Wednesday, Jul 9, 2008
I wrote the code and got in early on the stock -- but was it worth so much trouble?
Aug 13, 1999 | 9:43 p.m. EDT, Wednesday: E-Trade informs me that I am the owner of 400 shares of Red Hat Software, bought at the initial offer price of $14. I exhale breath I've been holding for three weeks. Somehow, I never believed it would actually turn out this way, that I'd end up with stock in my hands.
About three weeks ago, on July 20, Red Hat sent an e-mail to hundreds of software developers offering us a chance to participate in its initial public offering, a gesture of support for the community of free-software hackers without whom the company would not exist. But weeks of infighting and confusion -- aided and abetted by E-Trade -- followed. Now I've finally got my stock. Am I happy? Sure. Relieved? Definitely -- by the market's close on Thursday the stock price had reached $72.62. But was it all worth it? The whole process nearly tore our community apart. So, I really don't know.
How did I get here?
The troubles began two weeks ago, when E-Trade started to turn away hundreds of developers whom Red Hat had invited to participate in its IPO, to buy shares before they passed through other hands and their price swelled. The demographics of the typical Linux hacker ensured that roughly half of the invitees would not pass an eligibility test required by E-Trade. The programmers who had constructed the Linux kernel at the core of Red Hat's product simply did not fit E-Trade's profile of an attractive investor.
The free-software-loving masses raged. On sites like Slashdot, hackers began posting invective. They began with an electronic "Boycott E-Trade!!!!!" chant and things escalated from there. Many developers felt they had been misled into sending E-Trade $1,000 checks to open accounts, and then cheated when E-Trade would not refund their money immediately after declaring them ineligible to participate in the IPO.
Stung by the harsh words following its attempted generosity, Red Hat was hamstrung by the "quiet period" restrictions that follow any company's registration for an IPO, and it could not speak. But predictably, someone posted on the Net a complete set of "correct" answers to the E-Trade eligibility test. E-Trade even offered all the rejected developers a chance to retake the test. By hook or by crook many hackers either squeezed past the eligibility requirements or decided that their ethics would not permit stooping and retired gracefully, if not quietly.
I badly wanted in. I'd been supporting Red Hat since soon after I discovered Linux, and I felt that stockholder-coders like me were vital if Red Hat was going to be able to fight off Wall Street's bottom-line pressure. And I had written some of the code. My name was in the credits. I held out as long as I could; I wanted to be recognized for my contribution, not for my net worth. But eventually I retook the eligibility test and, with a little financial help from my family, passed.
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