OSBC 2010 - Highlights - Day 2

Day 2 of the 2010 OSBC again had several interesting sessions, including some insightful legal sessions.

A. Maximizing the Value of an Open Source Business

If you are looking for a nuts and bolts "how to" session on building an open source business from the ground up, this is the type of session you need to attend. Benchmark Capital's Rob Beardon made it through only half his presentation on "Tactics and Metrics for Scaling an Open Source Business" because of the volume of audience participation. Beardon, along with assistance from Zack Urlocker (former MySQL VP) and other open source veterans in the audience, sketched the following blueprint:

Guiding Principle: the value of an open source business is directly proportional to the size of the community and the company's ability to influence and monetize it.

Key Areas:

1. Foundation - every open source business must start with the following attributes to be successful:

• Technology - must add value by solving a customer's problem
  
• Community - must attract the best in the field with the promise of innovation and disruption
  
• Business Model - choose between the "owner/builder" (innovation) and packager/distributor (commoditization) models
  

2. Tactics - position for rapid scalability with viral awareness, then generating adoption, THEN sales

3. Metrics - traditional metrics are not relevant. State of the art is to measure web traffic, customer acquisition percentage and lead nurturing tools

A successful open source business will be able to create a "closed loop demand management" workflow that fuels growth. It is important to note that this methodology is not much different that standard "Entrepreneur 101" tactics, but is highly tuned to the particular needs of an open source business with a goal of a liquidation event for its VC vendors.

B. Legal Matters in Open Source
I attended several legal sessions on Day 2 as well. I won't recount all the details of the discussions, but here are some of the most interesting points:

1. GPL Enforcement. Karen Sandler, General Counsel of the Software Freedom Law Center, gave a thorough review of common open source software license incompatibility. Of note was her helpful clarification on the requirements of the GPL (Sec. 3 of v2, Sec. 6 of v3). In particular, she confirmed that the common practice of including only a download link to source code is not enough to satisfy the "written offer" requirement of the GPL. However, she also emphasized that a download link might be enough for all practical purposes as long as it is relatively easy to find the source code. This is true at least for the SFLC, which is more interested in software freedom than litigation. This is likely a relief for many developers that try their best to comply, even when the details often elude them.

2. Best Practices. Virginia Tsai Badenhope of Big Fix provided some great pointers in her session on how to handle open source within an organization. Her comprehensive checklist consisted of 5 categories:

• Inventory and assess usage of open source
• Comply with terms of open source licenses
• Implement an open source policy to whatever degree necessary to meet the business needs
• Update outbound licenses to ensure they reflect the use of open source
• Update inbound licenses to ensure suppliers make proper representations and warranties for open source

The details under each of these categories will vary depending on the company and particular circumstances, but it is critical to have a set of procedures in place to ensure nothing slips through the cracks.

3. Affero GPL. In his session on Open Source Litigation, Catalin Cosovanu from Wilson Sonsini primarily discussed litigation on enforcement of the GPLv2, but audience questions quickly transformed the discussion into the legalities of the Affero GPLv3. For example, the lack of definitive caselaw on the meaning of "distribution" under the traditional v2 means that the more comprehensive notion of "conveyance" under the could trigger more legal claims and lead to more uncertainty, particularly in the Affero network context. The network terms of Affero also make the notion of "corresponding source code" more ambiguous, particularly in a cloud environment. Finally, even simple questions like "where should the written offer appear?" are not as simple in the Affero context.

In-House Counsel - Managing Open Source

In addition to attending the 2009 Open Source Business Conference in San Francisco, I had the pleasure participating in a legal panel presentation - Managing the Use of Open Source Software in a Proprietary Environment: Lessons from In-House Counsel. Virginia Tsai Badenhope from the Smithline Jha law firm moderated the panel, which included Joyce Chow from Apple, Angela Ziegenhorn from Symantec, and Duane Valz from Yahoo!. We discussed the building blocks of good open source policies and business strategies.

The companies represented on the panel each had a unique perspective on the issue. Apple's open source policies evolved over time from ad-hoc e-mail requests to a fully automated workflow review process. Yahoo! relied on a number of employees who were active and well respected in the open source community to formulate an appropriate open source policy. The importance of cross-product security and technical reviews for Symantec products led Symantec to the creation of an open source review board to address its open source policy needs. Finally, Sun serves as an example of a company that has made open source as a core strategy supported by a robust open source policy, but many details of the policy required significant adaptation after the acquisition of MySQL.

All companies need a strategy for handling open source including bringing open source components in house, distrbution of products as open source, and relationships with the community. The following building blocks are worth considering as a starting point:

• License Matrix: Analyze and categorize common open source licenses to create a more consistent and efficient review process for inbound and outbound open source.
  

• Review/Approval Process and Tracking System: Establish a review process that gathers relevant information and archives approvals including a copy of relevant open source licenses. This process should scale based on need, which could range from a simple spreadsheet to a searchable database coupled with an automated workflow approval tool. Consider whether the review process should also include a separate technical and/or security review of the applicable code.
  

• Written Open Source Policy: A written policy aligned with an organization's business strategy and risk tolerance sets a common set of expectations for everyone. These policies are most effective when developed with input from engineers and business owners.

• Open Source Officer and/or Open Source Review Board. An open source officer is a necessity for any organization that is regularly involved with open source. Also consider whether a cross-functional open source review board is appropriate. Such boards should include business, engineering and legal members. The open source officer or review board often resides in a chief technology office or similar functional group and is responsible for defining high level strategy and initiative, and can also be involved in the review/approval process for particular usage of open source.
  

• Internal Training and Guidelines in Support of Strategy. Formulate internal training materials and guidelines to maintain consistency in application of strategy. This is particularly important in organizations that decentralize decision making authority on open sourceissues rather than centralizing it in a review board or similar body.
  

When considering what to include in a policy, the following principals might help in prioritizing objectives:

• OS policies and processes must continually evolve. Don't assume your policy will serve all your needs indefinitely, and don't be afraid to modify it to address new issues.

• Settings goals and defining strategy are critical to good open source decision-making. Because open source issues are often ambiguous with no inherently right or wrong position, decisions cannot be made in a vacuum.

• No matter how many policies, processes and tools are in place, each open source decision requires the application of independent judgment by someone with a functional understanding of open source issues.
  

I hope this discussion will help clarify thinking and provide some inspiration for finding the right strategy for your organization. Please leave your comments with other ideas that might help in developing an open source policy or business strategy.