Bruce Perens at The BazaarDec 20, 1999, 01:38 (1 Talkback[s])
(Other stories by Paul Ferris)
By Paul Ferris
Linux Today Editor Paul Ferris caught up with Bruce Perens at The Bazaar in New York during a party at FAO Schwartz. Bruce is one of the founders of the Open Source Initiative and is well known for being able to hit the eject button and leave projects, usually in a well-publicized manner.
Bruce has been more than just involved with Linux from a publicity standpoint, his credentials loom large on their own, having worked for several years for Pixar and on Debian GNU/Linux. He's a unique individual technically as well as a warm person emotionally.
Linux Today: I finally caught up with Open Source founder Bruce Perens at a party in FAO Schwartz -- Everybody knows about this place but me!
Bruce:The Greatest Toy Store in the World, Bar None -- But the most expensive...
Linux Today: Clearly a free endorsement by Bruce Perens...
Bruce: Is this going to be audio?
Linux Today: No, it's going to be text on our web page.
Bruce: See, I'm a banker now, I can't swear any more! I have to be respectable.
Linux Today: OK.
Bruce: I can only swear when I'm golfing, for example. But unfortunately, I don't know how to golf.
Linux Today: Bruce, you're into some really cool stuff right now. Could you start at ground zero and tell us what you're doing?
Bruce: OK, back in September or actually late August I was approached by Linux Capital Group, saying "Would you come be our president?" and the idea was to run an investment company in the vein of Internet Capital Group and CMGI. And also Safe-Guard Scientific is an example, where a company is not the conventional capital firm, which is guys who are already rich want to get obscenely richer. And so they have like ten or twenty or a hundred million dollars and they re-invest it in more companies.
Instead, what we are supposed to be doing is taking our capital group public and then you the open source investor buy a share of stock and that stock is re-invested by me in start-up Linux companies. So this is a way for you to get in on the ground floor of a start-up Linux company and for you to have somebody who's big experience in open source goes back to like 1994, and also Ian Murdock who goes back to 1993 when he started working on Debian.
We will be finding companies who we think are good, have marketable prospects, invest your money for you and then eventually those companies will go public or fall flat on their face -- one or the other. And when they go public, you have the chance to make the money that a VC makes rather than an investor.
I'll give an example here: Sequoia capital bought Red Hat at $3, and they can now sell Red Hat at $300, because they got in many months before the IPO. That was what you could buy Red Hat for at that time. Now the first time a conventional investor was able to buy RedHat was at $43. That investor could sell Red Hat at $300 they would have a 6 times profit, and that's quite a respectable profit. But look at Sequoia, they had a hundred times profit, well 99.
So, there is tremendous potential for profit in the venture capital business.
Linux Today: So, I have to ask you, will anyone be able to buy this stock? Will it just be us.
Bruce: Once it's a public company, anyone who can buy stock will be able to.
Linux Today: Next question then is what happens if the Venture Capitalists pick up on what you are doing and like buy your stock instead of for example VA Linux.
Bruce: OK, there is still some small chance that Linux Capital Group could never go public for a number of reasons: because it fails, because people give us hundreds of millions of dollars and we simply don't need to go public, etc.
If that happens I will not have realized my goal of opening the Venture Capitalist business in a sort of open-sourcey way.
Linux Today: Wow! So you're not just changing software, you're changing the financial world!
Bruce: I'm attempting to Open Source venture capital. In other words, I'm trying to let people get in earlier than they would otherwise get in, where the only people who are allowed to get in that early right now can invest a minimum of one hundred thousand dollars and have a two hundred thousand dollar a year income so that if the business fails it's not going to blow their wad.
That is the qualified investor that I actually must solicit now, but when LCG goes public it will have what we call portfolio companies, companies that we own that are not yet public themselves. When you buy a share of LCG stock you will get some ownership of those companies, then when those companies go public we spin them off the way any corporation does a spin-off, and you the LCG stock holder gets a share of the stock of the public company too and you get to keep your LCG stock. We get some of the stock also, we sell that stock eventually and we use that to re-charge the process that gives us more money to found more companies that eventually either go public or fail.
So the idea is that if you buy this stock, and if we work it right, you every few months or few years get stock in another public company as we spin it off. You can hold onto that or sell it, that's your choice, but the idea is that you're getting in earlier than you would otherwise. You can now do this in the Internet business sector with Internet Capital Group. You can look up their prospectus and things and see how they're doing and extrapolate. We're going to be kind of like that, but, of course, we're in Linux where you have to do more than just stick an "e" on the beginning and a .com at end to be marketable.
Linux Today:Basically you're lowering the barriers to investment in a similar way that Linux lowers the barriers of entry to the people who would like to play with an operating system.
Bruce: I guess I'm a populist at heart. I do all of these populist things and Linux is one of them. And then there's this whole HAM radio thing where I'm sort of positioning it as a way for people to learn analog electronics and technology. See Nocode.org and that will tell you something about what I'm trying to do with HAM radio for peoples' education, and also see my personal web site.
So essentially one of the things that makes me tick is empowering the little guy. Why should you be a big corporation to make technology? Why should you be a big corporation to invest in something? Why can't the regular guy have a big part in the development of all these cool things in our future instead of someone having to go to work for some tremendous corporation just to do cool science and to do investment, etc.?
Linux Today:If I'm like an open source developer, and I'm getting ready to do some investment, or I need venture capital, why would I come to you?
Bruce: The kind of person I'm actually looking for is someone who doesn't really have a business yet. They have a great idea, and they are a rocket scientist or someone reasonably skilled in software, open source, etc.
Linux Today: They should be able to do something more than say, Visual Basic, and make some dialog boxes right?
Bruce: Yeah, for example, one of the guys I'm talking with is talking about an open source approach to medical records where obviously the data will not be open source but the ways of explaining it, exchanging it, rather will be.
People are talking about various technologies that have nothing to do with software but where the concept of open source is interesting because you use computers for everything these days. So people approach me with an idea and we decide whether to fund them or not by having the people that I have funded -- the presidents of other companies -- look at their ideas, other technical people who I think are good, our financial people. And if they like the idea, we might make them an offer. What happens is that they get some amount of stock in their own company and they get to be president or Chief Technical Officer, or if they're really bad people persons, engineers.
Linux Today: [At this point I broke into hysterical laughter, because my degree is in Engineering -- LT ed.] So, what are you trying to say Bruce?
Bruce: I'm trying to say that not everybody can be a President or a CTO because there's a large amount of public contact.
Linux Today: I understand --
Bruce: So you can be someone who has a lot of stock in your company, even if you're the kind of person that hates people a lot. But you should understand that if you hate people a lot you're not the kind of person that should be the president.
So we start up your company, we give you capital, we do all the things for you that are boring. That are not your technical dreams. So we free you to pursue your technical dreams. We pay you a salary so your family and your rent is taken care of. We provide your personnel department, your chief financial officer, your marketing. It's a nasty word, but you still need a little of it. In this kind of organization, however, engineering drives marketing and not the other way around.
Just all of the things that a business needs to function that most of these open source people with ideas might not know a thing about. We have some very good financial people who provide that side of the guidance while I provide technical mentoring, helping publicity, etc.
So essentially, this is the dream job for me because if you look at my career you may notice that I'm actually better at starting things and then having other people finish them. I like the idea of sort of advising these people and helping one business get together with another and in general doing what I think are the really fun parts about the business. Then there is somebody who programs -- who loves to program every day.
But unfortunately you know I haven't gotten to write much software lately. I'm going to take some time to write some, just so I don't become some sort of non-programmer. But I make deals. I spent lunch time on Madison Avenue talking about 10's of millions of dollars in investments.
This is just such a buzz because I've been a Unix systems programmer since 1981. I went to communication arts college so I also have a broadcasting background. And now I'm getting to learn this entire new career and I never in a thousand years would have imagined that consequences in the OS community would make me into a banker.
All of the most important things about disciplines are about where they overlap. Like computers for computers for computers sake are not nearly as fun as taking a computer and doing something useful with it. And to do this in general you need to know how to program the computer and some other field, like accounting or painting images or something like that.
So here I am at the interface between software and finance and I really like where they meet. As I liked it at Pixar for 12 years being where software met art.
Linux Today: I think you're doing a terrific job. And maybe some more people will be following in your footsteps. How do you feel about that?
Bruce: That's why I'm there. I want to mentor people to be company presidents and then spin them off. When their companies go public, they are on their own. And I want to have them be communities of companies where they do business together and cooperate -- it's like the open source community made of companies.
It's being a whole lot of fun. I think one of the nicest things for me is like a year ago people didn't know how to get paid to do what they love. Now I think there are so many jobs for open source hackers, that we're all having opportunities to be paid to produce open source software. I'm glad of that and I think there's going to be a lot of good open source software coming out of the things that these companies are doing.
Linux Today: How about companies that want to develop for the BSD license? Is your capitalist firm only aimed at just a certain type of license, or is it everybody?
Bruce: The company's name is Linux Capital Group, because it makes it easier for the investor to understand what they are investing in. However, BSD is free software/open source, at least the new BSD license without the nasty advertising clause. Richard Stallman accepts it as a free software license and it's compliant with the open source definition. And Free Software and Open Source are really the same thing. So BSD really should be part of the fold.
Eric Raymond said at the conference that he things BSD should be more successful because a mono-culture is not healthy and if it's all Linux, you know, something happens to Linux and then we've got no system. If we've got Linux and BSD, that's nicer.
As far as I can tell, almost everything that's being written for the BSD system is also being put on Linux. So I think that an investment in something that's BSD oriented is not out of the question.
Linux Today: Once Linux gets in a high spot, it pretty much opens the door for anything else, because we'll force standards to be open and well defined and documented. I myself am not advocating proprietary products, but if Linux succeeds, something like proprietary BeOS can be a possibility. But it doesn't stand a chance without Linux opening the door.
Bruce: I'm not sure I can help you there. When you're making a new operating system at the same time that someone else is making a really good, really stable, free operating system, it's kind of hard. I'd like to help the BSD and Linux people more. But open systems are really only a part of what we have now, because there are a lot of open protocols that even have patents embedded in them, and there are no open software implementations, etc. And so we really want a world of software that you can really re-distribute, modify, etc., to solve your own problems.
Linux Today: How soon will this be on-line?
Bruce: It's LinuxVC.com. We have agreed to fund our first company, which is Ian Murdock's Progeny Linux Systems and then we're talking with some other ones and we have an escrow account open and are collecting investments from qualified investors which unfortunately is not yet everyone. But when I can collect them from everyone, I'm sure you'll know. So it's on-line, it's going and we're off and running.
Linux Today: Do you have anything else to add?
Bruce: I'm really happy to be at this conference and see Richard Stallman here and hear people talking about the virtues of Free Software and you know I use the words Open Source a lot, but I'm really talking about Free Software. It's nice to hear people say it here.
We coined the words "Open Source" in part because we thought the words Free Software would scare business people away. You can't scare business people away any more -- the smell of money is too thick.
So, I think we can call it Free Software and we'll still get the people.
Linux Today: So back to focusing on the freedom and those aspects? Help make people understand that that's why we are here? Why we are successful, is because of the freedom?
Bruce: Why we're successful is because we decided to break the paradigm where people were prisoners of their software! You know it's so funny, until people like Richard Stallman started saying that, no one even realized that they were prisoners to their software. It's like having really bad fitting shoes and not knowing it. And then one day you get really good sneakers and you want to run around. There's this exhilarating feeling that people have when they finally understand this. I'm seeing it all around me here.
Linux Today: You definitely can run with Linux and run fast! That is something exhilarating and it's an incredible feeling. Basically, all of this has been an incredible work on your part and I want to thank you myself personally.
Bruce: Of course, I could not do this without people that promote this. So I'm appreciative of the work of Linux Today and your personal effort.
Linux Today: Thank you! Thanks Bruce.