Inside the Open-Source Software Company That IBM Bought for $34B

“Every line of code that we write for our products, we give away for free,” said Matt Hicks, senior vice president of engineering at Red Hat, an open-source software company that in July 2019 became a subsidiary of IBM in a $34 billion deal. In this episode of Mastering Innovation on SiriusXM Channel 132, Business Radio Powered by The Wharton School, Hicks described his passion for building communities and what makes Red Hat successful in a world with millions of open-source projects.

Red Hat is subscription-based, and the company provides storage, operating system platforms, management products, consulting, and more to customers. Hicks discussed the IBM acquisition and what keeps the turnover rate at Red Hat low, and he offered career advice for STEM students.

An excerpt of the interview is transcribed below. Listen to more episodes here.

Transcript

Matt Hicks, SVP of engineering, Red Hat

Matt Hicks: In fact, if you get down to the people side of software, Red Hat’s entire culture is built around open-source and the power of open-source. It comes down to our “why statement,” is that open-source unlocks the world’s potential. In all cases, when we pursue this, when we jump into a community, we want to amplify the community because our goal is, if that community grows very large and diverse, and we get a ton of innovation, we’ll benefit from that. A lot of other companies, whether it’s the time duration, they need to turn a profit quickly on it, or they have different drivers — they want to use open-source, but they feel more comfortable with the proprietary model — they’re not able to have the same impact on the community as I think Red Hat has. And Red Hat is fairly unique in that. I think there are other companies that certainly utilize open-source very well, that we work with. Google is a great example, great open-source contributor. Their business model is using that for their hosted service and their cloud. Ours is we certainly run our software in the cloud, but we also ship it to on-premises customers. And I think you have to have that model.

Harbir Singh: Actually, that’s a fascinating point, I would think — by the way, my original degree was in computer science and electrical engineering, so I’ve forgotten everything on that — but I think I understand exactly what you’re saying. I think it’s more appealing to a developer, I think, to their core values, if you are also benefiting society while still working in your corporation. In other words, if you want to hoard the benefits of your innovation, it feels a little bit like you’re in an exploitative mode. If you can be profitable, even while sharing your innovation with others, but really winning the next-generation game, I think that’s what you’re talking about, in a sense, right?

Hicks: Absolutely. I describe it as I have a team of engineers, and a lot of them, they come in every single day to change the world.

Singh: Very interesting.

Hicks: And they love the aspect of that. In fact, it’s how I really learned software. I got into Linux in the mid-90s, and I feel like I learned software from some of the greatest software developers in our generation. And this was before school. I didn’t pay anything for it. It was unencumbered by access for me. Red Hat’s able to do this on a global scale, with not just Linux, but with a tremendous mass offer. And that does have those social worldwide benefits. They are very inspiring. I think being able to hold both of those, where every day you’re making the world a little bit better, and you’re able to excel in software, it’s a combination I love. I love having an engineering team that we’re able to do that. It’s quite compelling.

“Here our goal is, if that community grows very large and diverse, and we get a ton of innovation, we’ll benefit from that.” – Matt Hicks

Singh: So, others would have a hard time implementing that. And then your retention of employees, is it better than the industry average, as a result of that, perhaps?

Hicks: It is quite good. We actually do really well on the retention side, just because you have a passion element. It goes into why you come into work every day. You have compensation, you have all these measures, but if you love what you’re doing, I’ve found over the years, that’s probably the strongest driver. You get to come in and be your best every way, and you really feel like you’re putting your fingerprints on the world. I always have loved every minute I’ve been in Red Hat. That’s a nice thing to be able to carry into work every day.

Singh: That is great. So, how did this culture come about, if it is so widely shared? Again, it seems partly it is just a community that enjoys this, but at the same time, there’s bosses in charge of the bottom line somewhere along the way who say, “Hey, we didn’t make much money last year, or we could have made more money. You did well, I know, but … .” Are there dissenting voices in the company in some way?

Hicks: What we try to focus on with my leadership team is making sure that we are as obsessive as we are around the power of open-source software, we are equally obsessive of adding value for customers.

Singh: I see. OK, so you’re selecting in that level.

Hicks: Because releasing what you want versus the other, then customers for us, they just stop subscribing.

Singh: So that’s the goal that energizes people and gets you the results you need?

“If we pick the projects right, we get a ton of innovation from academic society, from our customers directly.” – Matt Hicks

Hicks: Yep. And it’s really complementary too because if you go to most software developers, what do they want, they want to write great software and they want it to be used. And so, when we say, “Look, when you make customers successful, they’re using your software.” It’s not just one side of the coin, you have both there. And so they’re very complementary goals. But that to us is, if we’re making customers successful and we’re creating that value there, then it just keeps the whole machine running. This lets the model work. If we pick the projects right, we get a ton of innovation from academic society, from our customers directly. Some of them work within open-source. It just lets us engage with all our ecosystem parties differently than proprietary software models.

Singh: We saw in the news that IBM has acquired Red Hat. How does that play into the innovation engine?

Hicks: It’s funny. Before Red Hat, I was at IBM.

Singh: I saw that. I think I found that somewhere. That’s right. So you were way ahead of the game. You knew years ago that this would happen.

Hicks: That’s right. I’m a very long boomerang. I think it’s 13-plus years in the middle there. But IBM brings … I learned a great discipline of software and scale, just the size. When I was there, there were 300,000 people, it’s almost 400,000 now. But they have the ability to amplify what we’re doing and the reach in the market to bring open-source to every corner of the planet.

About Our Guest

Matt Hicks is the senior vice president of engineering at Red Hat. In this role, he is responsible for all product engineering, including products such as Red Hat Enterprise Linux, the JBoss Middleware portfolio, OpenStack, OpenShift, and Ansible. His role also includes Red Hat’s hosted services, such as OpenShift Online, OpenShift.io, and OpenShift Dedicated, which serve millions of applications and billions of requests a day. With more than 20 years of experience in Linux and a background in computer engineering, Hicks has always had a passion for combining infrastructure and application technologies. His engineering background before Red Hat includes several years at IBM as well as startup experience but he has also served in a variety of roles in IT and consulting. You can find more on Twitter @matthicksj.

Mastering Innovation is live on Thursdays at 4:00 p.m. ET. Listen to more episodes here.

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