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And they together form the fundament for the new society that we seeing nowadays everywhere.

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The community values of free software is incredibly important.

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And the ability to make things happen all over the world.

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There are many organizations and non-profits in India who believe that

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the usage of open source is absolutely essential, you know, Braille digital device

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Take computing to the masses.

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And, you know, democracy use of technology in a continuous (dimly).

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So there are organizations which are trying to promote the usage of open source software in education.

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We have close to 250 million children who need to be educated.

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Now if you want proprietary software on, you know, the computers that you give to this children

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The cost of education becomes exorbitant.

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If you look at this One Laptop per Child

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Or universities in second and kind of better third world countries

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always often can't afford really thought to use software, really afford to use software and buy software.

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Of course we care about software. We care about

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the world in which we live as well. We care about everything.

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If you get ... will to drive some good changes

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you know it's not just as small localized this.

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But it has a phenomenal effect on a lot of people.

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Open source as a methodology, as a culture

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it really permiates (dimly) everything that we do here at Red Hat.

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It is very important to me to be a part of something.

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Not only building an institution but something that really matters.

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And matter to not just our shareholders but more broadly to the communities world.

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And Red Hat fits that mission.

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We truly have the mission to change the world.