The first major investor who was able to see the full potential of Red Hat became the Frank batten Jr. (Frank Batten Jr.). August 15, 1997, he purchased 6 801 400 shares of Red Hat in the amount of $2,000,000. After the transaction, Bob young and Mark Ewing remained approximately 4,000,000 shares. Thus, batten Jr. became the largest shareholder of the company.
On the crest of a wave
In 1998, the share of Linux on the market of operating systems was 17%, while in 1997 the figure was 7%. Microsoft with its Windows NT had a 36%, but its share did not grow.
The Microsoft guide was extremely dissatisfied with the current situation. The irony was that Red Hat with its strategy, with free flow of soft, were taken from the colossus of the industry huge a piece of cake but took up only a small part. A significant portion of users, and on the same Red Hat from Microsoft, used the free version of the software.
On the wave of popularity of Linux company Red Hat has signed a number of important agreements on integration and cooperation, in particular with IBM, Dell, Intel, Oracle, SAP, Netscape, Hewlett Packard and Compaq. In March 1999 the website RedHat.com visited 265 000 people.
August 11, 1999, at the height of the dot-com boom, has occurred an initial public offering of Red Hat stock. About 10% of the shares of the company were sold for $84 000 000. Thus, Red Hat was priced at $840 000 000. On the background of the annual income in $10 000 000, this result might seem something incredible.
In late 1998, the Red Hat came Matthew sulk (Matthew Szulik), soon became President of the company. In November 1999, Bob young gave Suliko CEO, because it is not considered that is willing and able to manage such a large business. Young still believes the invitation to Matthew sulk of Red Hat as its main contribution to the success of the company.
Where Red Hat now?
Today Red Hat is the leading provider of Linux. The company employs 7 900 people, and its market capitalization is $14 billion. Red Hat continues to evolve and optimistic about the future.
By the way, according to an article in the New York Times, published in August 2001, even bill gates in his time invested in Red Hat.
Bob young was a member of the Board of Directors of the company until 2005 when he decided to concentrate on his new project — Lulu.com.
The lessons to be learned from the history of Red Hat
- Don’t need to stop “throwing a rod” ahead of time
Entrepreneurs make their own luck. Regardless of the complexity of the circumstances in which I was Bob young, he continued to look for opportunities to implement their ideas. If you are sure that your idea has potential, do not rush to sell its future for short-term benefits.
- One discovery often leads to another
Printing, Dynamo-machine, car — all these innovations at the time, pulled a whole string of secondary innovation. When appears on the market a completely new product, it is expected that people will soon need its upgraded version. If you will be among the first to offer this version to extract dividends will be much easier.
- Competent business model is not less important than technology
Breakthrough technology can’t sell itself. The lack of effective promotion will lead to the fact that a great product is on the margins of the market. If you think your product is perfect, and your potential clients indicate its shortcomings, is to listen. Business is not willing to respond to criticism is doomed to failure.
- Offer people the idea, and not just a commodity
This approach was followed by many successful entrepreneurs. If your product is worth a certain idea, people will not just buy it — they will become your followers.
This strategy is described in detail in such books as “Bridging the gap” (Crossing the Chasm) Geoffrey Moore and “Purple cow” (Purple Cow) Seth Godin.
- Don’t have to stay at the helm of the company forever
Bob young has managed almost nothing to create a successful business with clients around the globe. But he was quite modest and practical, so at some point voluntarily leave the post of General Director and to appoint to this role of a man who, in the opinion of young, suited her better.
Subsequently, Bob young said that the departure from the company is the best compliment that he could do Red Hat, as this step indicates full confidence in the bright future of the company.