So You’ve Been Acquired…
Thoughts for my Red Hat Friends
Despite my better judgment, I’ve decided to post this letter outside of the Medium partner program, which means that you, dear Hatter, get to take advantage of my brain, free of charge. This seems appropriate, given that the Twitterati think your entire company subsists on the free labor of others <cymbal crash>.
So you’ve been acquired. If you’re lucky enough to have stock, and I know several of you who were, then congratulations! Enjoy your bump in pay and remember to sell, sell, sell as soon as humanly possible! If you’re one of the lucky ones whose shares will vest on an accelerated schedule, then double congrats! You may have hit the tech job equivalent of the lottery. But, probably not, if we’re being honest.
I think I’m uniquely situated to proffer an opinion on all this. After all, I spent nearly 4 wonderful years at Red Hat, after being at a startup, Gluster, that was acquired by them. I have many friends there, but importantly, for the purpose of this article, I own no stock in either Red Hat or IBM. When I worked at Red Hat, I made a point of selling everything as soon as humanly possible (those of us who lived through the original dot-com crash in 2001 suffer a bit of PTSD and we’ll just take the cash, thanks). Now that you know I have no dog in this hunt, I’ll give you my opinion. This is 100% my unvarnished opinion, with no meddling from other parties. Those who know me know I’m not the type to pull punches, and this is no exception.
One other bit of information about me that gives me a unique position from which to bloviate: I lived through the largest tech acquisition of our lifetimes when Dell bought EMC. I had just arrived at EMC a month prior — from Red Hat, natch — and suddenly became the butt of jokes from all my friends at Red Hat: “Dude, you’re gettin’ Dell’d!” Having lived through that major acquisition, I think there are some universal truths to these types of things, even though Red Hat is in a very different position from EMC between 2015–2016. In putting pen to paper over the ensuing paragraphs, I’m making a whole lot of assumptions, so take with copious grains of salt.
You know nothing, and neither does your manager
Obviously, this depends on the circumstances of the particular acquisition in question, but unless your immediate supervisor is Jim Whitehurst or Paul Cormier, it’s safe to say that no one in your immediate circle has a lick of information about what’s happening or is about to happen. Anyone who says otherwise is probably lying. Or just delusional. Over the course of the next few weeks and months, you’re going to hear a lot of scuttlebutt about actions supposedly in the works. Some of it will check out. Most of it won’t. The mantra of the day will be “stay the course” and “a thousand points of light” (sorry, showing my age on that one). Your manager will tell you that everything will stay on track and nothing will change, and you will tell your team the same. There is a very good reason for that — the last thing you want is your entire team getting demotivated about what is or isn’t happening at the highest levels of the two companies.
Your boss will look at you sincerely, stare lingeringly into your eyes, and tell you that all is well, all will be fine, and nothing will change. They will be honest, or as honest as they can be in a vacuum of information, and they will actually mean it. And it may even be true for some period of time. After all, an acquisition does IBM no good if the best employees split. So there will likely be a period of calm, perhaps for a year or so. But then…
Revenge of the Bean Counters
At some point, the people upstairs, who will have a tenuous relationship to product development and engineering, will start to take a look at every business unit’s P&L and start looking for what’s euphemistically described as “redundancy”. This means they’re going to start looking at which teams to let go and which lines of business to mothball. Usually the first to go is anyone considered a “cost” to the business: accounting, operations, some marketing teams, some sales teams, and other “nonessential” employees. The really hard part, which will probably happen in about a year, will be for any IBM’ers now in the unfortunate position of working on a product in the acquiring company now eclipsed by the new and shiny, or conversely, any Red Hatters working on a lesser product in the acquired company. You have a year. Now is the time to start trolling your LinkedIn connections looking to have coffee or lunch and dusting off that old resume. Do it now. You’ll thank me later — you’re welcome. Later in this piece, I’ll do a bit of conjecture on which products make the cut and which ones may be on the chopping block.
If IBM is smart, they’ll keep Red Hat as independent as possible, and prevent their bean counters from interfering. But if your job depends on that, and you’re not taking protective measures, you’re naive. $34Billion. That’s a whole lot of money to spend for a company that would have to wait a long time before even approaching that level of revenue.
About those big projects and big hairy audacious goals
As I mentioned above, it all depends on how independently Red Hat functions and for how long. If Red Hat delivers on its promises — and you don’t know what those are — then your time for working on new and crazy things is extended for… some indeterminate period of time.
When I was acquired by Red Hat, it was actually a godsend. Suddenly, my little cash-strapped Gluster community was presented with seemingly endless amounts of resources and support. That acquisition was honestly the best thing that ever happened to my career.
Which brings me to the other acquisition I’ve been through, Dell and EMC. Suddenly, my big plans were pretty much scrapped. All of my management tried to say that nothing would change, but it became apparent very early on that this was simply not true. And it was very convenient for them to say “nothing would change”, because within a couple of months, my team was re-orged into an entirely different business unit. Remember kids, in these situations, only the sociopaths win.
But hey, look on the bright side…
You now have a very convenient scapegoat for everything
From now on, any failure, no matter how miniscule or large, will be viewed against the backdrop of the IBM acquisition. It doesn’t matter if it was something in the works for years beforehand — it will now be IBM’s fault. They ruined everything. Except they didn’t, but shhhhhh… stay on message, eh comrade?
From the moment I stepped into EMC, it was pretty apparent that dysfunction was the order of the day. Coming from Red Hat, it felt like I had stepped back into the 20th century. But many of the EMC lifers had convinced themselves that they worked for an engineering-led company, despite the fact that this hadn’t been true for years. Suddenly, after the Dell acquisition, all of these long-time cultural debts that were being put paid were the fault of the acquiring company. I don’t know how many times I heard that Dell “ruined the company culture”. I really had to stifle laughter. Company culture flew the coup a *long* time ago. But it didn’t matter, because it was all Dell’s fault.
I sense that a lot of Red Hat’s deficiencies that have been papered by its success for many years will now become IBM’s problem — and their fault. Which will be incorrect, but it won’t matter.
Let the Games Begin
Red Hat is very accustomed to the concept of “meritocracy”, flawed though this term may be. The overarching ethos was that the best open source technology would win, and Red Hat would build product on it. And sometimes there would be multiple “winners” and Red Hat found reasons to invest in all of them. Red Hat is a company that has continued to develop 3 different virtualization management products over the years. It’s one of the things you can get away with when you’re rolling on Wall Street and your investors are happy. I’m not going to make any bold predictions here, but let’s just say that I suspect this will change. Eventually, there’s going to be scrutiny of the product development, and some of them are going to lose. Red Hat teams are now going to find themselves in pitched political battles against IBM product teams, and there will be blood. Worst of all for Red Hatters, you may eventually (1 year? 2 years?) find yourself in a world of diminishing investment — and this is definitely a future you need to contemplate. In that scenario, Red Hatters will find themselves in political battles not just with IBM but also between their own teams. Ask yourself, do you really need *all* of OpenStack, CloudForms, *and* RHEV? I’m going to say no. Those are three products that are not considered the future of the company. I’m not going to bet which one is going to lose — I’ve been wrong before. But I’m going to put good money on one of them being sent to the dreaded “mainenance mode purgatory”. Eventually. Everything’s hunky dory for now, right?
Sometimes these things shake out radically differently from what you expected. When Red Hat acquired Ceph in 2014, I thought it spelled the gradual end of investment in Gluster. I think everyone expected that, including upper management and the storage business unit. But then a funny thing happened — Gluster positioned itself as a superior container storage solution and hitched a ride with OpenShift, and now the positions are reversed: Gluster is on the upswing, and Ceph is looking around, wondering what its future holds. Who knows? When I was at EMC, everyone thought XtremIO, the newly acquired technology, was going to eventually replace VMAX, which was getting long in the tooth. Not happening. Things change, sometimes for technological reasons, but often for purely political ones. Turns out, VMAX was making a lot of sales guys rich, and they weren’t so keen to ditch that very quickly. Red Hatters would do well to take note.
If you’re on the OpenShift team, you’re probably feeling pretty good right now. But don’t get too cocky — There are a whole lot of people working on Bluemix, CloudFoundry, and other assorted Cloudy-ish technologies, many via acquisitions that were also fairly large. It doesn’t matter how much you think they suck and failed — they have existing relationships with the entire IBM sales and marketing organizations, and they probably have internal executive champions. You may be left alone for the time being, but if you don’t have the sales and marketing support that you’ve been promised to make your pie larger, get ready to reset your expectations. Suddenly, you’ll find yourself on the wrong end of comments like, “but they just haven’t delivered like they were supposed to.”
The only constant is change, and nothing is going to work out as you foresee. If you can’t stomach chaos, now is the time to look for other opportunities. On the other hand, if you thrive on it, this could be just the gig for you. Everyone in your management chain is going to put a positive spin on it, but keep in mind that none of them know. Nobody knows. Jim Whitehurst doesn’t know. I’m sure he’s been promised certain things, but all it takes is a couple of missed expectations on earnings calls for those promises to be “reevaluated”.
On the plus side, I don’t see much changing with respect to open source community investment. IBM has long done that, and they’re buying Red Hat. Changing that aspect of the deal would be literally the stupidest thing IBM could do. But again, there are lots of unknowns there — will IBM allow Red Hat employees to continue to work on open source projects that aren’t tied to a product or may even be somewhat competitive? This is something giving Red Hatters heartburn right now, so if I were in a position to say anything substantive here *cough*Jim Whitehurst, I would start putting out the message now.
Large companies have long sales cycles, and they’re not going to leave customers high and dry, although they will start to send subtle messages if they think products will be put into “maintenance mode” in the future. So if you’re working on CloudFoundry or OpenStack, I don’t expect much to change in the near future.
But you should still dust off that resume.
The Red Hat Model
I’ve been a big proponent of the Red Hat sales and business model for many years. I have long espoused it as an example of how you can differentiate between your community and sales execution strategies. Which to this day, remains a foreign concept to much of Silicon Valley. Also to this day, this aspect of Red Hat’s business continues to piss off valley types to no end, and I *love* seeing pissed off valley types. It doth warm the cockles of my soul (question: what’s a cockle?) Never has a group of self-inflating egos conducted such a massive self own through the sheer refusal to understand something foreign than the Valley’s permanent state of ignorance with respect to the Red Hat business model. It’s high-larious.
So I am vigorously crossing both fingers as I hope that IBM is also acquiring the Red Hat model to apply to its own product lines. This would be the smart thing to do. Massive embrace of collaborative open source community development, followed up by precise execution on the sales and marketing fronts is a winning strategy. Turns out, you can build solutions on open source code that people will pay for. Who knew? Something tells me that IBM understands this and will want to learn from their newly-acquired friends. I hope.
To turn this back to my Red Hat friends: this could be good. It could be bad. But it will definitely be interesting, and you will almost certainly learn something. I would enjoy the ride. And if you just so happen to receive a tip about the job of your dreams elsewhere, you might want to go ahead and take that conversation.