Open Sources | Rodrigues & Urlocker » Medsphere: Egos, source code, and corporate governance

December 01, 2006 | Comments: (0)

Medsphere: Egos, source code, and corporate governance

TAGS: Open Source

UPDATED: I spent some time digging further into the facts of the Medsphere debacle, and am updating the blog accordingly. A great place to start is with Steve Shreeve's informative account of Medsphere's commitment to open source.

For those following the Medsphere debacle, and for those foolishly suggesting that this could mark the end of open source enterprise applications (a concern, among others, that Steve Shreeve swats down), let me just state for the record that there is only one thing at question in the whole mess:

Egos. Egos and corporate governance.

I've known about the lawsuit and internal problems at Medsphere for several months, as I know the Shreeves, the board members (I used to work with Thomas Weisel Venture Partners as an EIR and also know Wasatch Ventures), and Larry Augustin (though I've never discussed this particular matter with Larry).

Wherever you may stand on the issue (and I tend to stand with Fred Trotter and Eric Raymond on this), one thing is clear: it is wrong for a company to release source code without its board's approval. But it's also very unclear how/why/when an open source company gets that approval. Does Red Hat ask its board if it can release its kernel innovations under the GPL (or any other open source license)? No. Why would it? It's a fundamental part of its strategy.

Medpshere is about open source. Its strategy is open source. Yes, it has a hybrid model, but the proprietary components of the company's business model were not open sourced. They're not part of the release in question. The management team open sourced...its commodity, open source software. (And, interestingly, the source code release was a public matter, communicated outside the company and with the CEO's (Ken Kizer's) full knowledge, as noted here So how does implementation of management's plan of record run afoul of the board?

Again, did the Shreeves get formal board approval to open source their open source software? I think the answer to this is probably 'No,' but it's not clear why or how they would have solicited board approval for living up to its strategy (and, as I understand it, it was a concrete, clear part of the company's business plan and board-reviewed plans). This was a four-part open source strategy - the company had already released two parts of this strategy (without formal board approval, because the board already approved the overall business plan, and doesn't need to re-approve each step on that plan), and the open sourcing of the software in question was just another step on that path. It's odd that the board got upset at this point....

I think it's more likely that the lawsuit has to do with management issues: the board at loggerheads with the Shreeves (it had been looking for a new CEO from nearly Day 1, despite the fact that the Shreeves and team were knocking the cover off the ball financially). Larry and the Shreeves didn't work out as management partners. I'm wondering if part of this issue just comes down to egos.

It's unfortunate that we've come to this point with rampant finger-pointing and community unrest. It's more unfortunate that a thriving open source business is being stifled by a silly $50 million lawsuit.

I'm going to be going through the complaints and counter-complaints to try to provide more legal meat here. This is something Pam @ Groklaw should be looking into. It's a serious issue. It's a bad precedent if a board can claw back code that has been released. Will companies start toe-dipping, and then pull back code if the experiments don't work out?

Posted by Matt Asay on December 1, 2006 11:17 PM

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