Living in fear is always bad, but being oblivious may be worse.
As is my usual practice, the other day at the bookstore I was browsing magazines on topics I know notvery- much about, my own personal Foreign Culture Immersion at Barnes & Noble. I spied a brilliant editorial, reprinted for you on the next page, in Linux User Magazine.
Our conversation today isn’t really about Linux, but a preliminary word about Linux is in order. For those unfamiliar, Linux is the #3 operating system in the world. For desktop PC’s it’s a distant third behind Windows and Mac, but for web servers, it’s #1 by far. 60% market share, in fact. Google runs 450,000 servers on a modified version of Linux. My web server runs on Linux and there’s a good chance yours does too.
Linux is a programmer’s anti-establishment answer to corporate software. It’s his way to spit in Bill Gates’ eye, because it’s a free operating system built by untold thousands of developers who use, modify and freely share their code. It’s “the people’s operating system.” Linux guys hate Microsoft, and they love the fact that Linux is a headless monster that Microsoft is powerless to fight. Linux guys have been watching with glee as Google has risen to challenge Microsoft.
As you’ll see in this column by a Silicon Valley software developer, Microsoft has always had a healthy bit of paranoia about their place in the world, a caution that is strangely lacking at Google. Quotable quote: “I do worry about how things will be at Google when the money gets tight. And the money always gets tight. I’ve played the role of Banquo’s ghost at enough Silicon Valley startup feasts to know how these stories can end.”
I do believe in economic alchemy, and Google is as successful as they are precisely because they’ve created just that. Google is the fastest channel between buyers and sellers the world has ever seen. I also believe in abundance – not in some airy-fairy metaphysical sense, but in the sense that the true resources in the world are ideas and applications of ingenuity, not raw materials. We’re not running out of anything, we just lack wisdom.
Still our friend Mr. Allison here has a point: All free rides come to an end. What happens when Google’s stock tumbles and becomes the pariah of Wall Street? What happens when they hire a new CFO or COO or CEO who decides that ‘the beatings will continue until morale improves’? What happens when the think tank-time and corporate-funded brainstorms get shut down to make Googlers focus on their ‘core competency’? What happens when Microsoft engineers a way to put contextual advertising on the computer desktop and MSN AdCenter becomes a force to be reckoned with?
Aside from how this affects your experience as a Google advertiser (competition for Google will be mostly good for you of course) the larger question is: Do you have a healthy dose of Microsoft-style paranoia? Or are you blithely going along like Google assuming all will always be well? Is more than 25% of your business coming from one single place? Are you excessively dependent on a single source of traffic, a major joint venture partner, a major supplier, a single merchant account?
Your homework assignment for today: Make a pie chart of all those things for your business, then diversify to make sure you can’t be taken down by one well-aimed strike.
Oh, and a tip of my hat to Linux User magazine for letting me reprint this article. If you’re interested in any or all things Linux, subscribe at www.linuxuser.co.uk.
Stone For The Stone Soup: The Chasm Between Paid and Free
Since we’re talking about Linux, some words about the “free” and “open source” and “public domain” worlds will be helpful.
The concept of Open Source has been growing by leaps and bounds during the last 10 years. Linux is the most famous example – if you want a computer operating that’s entirely, completely free, complete with MP3 players and document editors and spreadsheets and web servers and everything else – you can download it all and install it on your computer. You could build computers, install Linux and sell them all day long, no strings attached.
If you can deal with the not-terribly-user-friendly nature of Linux (it’s not as easy to use as Mac or Windows programs) it’s generally fast and rock solid too.
The Open Source concept was extended to massive use by Wikipedia. Wikipedia is the world’s largest encyclopedia, it’s online at www.wikipedia.org. Anyone can contribute or edit articles, and the whole thing, like Linux, has been built by untold thousands of people contributing their expertise. You can re-purpose their content all you want, as long as you work within the GPL guidelines.
Both of these things are wonderful examples of people creating communities and creating huge public resources by sharing. (They’ve both also got the hairy downside of incomplete, fragmentary content and lack of supervision. There’s a lot of poor-quality articles on the fringes of Wikipedia, especially in controversial subjects.)
Linux and Wikipedia are governed by the GNU GPL (General Public License), which basically says: You can use it free, you can share it free, and you can change it all you want, as long as you make your modifications also available to the public for free, under the same public license.
So anything that gets mixed with GPL content becomes free, and anything copyrighted cannot be mixed with GPL content. There is a chasm between the two worlds. Copyrighted materials and programs can be used together but they must be kept distinct.
Now of course you can certainly sell GPL software or content if people are willing to buy it, but you can’t copyright it. The bottom line is: GPL content or software all by itself is not and cannot ever be the sole basis of a business. It is only something that you can build a business around. (And it may be an essential ingredient on which you build a business – the fact that it’s free allows you to invest your money in other things.) Wikipedia is still not a money-making venture, it’s supported by donations. In fact they hired lots of people through E-Lance and similar services to create the stone for the stone soup, so that it would gather enough momentum to be selfsustaining.
Public domain works from the U.S. Government are somewhat similar, except that you can edit or repurpose them and then copyright them. Because you can copyright public domain derivatives (but cannot copyright GPL derivatives) many people have created businesses from the public domain. For example, all the endless variations of Christmas song arrangements you hear have new copyrights by the arrangers.
Examples of Business Models With Significant GPL or Public Domain Foundation:
- Google: Eight years ago they were a teeny tiny startup company running on borrowed computers at Stanford.
There was no possibility of buying expensive servers or blue-chip software. It was built on a modified version of Linux instead. All 450,000 of those servers run on free software. And it runs on ordinary, plain-Jane, commodity computer hardware, not “professional” servers. (We discussed this in my interview with Stephen Arnold several months ago and Renaissance Club members got the CD.) This was an absolutely critical move on Google’s part; had they done things differently, history would likely have gone in a different direction.
- Infusion Software (www.ManageProSoftware.com) is the software that processes my orders and manages my customer database. I pay those guys $300 a month but they built the whole engine on Open Source software.
What I’m paying for is the combination of all those components and the service that comes with it. The fact that they don’t have to pay licenses to Microsoft or Oracle or anybody else is a big factor. (The flip side is, they have to have guys on staff who know how to put all the Linux pieces together.)
- There are many companies that sell legal or financial information built partly or entirely from publicly available government documents. Making otherwise obscure information readily available and easy to search or use is valuable in and of itself.
- The enormously successful TIVO digital video recorder is really just a modified Linux PC.
Creating a business out of any of these things is no less than the application of marketing alchemy. It’s all about the Value Add. What you add to the “free” thing needs to be a quantum leap, above and beyond the free thing itself, and it can’t be easily replicated. Is Google easily replicated? No. Infusion? No. Each of those companies has taken commodity hardware and software and built a giant Unique Selling Proposition with it.
One of the things you’ll always run up against when you spend any time in the “free” “let’s share everything” GPL world is people around you resenting you for building a proprietary business with their freely contributed content. The whole Linux world resents commercialism, which shouldn’t be much of a surprise; those guys really believe that software copyrights are evil and create a divisive world. Hard core business people (like Microsoft’s Steve Ballmer) think publicly created software is a communist threat. Well, if you’re going to get the best of both worlds you have to live with one foot in each.
Successful people of all stripes cultivate exactly that skill: Bridging dissimilar worlds. My life in MLM greatly contributed to my occupation as a sales manager, working with reps and distributors in the industrial, high-tech, B2B world. I’ve seldom even tried to explain to anyone how designing stereo speakers as a teenager taught me to juggle dozens of tradeoffs inside my head, all simultaneously, and now I use those same skills when I develop complex, multi-step marketing campaigns. My most successful students almost universally bring skills from an old profession and apply them in the online marketing world.
Long live the two-headed monster who spans the chasm between two worlds who don’t understand each other. By definition, that’s what innovation is. Those who can innovate, inevitably prosper.
About this month’s CD: This is an interview with Bill Hammond, a man who has mastered the art of bridging dissimilar worlds – selling marketing to attorneys, for example. Pay close attention to the piece about inferential thinking and the Cuban Missile Crisis – that story is worth the price of admission, all by itself.
Perry Marshall
