Subject: Re: Thoughts on GPL
From: John Gilmore <gnu@toad.com>
Date: Tue, 24 Feb 1998 13:36:43 -0800

Hi Keith!

> Back to my standard example: you spent N man-years writing your
> software, and then you GPL it.  Many corporations already have
> good marketing and support organizations, so one takes your
> work, put their label and marketing/support behind it, and
> they're going to make the money, not you.   What you brought to
> the party, as a good software engineer, was the engineering and
> an understanding of how to build complex software.  That's a
> completely different skill set than the one required to market
> a product.

If this was true, then there would be a lot of marketing and sales
companies in the free software market (as subsidized "free riders"),
and few programmers (as exploited workhorses).  But in fact we have
the exact opposite: thousands of programmers, and a half a dozen small
CDROM companies.

Perhaps the error is in not looking at competitive forces.  What the
progammers bring to the equation tends to be unique: they're good at
particular things, they aren't fungible.  But the marketing/sales
folks are all in serious competition, forcing their prices to the
margin.  One CDROM copy of ftp://prep.ai.mit.edu is as good as any
other.  Only thir ability to integrate good technical work (to
distinguish their product and provide support) lets them charge a
premium.

> Even if your work isn't highjacked by someone, you aren't going
> to even begin to recover your engineering costs by selling
> support and/or enhancements.  I won't justify that statement
> here, but believe me, it's absolutely correct.

I know from personal experience that your "unjustified" statement is
untrue.  Not only is Cygnus able to thrive this way with existing free
software, but it has been able to catalyze the creation of new free
software, being paid by customers to create it from scratch.

Keith, my guess is that you're an engineer looking at marketing,
sales, and finance.  Any salesman will tell you that if you don't
believe in your "value proposition", you're going to have a tough time
selling it.  You clearly don't believe, therefore you can't sell it,
therefore you can't recover your costs.  It's a self-limiting
attitude.

Cygnus has worked hard to find and explore ways to create value for
customers, and we know we're in the business of creating that value,
not in the business of "writing free software", which is only a
powerful means to that end.

> Finally, to sell a product you have to find or build a marketing
> organization, a sales organization, and all the other trimmings.
> Expecting to convince your financiers that you're going to be
> able to survive, when you give away your only product, is not
> a good plan.

Hmm, it worked for us.  Cygnus took an $8M venture capital investment
a year ago.  The VC's understood the free software business model;
they weren't hoodwinked.  We "convinced our financiers" that we would
survive, perhaps by surviving for six years being run completely on
revenues (total investment, loans and equity, before then was under
$20K) and growing at a pretty good clip.

It looks like BSDI is doing OK too, using a relatively proprietary
business model.  That's OK, you have plenty of company.  Just don't
mistake "I don't understand your business model" for "Your business
model doesn't work".

	John