A Conversation with Venture Capitalist Daniel Egger--

A Conversation with Venture Capitalist Daniel Egger(4)

2007-05-17 13:46:03 [ Big Normal Small ] 　Comment

This Open Source development method has resulted in technology that is more stable, more portable, and often superior in many other ways to expensively-designed and built proprietary systems, such as the Microsoft Windows operating system, for example – and use of it is free. The Linux operating system, Apache Web server, and thousands of other less well-known components have revolutionized the information technology (IT) industry in the US and around the world.

With a Yale law-and-economics background, what I was naturally interested in was the question of who bears the cost of resolving the novel legal disputes that will arise whenever you have a major new area of economic activity, a new arena where the old rules do not fit. Because Open Source software has no one for-profit owner, but has collective ownership, it is not clear who will have the resources to resolve legal disputes, such as disputed copyright ownership or accusations of patent infringement, or to compensate innocent third parties who are harmed. For example, if commercial source code developed at great expense by a private company leaked into the Open Source code base by accident, and that commercial owner’s paying clients started using the free version instead, causing its business to collapse, who, if anyone, bears responsibility to compensate that company for the financial damage it has suffered? This is the kind of risk-allocation dilemma unavoidably linked to massive worldwide use of Open Source. Who is responsible ultimately for the costs imposed on innocent third parties as Open Source becomes a truly global market involving hundreds of billions of dollars of transactions? So my Company, OSRM, is leading research-and-development now for the developing insurance and risk transfer marketplace that will ensure the stability of an Open Source economy over the next twenty years.

Xing Zong: What advantage do you see in Open Source software over proprietary software? Do you believe Open Source is the future trend?

Egger: Yes, because of its superior stability, modularity, and low cost to introduce new functionality. Large, complex software systems – for example, the system that runs your cell phone, your friends’ cell phones, and all the relay towers, satellites, and routers in between – are very vulnerable to new errors introduced whenever any one small piece of the system is changed. And the entire system is tremendously capital-intensive. If you had to build a whole new system in order to compete with a better cell phone, it would require impossibly large amounts of capital for a start-up.

Systems built out of Open Source components are much more modular than proprietary systems. And because so many people have contributed to debugging them, they tend to be much less vulnerable to introducing new instabilities. That’s a huge advantage right there. And finally, because all the components but the new one you want to write are available for free, you can spend all of your capital on your unique incremental advantage. For example, if you look at Google, 90% of Google’s technology base is free Open Source, and just a thin layer on top is their proprietary search algorithm and memory-management techniques. They run Linux on thousands of very inexpensive stripped–down Dell boxes. If they had needed to build all that technology from scratch, they would never have been able to establish themselves.

This is why, for example, startups in China can compete in the Information Technology market and perform very well: because they no longer have the enormous start-up costs. You don’t have to do everything from scratch.

Xing Zong: Clear Intellectual Property rules are essential for technological progress. But you also assert that an Open Source environment will be more efficient. Do you think there is a conflict there?

Egger: Superficially, it might appear that Open Source software erodes the enforcement of copyright and other intellectual property rights. But in fact it is the opposite. Because it is the enforcement of strong copyright law that allows the original Open Source developers to keep their free software free, to keep it from being taken into commercial products, disguised as the work of commercial developers. The true value of the Open Source development model would be lost if commercial companies could take but not give back, by distributing their own versions of popular Open Source applications in closed, proprietary form. You can’t do that with Linux, for example, because the owners will use copyright law to go into the court and get an injunction forcing you to stop distributing your version unless you release your contributions as free Open Source as well. So it’s actually strong copyright enforcement and respect for others’ Intellectual Property that has made Open Source popular and successful in the first place.

Xing Zong: Are you personally a fan of Linux?

Egger: Of course; I love Linux.

Xing Zong: Do you still use Windows?

Egger: Well, I use a Mac. I run Microsoft Office for the Mac, because so many people I do business with just can’t yet manage converting files formats from Linux. It’s a headache.

Xing Zong: Are you a friend of Richard Stallman and Linus Torvalds?

Egger: I admire both men tremendously. When I was doing due diligence before founding OSRM, I wrote up a basic business plan and sent it to Richard Stallman, asking him if there was anything about my idea that was inconsistent with the spirit of the Free Software Foundation or the General Public License. He came back and said he disapproved of the name “Open Source” He thinks the correct term should be “Free Software.” So, he doesn’t like the Company name -- but as far as the risk-transfer substance of our plan, it was fully acceptable to him. I would not have started the company without at least that level of support from the Free Software Foundation. I asked for input early on from Bruce Perens, Pamela Jones, Eben Moglen, Larry Lessig, Dan Ravicher, and many other thoughtful people as well. Open Source is a collaborative, community-based form of initiative. You are not going to succeed if you are in conflict with the community and its basic values.

Rui Wang: Last question, you know that popular social network website Facebook attracts thousands of young people in college. In 2005, some Chinese students created the similar website and sold it last year. Do you consider this to be against the open source spirit?

Egger: No. it is a misconception that Open Source advocates believe technology people should not be allowed to get rich, just because they want software resources to be free. That’s not true. In fact, Richard Stallman and many others encourage people to go out and make money selling services related to free software. Many people became wealthy, such as the people who founded Red Hat, by providing value-added services on top of software that itself is absolutely free. So you can make a lot of money by doing something valuable using free resources. It is encouraged.

Xing Zong: Mr. Egger, thanks very much for your time!

Egger: My pleasure.

| First | | Prev |

china.com