, we began a
multi-part series looking at the soon-to-be ten years of LWN. At the end
of that episode, we were coming to the realization that the training
business was, perhaps, not going to perform quite as well as our
spreadsheets had suggested it might. It turns out that spreadsheets
created with free software can be just as deceptive as those done with
proprietary programs - who would have ever guessed? So we decided to look into whether it
might be possible to make some sort of deal with some other company -
preferably one with some money - to keep the show going.
Just how one might go about looking for such a deal is not immediately
obvious - especially if you're a bunch of technical people who have no clue
about how corporate acquisitions are done. Somehow, hanging an "Acquire
Us!" sign on the front page did not quite seem like the right way to go.
After some thought, we decided that the best approach might be to just
quietly slip the word to a few people that we might be open to offers, then
sit back and see what happened. As it turned out, that was all we needed
to do. Much of the following story has never been told - but all of the
non-disclosure agreements have run out by now, so this seems like the right
Meanwhile, things were happening at a furious pace in the Linux community.
- August 26, 1999: Red Hat
and Caldera get around to year-2000 compliance. The 2.3.15 patch is
"huge", touching all of 600 files (2.6.24 currently has changes to
over 10,000 files). The first
Ottawa Linux Symposium concludes.
- September 2, 1999: Sun
buys StarDivision, but uses its "community source license" for the
code. Red Hat shuts down "Red Hat Linux" vendors on Amazon.
- September 9, 1999: SCO
(old SCO, mind you, not the current company) trashes Linux in Europe.
Bruce Perens worries that Sun may be trying to grab control of the
Linux desktop through its acquisition of StarDivision. Disruptive
changes in the "stable" 2.2 kernel upset users.
- September 16, 1999: the
2.3 kernel goes into "feature freeze," with Linus predicting a release
by the end of the year. He neglected to specify which year, though.
Cobalt networks files to go public. LinuxOne - a company nobody had
ever heard of - files to go public. Andover.net (the company which
had bought Slashdot) files to go public. The first ext3 filesystem patches
The 2.3 feature freeze is instructive - 2.4.0 was not released until
January, 2001 - 16 months after this "freeze" went into effect. Over the
next months we'll see plenty of reasons for the delay in the 2.4.0 release;
Linus was famously not a great release manager. But releases which failed
to arrive were the norm back in those days. Free software was much like
proprietary software in that regard. One has to look back to realize just
how much better we have gotten at getting software releases out in a
reasonable period of time.
The IPO filings were beginning to pile up - much to your editor's chagrin.
Actually reading those things is a painful chore, and we felt that
we needed to examine all of them. The relative
newcomers out there may be wondering who that LinuxOne company is. So were
we, at the time. LinuxOne materialized out of thin air, slapped its name
onto a copy of Red Hat Linux, and called itself a Linux company. They
clearly hoped to get in on the general mania and make a bunch of money
before people caught on - they nearly achieved it, too.
- September 30, 1999:
Caldera spinoff Lineo gets going - remember Embedix and Embrowser?
Red Hat drops LWN news from its web site.
Lineo got spun out of Caldera for a couple of apparent reasons: (1) to
isolate the DR-DOS lawsuit
which was being pursued against Microsoft, and (2) to
try to double the number of public offerings. The first objective was
achieved, and the suit was ultimately successful. In the end, though,
Lineo still failed to get off the ground.
- October 7, 1999: Sun
announces that it will be releasing the Solaris source code. The
OpenBSD project grabs the last freely-licensed version of ssh and
starts the OpenSSH project.
- October 14, 1999:
TurboLinux gets a big chunk of venture money. SCO (old SCO) buys a
chunk of the Linux Mall. Crypto export rules in the U.S. begin to
soften. The devfs discussion continues. SGI, VA Linux, and
O'Reilly launch a commercialized version of the Debian distribution.
VA Linux files for its IPO.
Old-timers will remember the Linux Mall - that was the place, once upon a
time, where we bought our Linux CDs (and stuffed penguins too). Yes, we
actually bought Linux on CD and waited for it to show up via mail, though
it may seem a little strange now. The Linux Mall, and its founder Mark
Bolzern, were fixtures in the early days of Linux. As Linux grew and
bandwidth increased, though, the Linux Mall was having a bit of a hard time
of it. The name was famous, though, and the site got a lot of traffic, so
companies interested in getting into the Linux hype were interested in it.
It may be getting a bit ahead of the story, but this is as good a place as
any to let it be known that one of the things that the Linux Mall wanted to
do with its new-found wealth was to acquire a media outlet like LWN. It
was part of the bigger plan of creating a full-featured e-commerce "mall"
centered around Linux. We considered the offer long and hard, but, in the
end, declined it. Just as well: the Linux Mall missed the IPO boat and got
folded into EBIZ, which, in turn, eventually went bankrupt. Had we taken
that path, there would be no LWN now.
- October 21, 1999:
LinuxToday is acquired by Internet.com; co-founder Dave Whitinger leaves
the building. ATI announces that it will be releasing 3D programming
information for its video adapters - the good news here is that it's
finally getting around to doing that.
- November 4, 1999: DVD
encryption is cracked and DeCSS is released. The Y2K-related
"windowing" patent threatens the kernel. Burn all GIFs day. The
kernel gets past the longstanding 1GB limit on installed memory. Slackware 7 (the
successor to Slackware 4) is released. The non-profit Red Hat Center
for Open Source launches - and is never heard from again.
- November 11, 1999: Cobalt
network goes public, shares begin trading at $130.
- November 18, 1999: The Linux
Business Expo is held as part of the once-famous COMDEX event. Red Hat
acquires Cygnus. BitKeeper is said to be getting closer to release.
Mozilla hits milestone 11 and is said to be getting closer to
release. Advogato.org launches.
LWN has only rarely operated booths at conferences, but we did have one at
the Comdex Linux Business Expo. For the curious, here's a picture from
the event featuring LWN editor Rebecca Sobol. That week's LWN edition
was produced from that booth after the floor closed, under the watchful eye
of security guards who didn't think we should be there. Your editor
remembers it as one of the coldest experiences of his life. During the
show, we subjected to constant, highly-amplified screaming obnoxiousness from the
large booth being run by LinuxToday - the acquisition, it seemed, had put
that site onto a rather less dignified path.
The other thing LWN was doing at this event was talking with potential
suitors. One of those was a company called Atipa, which was operating a large booth of
its own. Atipa was a VA-style Linux box vendor with a grand plan for a
Linux portal site which would, eventually, be the place people went
for Linux information. They thought that LWN would make a good
addition to that portal, and were pushing hard to make a deal.
We met a few times with Atipa's CEO, a charismatic man who told a good
story. The company, he said, was going to outdo even the coming VA Linux IPO, which
was already clearly going to be big. Along the way he was going to pick up
companies like Applix and open-source the ApplixWare office suite -
something which would have been nice at the time. He stated flat out that
he was soon to be a billionaire, and that we could share in that bonanza.
It was quite the tale, but we tended to walk out of these meetings
believing every word of it.
With some distance, though, the glow always faded. We wondered why our
visit to the company's headquarters revealed a building almost devoid of
people. The magic "profit happens here" step in their plans seemed less
inevitable when looked at later.
In the end, we did not take this deal. Thereafter, we received
(unverifiable) word that Atipa's
investors started asking some harder questions and found that, perhaps,
they, too, had allowed themselves to be charmed more than they should
have. Atipa rather abruptly found a new CEO, the IPO never happened, and
investors, presumably, lost their money.
Also at the Linux Business Expo, we met with some representatives from
O'Reilly. They were getting the O'Reilly network off the ground, and
thought that LWN might make a good addition to it. They eventually offered us
a deal (which looked more like a traditional angel investment than an
acquisition) and a network
affiliation which would have given us a portion of the revenue from the ads
they sold. Your editor, who has a lot of respect for the people at O'Reilly, has
always had a bit of regret at turning down this offer. It was an
opportunity to get business advice from some very smart people. But it
would almost certainly have been fatal to LWN once the advertising market
Meanwhile, the acquisition of Cygnus by Red Hat led to a fair amount of
online worrying about whether Red Hat was set to take over Linux by virtue
of employing a number of GCC developers. Such fears look a little silly
now, but they seemed real then.
- December 9, 1999:
Andover.net goes public. The kernel gets NUMA support (during a
feature freeze, remember).
Sun announces a Linux Java release, rolling over the "Blackdown" team
which had been working on this release for years.
- December 12, 1999: VA
Linux goes public, setting the record for the largest first-day gain
in NASDAQ history. Eric Raymond gets rich and
lets us all know about it.
The non-free BitKeeper license is revealed. LinuxCare acquires the
Puffin Group and gets another $32 million. The Linux Capital Group
launches; it starts by funding Progeny Linux. Companies send out "we use
Linux" press releases in an attempt to make their stock price go up.
The VA IPO was not just the peak of the Linux bubble - it could well be the
peak of the dotcom bubble as a whole. It was not possible to watch that
stock rise to well over $300 a share on the first day and not be
overwhelmed by a sense of unreality. Still, it seemed like no more than
what Linux deserved, and people somehow expected it to continue.
- January 6, 2000: Linux
survives Y2K. Red Hat buys Hell's Kitchen Software, does nothing with
it. VA Linux launches the SourceForge site.
- January 13, 2000: Caldera
Systems (later to become SCO) files for its IPO. The kernel gets a
new block driver API and 32-bit UIDs - still during the feature freeze.
- January 20, 2000:
LinuxCare files for its IPO. Linus Torvalds shuts down the sale of a
number of Linux-related domain names. Secure Computing Corporation
announces that it will be developing (what becomes) SELinux. Enoch
becomes Gentoo Linux. TurboLinux completes another funding round.
Once upon a time, Caldera Systems was supposed to be among the biggest
winners in the distribution sector - they had the business connections and
the distribution channels. "Linux for business" got the company far enough
to do an IPO, but not much beyond that. This is, of course, the company
which eventually became the SCO Group.
Caldera was well overshadowed by LinuxCare, though. The distribution
business always looked like a hard one to maintain over the long term -
that is why Red Hat was trying to be a web portal company. Services were
going to be the real gold mine, and LinuxCare was going to be at the top of
the Linux support industry. The company got money from left and right (a
funding round produced offers of ten times the target amount) and hired a
long list of well-known Linux hackers.
Need we say that LWN's editors paid a visit to LinuxCare during this time?
It was a hard time for LinuxCare to discuss acquisitions, since the IPO
process was already underway, but discuss they did. So we went to the
famous San Francisco headquarters. Your editor's memories from that day
are strong. LinuxCare was filled with hundreds of people who all believed
they were on the way toward an IPO that would exceed even VA Linux; suffice
to say they were happy about the prospect. Meanwhile, though, a couple
hundred of them were all working in a single not-very-large room called
"the barn"; it resembled, more than anything else, a school lunchroom
filled with long tables. Everybody worked on a laptop because there was no
room in their tiny piece of table space for anything else. They all
complained about having colds. It looked awful.
LinuxCare's negotiator was an ex-fighter jet pilot who retained the "top
gun" attitude. When valuations were discussed, we were told that offering
LinuxCare's pre-IPO shares at $50-60 each was being generous to us. Issues
like editorial control were not really even on the table. In the end, we
turned this deal down, but with a feeling like we were throwing a winning
lottery ticket in the trash. Of course, subsequent events showed that we
need not have worried about this particular missed opportunity.
- February 10, 2000:
Real-time Linux turns out to be patented. VA Linux acquires
Andover.Net. The KDE project moves to SourceForge. Atipa acquires
Enhanced Software Technologies. The Linux Fund announces that it will
be filing for an IPO.
The Andover.Net acquisition was announced at LinuxWorld in New York - LWN
was there, of course. The initial deal included a massive pile of cash to
be handed to Andover.Net's shareholders, but people questioned that handout
to the extent that it eventually went away. Andover.Net's owners had to content
themselves mostly with VA Linux shares, which, already, were worth considerably
less than they had been on IPO day. In the end, Andover.Net turned out to
be a good buy for VA Linux, once it became clear that the Linux-installed
computer business was harder than it had looked.
We were approached by a VA executive at LinuxWorld to see if we were
interested in maybe being acquired sometime. By then, though, we had so
many offers that we couldn't really give them all serious consideration.
So we did not pursue that opportunity.
But, at this event, we did talk with some representatives from ZDNet, who
were also looking for a Linux site to buy. The offer they made was, by
far, the most generous of any. By some reckoning, we should have taken it.
Certainly it would have come out better than most of the other options we
had. But ZDNet would have exercised more editorial control than we would
have liked, and, being already a public company, it didn't offer that IPO
"pop" that we somehow thought was our due. So we ended up not taking that
- February 17, 2000: devfs
is merged into the mainline kernel. Also merged is the "softnet" core
networking rework. Remember, the kernel is in a feature freeze.
- February 24, 2000: Eazel
is founded with the goal of improving Linux usability.
To your editor, Eazel never made sense from the beginning. There was,
truly, no revenue model. Indeed, it seemed like a scam designed to draw
venture money for the purpose of writing Nautilus. To that extent it
succeeded, but the investors cannot have been happy in the end.
- March 2, 2000: Atipa
announces $30 million in investments.
- March 23, 2000: Caldera
Systems goes public; its share price merely doubles. The planned date
for LinuxCare's IPO passes with no offering.
- April 4, 2000: Linuxcare's
IPO is pushed back to April 24 - or so they say. EBIZ acquires
longtime Linux CD distributor InfoMagic. Atipa Linux Solutions
acquires DCG Computer Corp. Sendmail Inc. gets $35 million in
This was the point where LWN announced that it had been acquired
by a company called Tucows. We had, in fact, been talking with them for
some months, and had made the decision in February. It took some time,
though, for the lawyers to hammer out the final agreement. In the end, we
were probably exceedingly lucky: market conditions were going downhill in a
hurry by this point and, had the negotiations stretched out much longer,
Tucows might have started looking for reasons to back out of the deal.
Or maybe not. We went with Tucows for a number of reasons, but at the top
of the list was that they were clearly smart and decent people who,
while arguably being carried away by the bubble like the rest of us,
clearly had a functioning business underneath it all. Their acquisition of
LWN never yielded the benefits they were looking for, but the people at
Tucows always treated us well and we still count them as friends. Perhaps
we were smart, or perhaps we were just very lucky, but, in retrospect, we
came out of a complex, high-stakes process having made what was probably
the best possible decision.
The Tucows acquisition made it possible for LWN editors Rebecca Sobol and
Forrest Cook to join as regular staff members. It also positioned us
within a safe harbor for the dotcom crash, which was already in progress.
But the story of those years will be the subject of next week's
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