Thursday, Jul 24, 2008
As Red Hat prepares to go public, one Linux hacker's dreams of IPO glory are crushed by The Man.
Jul 30, 1999 | At first I thought it was spam. It was probably the hundredth message I had received that day, and I was inclined to consign it straight to my personal spam graveyard. But it was titled "A personal invitation from Red Hat" and in my world, Red Hat -- one of the leading distributors of the Linux-based operating system -- is a big name. So I took a look. And I got excited. On close examination, the e-mail seemed minted of pure gold -- it was a special invitation to participate in Red Hat's imminent initial public offering.
This is the story of how that gold turned to lead for about 400 software developers passionately devoted to Red Hat Inc. -- a story from the front lines of a battle between the idealistic world of open source and the real world forces who run this country.
Starting July 20, Red Hat sent at least 1,000 e-mails to a group of software developers who had contributed to the products Red Hat sells, in particular a Linux-based operating system. The e-mail began: "Dear open source community member: In appreciation of your contribution to the open source community, Red Hat is pleased to offer you this personal, non-transferable, opportunity."
"Red Hat couldn't have grown this far without the ongoing help and support of the open source community," the letter continued. "Therefore, we have reserved a portion of the stock in our offering for distribution online to certain members of the open source community. We invite you to participate."
The letter also stated that that the stock distribution would be made via E-Trade Securities, and that you needed to establish an active trading account with E-Trade, pronto.
Six hours after receiving the e-mail I was on the 11 p.m. train from Boston down the eastern corridor; 14 hours and a sunrise later I was in New Jersey where my savings bonds, earmarked for repayment of college debt, lay in a safe-deposit box. A meeting with a friendly bank officer, a cashier's check and a signature -- and my application for an account on E-Trade was on its way. E-Trade required a minimum deposit of $1,000 to open a trading account, and Red Hat's shares were to be sold in 100-block lots, at an opening price of around $10-$12 a share, so I had to find at least $1,200. As a typical Linux hacker I didn't have much ready cash. But I scraped together enough for 200 shares.
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