An Interview with Mark Bolzern of LinuxMall
Mark Bolzern is truly one of the original Linux pioneers. Profiled in the Linux Journal's Linux Kernel Who's Who feature (in the June issue), Mark was among those farsighted enough in 1994 to believe that Linux would be the "next generation UNIX" and that it also would be the next big challenge to Microsoft. So far, he's batting a thousand.
Yet unlike many of the original kernel hackers, Mark chose to pursue "Linux advocacy" as his main contribution to the Linux community. He established his own Linux distribution, Linux Pro, helped convince Multisoft to port their xBASE database product FlagShip to Linux (take a look here for a review of Multisoft's FlagShip that appeared in the June 1995 issue of Linux Journal), and founded Workgroup Solutions, the company that evolved into LinuxMall.com.
With the recent merger of LinuxMall.com and TheLinuxStore, a move which combines two of the largest Linux commerce sites on the Internet, we thought it would be a great time to catch up with Mark Bolzern and learn about some of the decision-making that went into the merger, his plans for a bigger, better LinuxMall and his thoughts about building the Linux community.
David Penn: I understand that LinuxMall.com had been preparing for an IPO when the opportunity to merge with TheLinuxStore came around.
Mark Bolzern: True; we were perhaps 30-90 days from filing.
David: What had LinuxMall hoped to accomplish through the IPO?
Mark: My primary motivation in building LinuxMall.com has always to build an entity that establishes Linux in the marketplace, and continues to promote Linux. The purpose is to solve problems for people who need more flexible technologies than they would otherwise be able to use. There is a need to establish Linux as a viable choice, a valid alternative, for anyone from home user to small-business person to major corporate entity, whether they are gurus or neophytes. This provides them with the freedom to empower themselves that having source code brings, if they are willing to learn and make some hard choices, hire others who can help, or just in general be able to use a more complete and more stable collection of products not controlled by any single vendor. By helping to make the choice of accepting Linux easier, we will help move Linux forward ... which leads to my second motivation.
My second purpose is to create the necessary channels between creators of the technology with new products and improvements, and the consumers and users of the technologies. In the long run, this takes a commercial profit making, self-funding entity. So what LinuxMall.com does is bring together users who have needs and with the products or services that fulfill those needs. By doing so, we also bring together programmers, developers, publishers and service providers with technology users who are willing to pay for these things. It is important for this to be done in a completely vendor-neutral and independent fashion, which means we will carry any valid product from any vendor and sell it to any customer who wants that product. The sale must be an informational sale, where a customer chooses based on knowledge of what is best for him/her. And only if there is money involved will it be a stable long-term endeavor.
My third purpose is to stimulate more product development. LinuxMall.com assists with this in four ways: 1) working with organizations such as Linux International, Linux Professional Institute, Linux Business Expo and various other show organizers and any other entity that is a vendor-neutral promoter or improver of the Linux industry as a whole; 2) working with publishers and developers of commercial products to help them long before an ordinary reseller normally would, including issues such as testing, test marketing, artwork, packaging, promoting and distributing; 3) giving back 2% of our e-commerce income to the community in various ways for various projects that benefit Linux in general; 4) having a viable associate program that provides up to 10% of any given sale to the entities that led to referring that sale. Our credo is to "help everyone and anyone we can, and do no one any harm".
Finally, I have always wanted to share ownership of my company with those who have made it possible for Linux to become what it is. This way, we can continue to grow with those people and others who want to continue to move Linux forward. The only way to do this is to become a public company, and to make our stock available to anyone who wishes to own part of the commercialization of what they have created. There was one problem with the IPO route that had been troubling me ... the directed shares (Friends and Family) program was always too limited, and it was a lot of work to qualify who should be in it and who would miss out. We needed a better way.
David: Will those same things be accomplished through the proposed merger with TheLinuxStore?
Mark: One thing we can do now, that we could not have done, is make large amounts of stock available to anyone who considers themselves a friend just by letting them buy it on the open market at a rate that is lower than the $8-30 at which we would have had to offer our directed shares (and limited numbers of shares per person) if we had done an IPO. We hope there will not be an insane upswing that ends up angering people who bought stock before the price came back down to reasonable (and business-justifiable) price levels. We also hope that people will believe in us and pursue a long-term buy-and-hold approach.
If you compare us to Red Hat, Andover, VA or Caldera in terms of last year's combined revenue vs. the market cap, I think you'll confirm for yourself why I think our stock (currently trading under the ticker symbol EBIZ) is an exceptional buy.
We plan to apply to move off the OTC and to NASDAQ as soon as possible, something an IPO would have done for us if successful. And in the current down market, there is no guarantee that an IPO would have been successful.
Ultimately, I think this merger is a good match that fulfills all four of the criteria I mentioned above. It is also a way to avoid IPO investment madness (ups and downs) from affecting the price of our stock the way it would in an IPO. We hope to build long-term value in a company which people will be proud to buy and hold stock in because we do our jobs well and the value continues to rise in a normal long-term sawtooth pattern.
The one thing we don't accomplish is raising funds for operations into fat bank accounts by selling massive blocks of stock to the public in an IPO. We are in pretty good shape having been profitable in the past, as well as expecting to become profitable again in the not too distant future. If we should need more funds, we can do another public offering later (not an IPO - rather a PO) or a Private Placement of stock with major investors. It is too easy to waste money if you have too much of it on hand at any given time.
David: From a cursory glance, LinuxMall and TheLinuxStore offer many of the same Linux-related things. How are the two entities different?
Mark: LinuxMall.com has been designed to become an umbrella site, a collection of stores or Linux-related sites with various resources. We feel that TheLinuxStore.com fits in easily as one of these entities.
LinuxMall.com has not previously handled hardware, while TheLinuxStore.com has done so, and also believes in vendor independence as we do. They will buy and resell hardware from any other vendor, as well as make their own store brands where other vendors do not fill the gaps. LinuxMall.com's customers have been asking us to carry pre-configured Linux systems with both software and hardware. If VA, or Workstation2000, or Dell, or Compaq, or Penguin Computing, or Atipa or anyone else wish for TheLinuxStore.com to carry their hardware, we can see to it that this happens.
TheLinuxStore.com has had some merchandise (shirts, mugs, etc.), but those have been almost entirely different from LinuxMall's, so our collection of these things grows. Finally, TheLinuxStore.com has been much more B2B than LinuxMall.com, which has been primarily B2C. There is actually very little overlap between the two companies, but very much synergy pointing towards merger being a good idea.
David: And how will the new whole be more than the sum of the parts?
Mark: Together we will offer pre-configured systems for VARs and resellers, including reselling hardware produced by other Linux hardware vendors, just like LinuxMall.com has been selling distributions from all the different Linux distribution makers. We hope to become literally a one-stop shop for all things Linux, with separate channels for end users and dealers. Also, a one-stop sales channel for anyone wanting to make, sell and distribute Linux-related products. Because we will focus on Linux, we can do a better job of it than those coming from mainstream channels. The best they will probably do is sell the most popular items, while we will have a much broader selection.
In addition, LinuxMall.com and Ebiz can be more efficient by removing redundancy between our two operations, and re-deploy our people effectively. Our management and other staff complement each other very nicely in that we both have different strengths and possess staff that can easily fill holes in each other's organizations.
David: What will the new LinuxMall's relationship with Ebiz Enterprises be?
Mark: The management & staff merges, and Ebiz buys LinuxMall.com with its stock. The majority of the stock of the combined entity is then owned by the former owners of LinuxMall.com, and we will apply to Nasdaq for the LINX trading symbol to replace the EBIZ symbol currently in use.
David: In our Linux Kernel Who's Who, it reads that you chose to be a Linux advocate instead of a Linux developer.
David: What contributed to that decision?
Mark: There were many competent developers, but few advocates who really knew how to help Linux become the force it is today. I thought I could be of more help in selling to the public what the developers were doing, than in being another developer. Having been a developer and trained engineer in a previous life, I was one of a few who could truly bridge the gap between technology creators and technology users in the commercial way that would become necessary for Linux to succeed as it deserved to. I have also been very successful in the past with predicting which technologies would succeed and which would not. That history bore credence to my predictions for Linux, which helped in being an advocate for Linux.
David: Is your work with LinuxMall an extension of that decision?
Mark: Absolutely. Very astute of you to notice; most people miss this little fact.
David: What is your feeling on consolidation in the Linux community/industry?
Mark: Certainly the merger of LinuxMall and TheLinuxStore can be seen as a part of this trend ...
It is bound to happen. It has happened in every maturing industry I know of. I just hope it is all for the better of what I see as the overall goal ... the freeing of the masses bound in slavery to a single vendor as dictator, and giving them a better world where they have choice, and freedom to learn to affect, control, influence and make the best use of the technology they must use to survive.
David: As Linux becomes more and more a part of the mainstream, is it conceivable that Linux specialty stores will become less profitable? Or do you believe there will always be a place for "stores" that cater exclusively to the Linux community?
Mark: The time of the "Linux Specialty Store" and "Linux Distributor" is only just beginning.
There was a time when microcomputers came on the scene, but minicomputers were king. To some degree, the channels for minicomputers picked up and accepted the Micros, including the IBM PC, but they never truly embraced them. A whole 'nother channel was built while ComputerLand, MicroAge, Merisel, Micro-D and others did the task of representing microcomputers better. Then over time, yes, microcomputing merged into the mainstream, as consolidation occurred. Ingram bought out Micro-D; Merisel still exists; CompUSA, MicroCenter and others beat out ComputerLand & MicroAge - but it didn't happen until microcomputers were a bigger business than minis. It won't happen in earnest in Linux until Linux is a bigger business then Microsoft ... For the moment, even with as much steam as Linux has gained, its marketplace is still a drop in the bucket next to the MS-related marketplace.
LinuxMall.com has been an e-commerce reseller of software which sells primarily to end users, while our Frank Kasper & Associates division has been a wholesaler of Linux products to dealers, some of whom compete with LinuxMall.com. We believe strongly that our e-commerce division must buy from FKA on the same terms as our competitors ... and if it were to win sales over others, that it happen only because it does a better job than the competition does. The reason we merged with Kasper & Associates has nothing to do with dominating the market. Rather, it is so that as new products come to market, we can distribute them as widely as possible as quickly as possible, which is to everyone's benefit. If we focus on Linux products, we can do a better job than those who just sell Linux products as a sideline. LinuxMall.com and everyone else win only if the Linux market can grow as fast as possible to the point where it catches and bypasses Microsoft; I don't believe traditional Microsoft channels will ever do the job like it needs to be done. And also, it can happen only if all the Linux vendors cooperate with us and each other against a common foe. If we give in to infighting, we lose. I hope that VA, Andover, Red Hat, Internet.com and all the others see this so that we can all help each other to succeed ... build the pie first, not figure out how to slice it before it is baked. LinuxMall.com stands ready to work with any and all of them in any mutually beneficial way we can.
David: As someone who has been long involved with the Linux community, what do you see as the immediate short-term effects of an imminent Microsoft breakup?
Mark: It will continue to bring an undue amount of attention that comes to Linux too early for us to properly handle it. However, this Microsoft brouhaha doesn't really affect Linux directly very much yet. If Microsoft were to bring out MS Office for Linux, that would have the effect of bringing over more people more quickly. It would also have the down side of suppressing otherwise promising competitors to MS Office and leaving MS in the same dominant position they were in before, forcing Linux towards broken MS "standards". If MS releases their own "Linux-like" OS based on FreeBSD as I think they will (weakness of that license!), with Windows APIs, it too will create much in the way of problems; we need to get ready for that onslaught. This is one reason I am in such a hurry to get the Linux market well established.
David: What do you see in terms of growth for LinuxMall in the wake of this merger? Are there any new initiatives that are now possible with the combined strength and reach of LinuxMall and TheLinuxStore?
Mark: We look forward to more awareness of who LinuxMall.com is, what we are doing and why; more sales; more strategic partnerships to assist any and all makers, vendors and resellers of Linux-related products, as well as companies wishing to move their products to Linux; a way for people to own stock in us, and bet along with us in ways that can make them money; more ability to bring new products to market; more support by us of the general Linux marketplace; and hopefully, responsive support for us and what we are doing by the marketplace itself.
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