About LWN.net

LWN talks with Paul Everitt

What does DC plan to do with the money?

Enter the content management market. We will create a product atop Zope that, when combined with our services business, brings Open Source to the CMS (content management system) market. In support of that we'll aggressively grow the Zope platform, encouraging many others to make money in many ways.

Could you elaborate a bit on the content management business? What sorts of services do you expect to offer?

We'll provide consulting, integration, and in some cases site operations for customers who want fresh approaches to content and want it soon. Our basic approach is to take a rich idea of content (html, graphics, word files, discussion posts, custom types), apply rich services (membership, security, cataloging, workflow, clustering, syndication, etc.), and deliver to rich platforms (web browsers, pdas, perl scripts, etc.)

Time to market has been and will be our trade. Our architecture (such as scripting language and object database) and culture all promote this. We'll be taking some bold steps to reinforce this. PythonLabs is the first step, one that in the context of this paragraph should make sense.

We'll also stress the value of the open source relationship. This market has been burned by over-hyped, very expensive solutions. Yet their needs are growing. Many have given up and gone back to writing a CMS themselves, rather than pay a lot for little. With an open source choice, they get the benefits of both buy and build. We'll be very competitive here.

You've been profitable for two quarters - do you expect that to remain the case, or does this funding round indicate an expansion phase that will eliminate the profits for a while?

The goal certainly is to grow the top line and run a deficit during buildout, otherwise we wouldn't need the capital. We've been turning away a lot of work and operating under the radar, so there's huge pent-up demand.

One often hears the line "nobody has ever made money off open source." The LynuxWorks IPO filing even says so. Digital Creations is evidently proof to the contrary; what would you say is the key to success in this area?

The biggest reason is that we have chosen a market where people stroke big checks based on perceived value, not consumed manhours. This lets us be a service company without being a body shop. Our engagements are structured to let us profit from being fast and brilliant, rather than being punished. This also rewards us for reuse. We're already seeing the impact of this.

Second, we are about our own IP. We aren't about other people's intellectual property. This gives us a solid brand and a hook for our services business. As long as Zope is hot and in demand, we're hot and in demand. Others can profit -- there's a nearly infinite demand for consulting in the world -- but as long as Zope is perceived as our brand, we're successful.

Other open source business models are trying to chase a disappearing dollar -- the software dollar. Most software markets have become fairly commodity and open source increasingly covers all segments. Why do people want to pay for software? So these other business models want to setup software companies that try to get their dollars in a different way.

Thanks to Hadar, we went ahead in Nov 1998 -- the pre-dawn era of Open Source -- and set ourselves up as a services company that ran a product. As such, rather than chasing disappearing dollars (for software), we are catching infinite dollars -- services. The hiring problem means that people don't want software anymore. A rack of software is just another problem, as there is nobody around to implement it. IBM knows this -- for every dollar of software they make, they make one more on hardware and seven more on services.

Most software companies don't want to do services. Certainly most open source companies don't have the culture for it. Also, it's traditionally been hard to find a recipe for strong multiples in services. Fortunately we have found the recipe.

When's the IPO? :)

The good news is that it's in March. The bad news is, March of 2008. :^) Seriously, our charter is to build a strong company and realize the full revenue potential in front of us. We're certainly, certainly not on the "in lieu of revenues, go public" track.