Red Hat celebrates its 10-year IPO anniversary

Ten years ago Red Hat went public on hype, but its legacy has been built on delivering real value to customers.

Ten years ago today, on August 11, 1999, Red Hat saw its shares triple in an initial public offering that ushered in a new era of commercial open-source prosperity.

Iain Gray , then a Sun employee and now Red Hat's vice president of Global Support, writes nostalgically: "I remember sitting in the Sun office in UK watching the stock skyrocket, thinking the world had gone mad."

Indeed it had. Soon Red Hat's stock was to plummet to earth but not before the company learned a valuable lesson: there must be more than hype to make open source grow.

Red Hat's S-1, the document filed with the Securities and Exchange Commission registering its intent to sell its shares on the public market, was filled with desire to use the IPO cash to improve its brand, expand professional services, and to improve its Web site to "create the definitive online destination for the open source community."

Very little attention was paid to the nuts and bolts of actually making money. In fact, as LWN.net pointed out back in 1999, "Nowhere in the [S-1] filing is anything about 'make more money selling our distribution.' Red Hat clearly sees its future elsewhere."

Not for long. Whatever Red Hat's vision of its business model in 1999, it soon realized that it needed to spin value far beyond a strong brand. The company recognized in its S-1 filing that "if faster Internet connections become widely available, more users may download the distribution from the net, and fewer will buy it."

That worry absolutely proved to be true, leading Red Hat to introduce (the initially proprietary) Red Hat Network in 2000 and in March 2002 upped the ante with Advanced Server, which later became Red Hat Enterprise Linux.

Over the past 10 years, Red Hat has maintained its investment in strong branding, but has focused even more on its core distribution and the value therein, investing more than $100 million each year to improve Linux and its distribution thereof.

The results speak for themselves. Red Hat demonstrated that anyone can be rich for a day with a hype-based IPO launch, but it has more importantly proved that there's a whole lot of substance to open source over the past 10 years. Red Hat has made a massive impact on the software industry, not the least being making open source palatable to the enterprise buyer, to the extent that now open-source competitors are giving Red Hat a run for its money .

There could be no better testament to Red Hat's influence and importance.


Follow me on Twitter @mjasay.

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About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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