Open Source on a foggy morning – a conversation with a Red Hat

As our tour bus waggled its way out of München and towards the Red Hat European headquarters at Grasbrunn I thought about Cloud Computing.  I glanced out the bus window towards the direction of the sky but saw no clouds.  It was fog, fog and more fog.  After attempts to figure out how clouds compute I suffered a mini brain aneurism and decided to stop thinking because I was certain all would be explained at Red Hat.  The fog was going to break and the day come back with clouds, sky and such.

 A building emerged from the fog.  Upon our arrival at Werner-v-Siemens-Ring 11 a man in a black sweater wearing a red hat greeted us.  The mystery deepened amidst the fog.  Who is this man and why is he wearing a red hat?  I expected to be lead to a smoke-filled room illuminated by nothing but a single hanging light bulb.

 We followed the man in the red hat up three flights of stairs in a monotone building and promptly sat down in a neutral-colored conference room.  The man in the red hat was an energetic and polite fellow: imagine Waldo (from Where’s Waldo?) wearing a black sweater and red hat.  As it turned out, the man was Jan H Wildeboer, the Evangelist of Open Source Affairs with Red Hat.

 Red Hat was founded by Richard Stallman, Lawrence Lessig and Linus Torvalds.  The mission of Red Hat is being both the keeper and collaborator of Open Source code.  Their current market capital is about $8 or $8.5 billion with $1 billion in revenue.  They do not have capital assets but consist of people resources.  They have 25 APAC sites, 35 EMEA sites with the rest in the US.

The process of acquiring Open Source code begins with an open source community of roughly 100,000 projects.  After rounds of selection and stabilizing these projects, selected projects are funneled to Red Hat.

The main advantage of using Open Source is that most of the technologies are well established, mature and proven for enterprise use.  It is easy for an enterprise to expand their use of open source to help them grow.  Open Source technologies are cost-effective because of the low cost of entry across the hardware, administration and software.  Finally, they are both flexible and secure because there are no vendors to lock-in and it’s easy to integrate.

 Red Hat’s business model is to sell “boxes” or available Open Source codes to clients and charge subscription fees.  The subscription fees ensure the clients receive updates when available.  Otherwise the clients are free to terminate the subscription at any time and customers can tailor their own development needs.  Red Hat called this low cost, high value computing.

 Red Hat’s value propositions for the clients include matching the right products for each client’s business needs.  Their product’s level of scalability and availability has been proven across enterprises and enterprise classes.  Most importantly, Red Hat staff provides expert front-end client training followed by continuous support, forming a consultancy relationship with clients.

 Luckily, a brave individual (let’s call him “Satyen” to protect his anonymity) asked Jan, “Wow, this is very cool but what about Cloud Computing?”  Jan shrugged his shoulders and replied, “It’s just a generic term.”  He went on to explain that Cloud Computing is “simply” computation, software, data access, and storage services that do not require end-user knowledge of the physical location and configuration of the system that delivers the services.  Okay the conversation ended with me experiencing a second aneurism with near cardiac arrest. 

 As we silently proceeded down the gray stairwells I again wondered what exactly Cloud Computing was again?  Perhaps it didn’t really matter as Jan had advised.  What really matters are the principles Red Hat was founded upon:  Creating a community where developers and enterprises can share tools.  But this community is nevertheless fragile and can only be maintained as long as there is mutual trust between parties.  Red Hat has vowed to remain true to its calling (like a crime novel detective) and continue to differentiate themselves from other corporations like Microsoft, SunMicro or Oracle (somehow always the villains of an unending story).

 Our tour bus waggled itself back onto the main road.  I turned and looked out the window and the Red Hat HQ was already fading into fog, with the exception of a hint of red still visible in the distance.  Again I looked to the sky in search of a cloud or two but the day turned out to be sunny and blue.

Monday, March 21, 2011

Our day today started with a presentation from Ashoka.  Ashoka is a non-profit organization aimed at enabling social entrepreneurs.  The concept of social entrepreneurship is new for me.  Wikipedia defines a social entrepreneur as some who recognizes a social problem and uses entrepreneurial principles to organize, create and manage a venture to achieve social change (a social venture).

Ashoka was initially formed in 1981 and currently operates in over 70 countries.  The Ashoka model starts with the individual and seeks to address a specific problem:  many ideas that could benefit and change society as a whole are never realized because the individuals behind them lack the time, resources, or connections to make them happen.  Ashoka seeks “fellow” to invest in through small living stipends designed to enable social entrepreneurs to make ends meet while moving their ideas forward – i.e. allow them to stop working and devote their best energies to the idea.  Downstream, Ashoka can provide access to best practices and networks for financial investment and dissemination of ideas.  In an ideal world, Ashoka is try to identify and spread those ideas that can change the systems in which our society operates.

The concept of Ashoka really struck a chord.  Many great ideas – regardless of scope or intent – die on the kitchen table because a person cannot justify quitting to themselves and/or their family.  This is true especially when the scope of change is the social system because the profit potential may be low.  The public sector cannot often justify investment in such high risk ventures, and the private sector may not have incentive to invest in the early stages because of the low profit potential.  A company like Ashoka provides an avenue to resources in the early stages that would normally require an entrepreneur to assume great personal financial risk.

Ashoka does have a predictable problem though: the scope of their vision crosses many industries and geographies and thus requires a diverse range of competencies and experience.  While Ashoka cannot often recruit and retain high quality talent to address all target fields of work, they supplement their internal human resources with a network of professionals/corporation who devote time and resources to supporting the Ashoka “fellows”.  Participation in the network is promoted as a way to give back and often attracts professionals with extensive connections in the business world as well as the public sector that can enable the change in social system(s) envisioned by Ashoka.

Our presentation concluded with a chance to act as part of that network.  Pamphlets providing overviews of several projects Ashoka is supporting and we were asked to provide some feedback on some of the challenges they may face implementing the ideas.  This activity was a distinct reminder that we do not need to be the social entrepreneur nor the experienced professional “giving back” as part of the network to be part of this desired social change; each of us can use what we have learned here at TMMBA to provide guidance and advice to enable those around us to be more.

Knorr Bremse

One of our final company visits of the study tour was of Knorr Bremse (KB).  Although not a household name, KB has made its mark upon the world.  For over a century, Knorr Bremse has been a major supplier of brake systems to trains worldwide.  Since its’ founding in 1905, KB has further expanded its product line into large commercial vehicle brakes (trucks, buses, etc.), and more recently, on-board systems and consulting services.

From the hotel, the ride to Knorr Bremse was a short one, and we passed by a  few notable sites: Olympiapark (Olympic Park) and BMW World, which we would later visit.  Upon arrival at KB, the company was kind enough to provide us with lunch before presenting to us.

We received a total of three (!) separate presentations from KB.  The first one focused on giving us a general overview of Knorr Bremse’s extensive history and the business environments that the company operates in.  The second presentation was more forward looking, giving us some insight of how recent global events are shaping their company.  A couple of interesting insights that they shared include the following:

• Greater Urbanization:  In human history, the majority of people lived in rural areas while the minority lived in cities.  However, recent trends show that more people are moving into condensed urban areas.  As people are consolidated, there will be a larger need for efficient mass transportation systems – clearly, a big opportunity for KB.
• Challenge of Localizing in a Global Market:  Knorr Bremse has found itself looking to do business in developing nations such as China, India, and Russia.  In the process of doing so, KB has discovered many challenges in doing business in these areas, especially in regards to local cultures and regulatory requirements.

The final presentation was actually a short tour of Knorr Bremse’s final assembly plant.  Our tour guide was a very enthusiastic engineer, who showed us some of the company’s brake systems and gave us a general overview of the plant’s structure.  

Given the amount of information they shared, Knorr Bremse was certainly one of the more thorough visits of the entire trip.  As one of the last companies we visited, KB seemed to reinforce the points that the other companies had conveyed – mainly, the many opportunities and challenges of a rapidly globalizing world.