Subject: Re: Cygnus and proprietary software
From: "Adam J. Richter" <adam@yggdrasil.com>
Date: Sat, 20 Dec 1997 01:21:25 -0800

>> I hope this trend is just the result of Cygnus's unique
>> circumstances, rather than a problem that every free software
>> company will trip over as it reaches Cygnus's size.

>The proprietary approach simply makes more money.

	I do not believe that proprietary software companies started
with the same level of investment and human capital at the same time
have generally fared better than the free software companies.  This is
my general feeling from four years of following the stories of other
companies whose CEO's I know from Software Forum (formerly
Software Entrepreneur's Forum), The Center for Software Development,
Silicon Valley Asssociation of Software Entrepretneurs and elsewhere.
I think that proprietary software from the same sized company tends to
face stiffer resistance to adoption.

	However, I believe that investors feel more confident in
the valuation of company that has a more direct business model
especially as company's investor pool progresses to wider groups
with less specialized knowledge of the business (founders -> angel investors
-> venture capital funds -> big corporate buyers at IPO road shows
or acquisition -> the public stock markets).  I am not privy to what
goes on at Cygnus, but I wonder if the pressure to make a hedge on
the business model is driven more from investors than the idea of
management.

	Also, I hardly see how a hedging the business model means
that the business model has failed.  I think most businesses
at a near-IPO or later stage tend to have "hedge" products that basically
just address the most common "what if" investor questions like "what if
everbody moves to E-commerce", or "what if microsoft fields a competing
product."

	Unless you think that writing proprietary software is bad per se,
the real problem that Cygnus faces is in how it has diluted its brand,
a long term cost.  "Cygnus" no longer automatically means free software.
This may not be very important to the top level economic buyers who
seem to make the deals with Cygnus sales people and management on the
golf courses (or wherever).  However, technical buying influencers
whose input is not as directly visible to Cygnus may not push as hard
for Cygnus in the future.  These are people who say "I want tool set
foo", and all of the details of why tool set foo are preferred may not
even percolate up to the person on the golf course.

	I do not think that Cygnus is doing anything evil by also
producing proprietary software, since I do not think that proprietary
software is evil per se.  Whether this maximizes their shareholder
value is arguable.  Perhaps an original founder like John would feel
differently on the grounds that he believed he was investing for more
than just financial return, likewise for some other stakeholders perhaps.

	I admit that I am talking through my hat when it comes to
big corporate buying decisions like this.  In addition, as I have
said, I do not know the goings on within Cygnus.

	Let me also speculate a bit in favor of Cygnus with regard
to free software.  Cygnus is hosting the egcs project and there are a
lot of Cygnus people invovled with it (see http://www.cygnus.com/egcs).
That is a major release of free software as recently as 15 days ago.
I also see recent snapshots or official releases of Cygnus-originated
free software, such as dejagnu, gnats and automake.  Perhaps an outright
majority of all of the mail that I get back when I send in patches or
bug reports to the appropriate gnu mailing lists are from Cygnus people.
These are not the actions of a company that has abandoned free software.

Adam J. Richter     __     ______________   4880 Stevens Creek Blvd, Suite 205
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