It's not easy to build an Open Source software company.
Canonical recently has made a change to its intellectual property policy. The new policy prevents developers from distributing altered binary versions of Ubuntu. Users are still allowed to distribute unaltered Ubuntu freely, but if they make changes to Ubuntu, Canonical wants developers to either go through a review process or remove all references to Canonical trademarks, Canonical logos, and proprietary software and recompile the Ubuntu archive without any of those.
This change has caused friction with the Open Source community; many are not happy with these restrictions as it goes against the culture of Open Source sharing and collaboration. After all, Ubuntu itself is built on top of the work of hundreds of thousands of Open Source developers, and now Ubuntu is making it difficult for others to do the same.
Canonical's stated intention is to protect its trademarks and reputation; they don't want anyone to call something "Ubuntu" when it's not actually "Ubuntu". I understand that. That aside, many understand that the unstated goal is to make money from licensing deals. The changes affect organizations that base their custom distributions on Ubuntu; it's easier to buy a license from Canonical than to figure how to remove all the trademarks, proprietary software, logos, etc.
Jono Bacon, Canonical's former community manager, wrote a balanced post about the situation.
My thoughts? I understand Canonical has to find ways to make money. Most companies are downright greedy, but not Canonical or Mark Shuttleworth. I find the Open Source community "penny wise and pound foolish" about the situation.
I can relate because Canonical, like Acquia, is among a small group of Open Source companies that try to do good and do well at scale. We invest millions of dollars each year contributing to Open Source: from engineering, to marketing, to sponsoring community events and initiatives. It is not easy to build a software company on Open Source, and we all struggle to find the right balance between giving back and making money. This is further complicated when competitors choose to give back less or don't give back at all. Companies like Canonical and Acquia are good for Open Source, and helping them find that balance is key. Don't forget to support those that give back.
At yesterday's Worldwide Developer Conference keynote, Apple announced its annual updates to iOS, OS X, and the new watchOS. As usual, the Apple rumor blogs correctly predicted most of the important announcements weeks ago, but one important piece of news only leaked a few hours before the keynote: the launch of a new application called "News". Apple's News app press release noted: "News provides beautiful content from the world's greatest sources, personalized for you".
Apple basically cloned Flipboard to create News. Flipboard was once Apple's "App of the Year" in 2010, and it remains one of the most popular reading applications on iOS. This isn't the first time Apple has chosen to compete with its ecosystem of app developers. There is even a term for it, called "Sherlocking".
But forget about Apple's impact on Flipboard for a minute. The release of the News app signifies a more important shift in the evolution of the web, the web content management industry, and the publishing industry.
Impact on content management platforms
Why is Apple's News app a big deal for content management platforms? When you can read all the news you are interested in in News, you no longer have to visit websites for it. It's a big deal because there are half a billion active iOS devices and Apple will ship its News app to every single one of them. It will accelerate the fact that websites are becoming less relevant as an end-point destination.
Some of the other new iOS 9 features will add fuel to the fire. For example, Apple's search service Spotlight will also get an upgrade, allowing third-party services to work directly with Apple's search feature. Spotlight can now "deep link" to content inside of a website or application, further eliminating website or applications as end-points. You could search for a restaurant in Yelp directly from your home screen, and go straight to Yelp's result page without having to open the Yelp website or application. Add to that the Apple Watch which doesn't even ship with a web browser, and it's clear that Apple is about to accelerate the post-browser era of the web.
The secret to the News app is the new Apple News Format; rumored to be a RSS-like data feed with support for additional design elements like images, videos, custom fonts, and more. Apple uses these feeds to aggregate content from different news sources, uses machine learning to match the best content to a given user, and provides a clean, consistent look and feel for articles coming from the various news sources. That is the long way of saying that Apple decides what the best content is for you, and what the best format is to deliver it in. It is a profound change, but for most people this will actually be a superior user experience.
The release of Apple News is further proof that data-driven experiences will be the norm and of what I have been calling The Big Reverse of the Web. The fact that for the web to reach its full potential, it will go through a massive re-architecture from a pull-based architecture to a push-based architecture. After the Big Reverse of the Web is complete, content will find you, rather than you having to find content. Apple's News and Flipboard are examples of what such push-based experiences look like; they "push" relevant and interesting content to you rather than you having to "pull" the news from multiple sources yourself.
When content is "pushed" to you by smart aggregators, using a regular web browser doesn't make much sense. You benefit from a different kind of browser for the web. For content management platforms, it redefines the browser and websites as end-points; de-emphasizing the role of presentation while increasing the importance of structured content and metadata. Given Apple's massive install base, the launch of its News app will further accelerate the post-browser era of the web.
I don't know about your content management platform, but Drupal is ready for it. It was designed for a content-first mentality while many competitive content management systems continue to rely on a dated page-centric content model. It was also designed to be a content repository capable of outputting content in multiple formats to multiple end-points.
Impact on publishing industry
Forget the impact on Flipboard or on content management platforms, the impact on the publishing world will even be more significant. The risk for publishers is that they are being disintermediated as the distribution channel and that their brands become less useful. It marks a powerful transformation that could de-materialize and de-monetize much of the current web and publishing industry.
Because of Apple's massive installed base, Apple will now own a large part of the distribution channel and it will have an outsized influence on what hundreds of millions of users will read. If we've learned one thing in the short history of the Internet, it is that jumping over middlemen is a well-known recipe for success.
This doesn't mean that online news media have lost. Maybe it can actually save them? Apple could provide publishers large and small with an immense distribution channel by giving them the ability to reach every iOS user. Apple isn't alone with this vision, as Facebook recently rolled out an experiment with select publishers like Buzzfeed and the New York Times called Instant Articles.
In a "push economy" where a publisher's brand is devalued and news is selected by smart aggregators, the best content could win; not just the content that is associated with the most well-known publishing brands with the biggest marketing budgets. Publishers will be incentivized to create more high-quality content -- content that is highly customized to different target audiences, rather than generic content that appeals to large groups of people. Success will likely rely on Apple's ability to use data to match the right content to each user.
This isn't necessarily bad. In my opinion, the web isn't dead, it's just getting started. We're well into the post-PC era, and now Apple is helping to move consumers beyond the browser. It's hard to not be cautiously optimistic about the long-term implications of these developments.
Here is a very simple thesis on how to disrupt billion dollar industries:
Content platform + user platform = BOOM!
That is a bit cryptic, so let me explain.
Traditional retailers like RadioShack and Barnes & Noble were great "content platforms"; they have millions of products on shelves across thousands of physical stores. Amazon disrupted them by moving online, and Amazon was able to build an even better content platform with many more products. In addition, the internet enabled the creation of "user platforms". Amazon is a great user platform as it knows the interests of the 250 million customers it has on file; it uses that customer information to recommend products to buy. Amazon built a great content and user platform.
Businesses with a content platform that aren't investing in a user platform will most likely get disrupted. To understand why user platforms matter, take a look at a traditional media company like The New York Times -- one of the world's best content platforms, both online and offline. But it's also one of the world's poorest user platforms; they don't have a 1-on-1 relationship with all their readers. By aggregating the best content from many different sources, Flipboard is as good of a content platform as The New York Times, if not better. However, Flipboard is a much better user platform because all of its readers explicitly tell Flipboard what they are interested in and Flipboard matches content to users based on their interest. For The New York Times to survive, their strategy should be to invest in a better user platform: they should spend more time getting to know every single reader and serving curated content that matches the user's interest. The New York Times seems well aware of this problem, with its decision last week to host its articles directly on Facebook to get access to Facebook's user platform with 1.4 billion users.
Similarly, Netflix is disrupting both traditional broadcasters and cable companies because they built a great user platform capable of matching movies and shows to users. To many Netflix users' frustrations, traditional TV broadcasters still have the better content platform, but that hasn't stopped the growth of Netflix. Furthermore, Netflix is investing heavily in becoming a better content platform by producing their own shows, including original series such as House of Cards and Orange Is the New Black. Unless traditional broadcasters invest in becoming great user platforms and matching content to users, they risk losing against Netflix.
The challenge for newspaper organizations or cable providers is usually not with the technical evolution, but with changing their business model. Take the cable providers, for example. Legacy constraints like distribution models, FCC regulations and broadcast spectrum requirements prevent them from moving as fast in this direction as a Netflix might. Fortunately for most cable providers, they are also the internet providers, which allows them to become user platforms if they too can master the personalization and contextualization equation.
Facebook, Twitter, Apple and Google are some of the world's best user platforms; they know about their users' likes and dislikes, their location, their relationships and much more. For them, the opportunity is to become better content platforms and to match users with relevant products and articles. By organizing the world's information, Google is building a massive content platform, and by launching services like Gmail, Google+, Google Ads, Google Fiber and Google Wallet, they are building a massive user platform. Given that they have the world's largest content platform and the richest user platform, I have no doubt that Google could dominate the web the next couple of decades.
The examples above are focused on print media, television and radio, but the thinking can easily be extended to commerce, manufacturing, education, and much more. The thesis of content platforms adding user platforms (or vice versa) is very basic but also very powerful. Adding user platforms to existing content platforms enables a transformative change in the customer's user experience: content can find you, rather than you having to find content. Furthermore, brands are able to establish a 1-on-1 relationships with their customers allowing them to interact with them in a way they were never able to in the past. By establishing 1-on-1 relationships with their customers, brands will be able to "jump over" the traditional distribution channels. If we've learned one thing in the short history of the internet, it is that jumping over middlemen is a well-known recipe for success.
Anyone building a digital business should at least consider investing in building both a better content platform and a better user platform. It's no longer just about publishing content; it's about understanding what uniquely delights each user and using that information to manage the entire experience of a site visitor or customer over time. The idea of using interests, location, user feedback, past behavior and contextual information to deliver the best user experience is no longer a nice-to-have; it is becoming a make-or-break point. It is the next big challenge and opportunity for everyone building digital experiences. This is why I'm passionate about content management systems needing to evolve to digital experience management systems and why Acquia has spent the last two years building software that helps organizations build user platforms. As I talked and wrote about years ago, I believe personalization and contextualization will be a critical building block of the future of the web, and I'm excited to help make that a reality.
I believe that for the web to reach its full potential, it will go through a massive re-architecture and re-platforming in the next decade. The current web is "pull-based", meaning we visit websites or download mobile applications. The future of the web is "push-based", meaning the web will be coming to us. In the next 10 years, we will witness a transformation from a pull-based web to a push-based web. When this "Big Reverse" is complete, the web will disappear into the background much like our electricity or water supply. We'll forget what 'www' stood for (which was kind of dumb to begin with). These are bold statements, I understand, but let me explain you why.
In the future, content, products and services will find you, rather than you having to find them. Puma will let us know to replace our shoes and Marriott will automatically present you room options if you missed your connecting flight. Instead of visiting a website, we will proactively be notified of what is relevant and asked to take action. The dominant function of the web is to let us know what is happening or what is relevant, rather than us having to find out.
Facebook and Flipboard are early examples of what such push-based experience looks like. Facebook "pushes" a stream of personalized information designed to tell you what is happening with your friends and family; you no longer have "pull" them and ask how they are doing. Flipboard changes how we consume content by aggregating the best of the web and filtering it based on our interests; it "pushes" the relevant and interesting content to you rather than you having to "pull" the news from multiple sources. Also consider the rise of notification-centric experiences; your smartphone's notification center provides you with a stream of relevant information that is pushed to you. More recently, these notifications have become interactive; you can check in for a flight without having to open your travel app. You can buy a product without having to visit their website.
What people really want is to tune into information rather than having to work to get information. It saves them time and effort and in the long run, an improved user experience always wins. In most cases, "Show me what I want" is more useful than "Let me search around and see what I can find".
With some imagination, it's not too hard to picture how these kind of experiences could expand to other areas of the web. The way the e-commerce works today is really no different than having to visit a lot of separate physical stores or wading through hundreds of products in a department store. We shouldn't have to work so hard to find what we want. In a push-based world, we would sit back as if we were watching a fashion show -- the clothing presented could come for hundreds of different online brands but the stream is "personalized" to our needs, budget, sizes and style preferences. When the Big Reverse is complete, it will be the end of department stores and malls. Keep an eye on personalized clothing services like Trunk Club or Stitch Fix.
Ten years from now we're going to look back and recognize that search-based content discovery was broken. Today the burden is put on the user to find relevant content either via directly typing in a URL or by crafting complex search queries. While pull-based experiences might not go away; push-based experiences will dominate as they will prove to be much more efficient.
Many of you won't like it (at first), but push will win over pull. Healthcare is going through a similar transformation from pull to push; instead of going to a doctor, we'll have web-enabled hardware and software that is able to self-diagnose. Wearables like activity trackers are just the start of decades of innovation and opportunity in healthcare. Helped by the web, education is also moving from pull to push. Why go to a classroom when personalized training can come to you?
We are at the beginning of a transition bridging two distinctly different types of economies. First, a "push economy" that tries to anticipate consumer demand, creates standardized or generic products in large amounts, and "pushes" them into the market via global distribution channels and marketing. Now, a "pull economy" that—rather than creating standardized products—will create highly customized products and services produced on-demand and delivered to consumers through one-on-one relationships and truly personal experiences.
This new paradigm could be a very dramatic shift that disrupts many existing business models; advertising, search engines, app stores, online and offline retailers, and much more. For middlemen like online retailers or search engines, the push-based means they risk being disintermediated as the distribution chain becomes less useful. It marks a powerful transformation that dematerializes and de-monetizes much of the current web. While this might complicate the lives of many organizations, it will undoubtedly simplify and better the lives of consumers everywhere.
From time to time, people ask me how much money to raise for their startup. I've heard other people answer that question from "never raise money" to "as little as you need" to "as much as you can".
The reason the answers vary so much is because what is best for the entrepreneur is seemingly at odds with what is best for the business. For the entrepreneur, the answer can be as little as necessary to avoid dilution or giving up control. For the business, more money can increase its chances of success. I feel the right answer is somewhere in the middle -- focus on raising enough money, so the company can succeed, but make sure you still feel good about how much control or ownership you have.
But even "somewhere in the middle" is a big spectrum. What makes this so difficult is that it is all relative to your personal risk profile, the quality of the investors you're attracting, the market conditions, the size of the opportunity, and more. There are a lot of parameters to balance.
I created the flowchart below (full-size image) to help you answer the question. This flowchart is only a framework -- it can't take into account all decision-making parameters. The larger the opportunity and the better the investors, they more I'd be willing to give up. It's better to have a small part of something big, than to have a big part of something small.
Some extra details about the flowchart:
- In general, it is good to have 18 months of runway. It gives you enough time to figure out how to get your company to the next level, but still keeps the pressure on.
- Add 6 months of buffer to handle unexpected bumps or budgeting oversights.
- If more money is available, I'd take it as long you don't give away too much of your company. As a starting point for how much control to give up, I use the following formula: 30% - (5% x number of the round). So if you are raising your series A (round 1), don't give away more than 25% (30 - (5 x 1)). If you are raising your series B (round 2), don't give away more than 20% (30 - (5 x 2)). If you start with 50% of the shares, using this formula, you'll still have roughly 20% of the company after 5 rounds (depending on other dilutive events such as option pool increases).
My view is that of an entrepreneur having raised over $120 million for one startup. If you're interested in an investor's view that has funded many startups, check out Michael Skok's post. Michael Skok is Acquia's lead investor and one of Acquia's Board of Directors. We both tried to answer the question from our own unique viewpoint.