10 to Watch: Bob Young

If 1999 was the year of Red Hat's honeymoon, then watch for flying pots and pans in 2000. Led by the ever-grinning visage of Chairman Bob Young, Linux distributor Red Hat had a yearlong free ride in the press, and investors responded in kind. The day of its August IPO, the stock tripled. On the day before Christmas, the company had a market cap of $15 billion in its stocking. All this for a company that repackages a free operating system with a few other pieces of software.

Give Young much of the credit. A former computer hardware salesman in Toronto, he stumbled on the Linux movement in the early 1990s and began to think of ways to turn the hackers' delight into a business. Now 45, the Hamilton, Ontario, native is getting closer, although there are dozens of versions of Linux on the market. Anyone can download it; anyone can make improvements; anyone can sell it for $20 or for less.

That's why Red Hat needs to put its version of Linux in as many boxes as possible, then tout its Web site as an ad-driven service center. With revenue from PCs and servers scant so far, the company has its eye on non-PC devices.

"Our big-picture model is not to convince 400 million PC users to unplug Windows or Mac OS and install Red Hat Linux," says Young. "It's to help build appliances for the other 6 billion people who don't want to own a PC."

Easier said than done. This year, Red Hat can't count on the luxury of playing grassroots underdog to Microsoft. And expect established Unix server stalwarts, led by Sun Microsystems, to fight back as well, even as they align with Linux.

There's also dissent from within. Some voices in the Linux community wonder whether Red Hat's growing presence threatens Linux's health.

"If any one [Linux] distribution company gets too large, they might try to put their arms around the space and execute a Microsoft play," says Arthur Van Tyde, executive VP of Linux consultancy Linuxcare.

Young makes no apologies for his ambition. Indeed, Red Hat's IPO-fueled purchase in November of software toolmaker Cygnus bolsters the dream of providing not just Linux, but an entire platform of open-source software.

Skeptics like Van Tyde say that Young's unwavering brand evangelism, delivered with an aw-shucks Canadian twang, has been crucial to the inroads Linux has made into corporate infrastructure. As a matter of fact, evangelism is now his full-time job. He was bumped up to the chairman's post in November, leaving CEO Matthew Szulik to run the day-to-day affairs.

Young and company were the first to convince major industry players such as Dell, Intel, Netscape and Oracle to lend not only name but also development effort to Linux. With the leadership role comes enormous responsibility. "If companies have a bad experience with Red Hat Linux, they'll say Linux is bad," says Van Tyde.

Factor in the investor hordes who've gobbled up anything Linux-related. If 2000 revenues don't climb well beyond the two previous quarters - $4.4 million and $5.4 million, with a most recent loss of $3.6 million - traders could get spooked. The company expects significant losses at least through February 2001, according to its latest financial filings.

Young says of Microsoft: "The reason it lives up to the hype is that it delivers on the promises." Now Red Hat must follow suit.

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