Everything Red Hat CEO Jim Whitehurst would say about the IBM deal

This week during the Red Hat Summit in Boston - the first major Red Hat event since IBM announced its intention to acquire the open source vendor for $33 billion - CEO Jim Whitehurst sat down for a roundtable briefing with press from across the EMEA region.

Naturally the main topic of interest was the IBM-Red Hat acquisition, which has just this week been approved by the US Department of Justice - however, European regulators may yet stall the deal from going ahead.

The roundtable was just hours before Whitehurst's keynote - the first guest of which was IBM CEO Ginni Rometty. While the keynote chat was typically lighthearted, the marketing messaging was clear: one of cooperation and mutual respect, where Red Hat would remain an independent business unit.

But will this be the case? The two companies, at first glance, appear to be chalk-and-cheese. Big Blue, as it is nicknamed, is a more than 100-year-old computing pioneer that evolved from the Hollerith tabulators, and only relatively recently relaxed its policy that all employees had to wear suits. It has also faced controversy over the years for instigating various rounds of mass layoffs, and the company is facing fresh allegations of targeting older workers when management swings the ax.

However, true to its form, it has also pioneered artificial intelligence research, and is currently at the forefront of commercial quantum computing, including an open source framework, qiskit. (As an aside, we have heard Red Hatters talking about the potential for quantum computing to unlock better, near-unbreakable cryptography - an interesting problem to throw at an engaged open source community with the pure research abilities resources of IBM.)

And on the other hand there is Red Hat, whose CEO, Whitehurst, wrote the book on fostering better workplace culture, encouraging a kind of "abrasive creativity" that seems at odd with IBM's traditionally corporate sensibilities.

"I would rather be owned by IBM, which is passionate about open source and a big contributor, than a bunch of mutual funds out there that could care less," he told Computerworld UK at one point in the Q&A, possibly a veiled reference to the newly independent SUSE.

There is no question, however, that Red Hat is one of the few open source vendors to have truly created a viable and profitable business of its own, based on a subscription model - radical when it first emerged - and while also proving its commitment over the years to upstream community engagement and code maintenance. So even putting the speed of innovation that open source enables aside, it should be a steady bet for IBM.

Almost every question from reporters overlapped with the still-uncertain future relationship between Red Hat and Big Blue. Here we provide a selection of Whitehurst's comments that touched on IBM.

On Red Hat's value-proposition and why IBM were interested

"I think almost every enterprise is struggling with innovating at a faster pace. The problem, or the opportunity, is there's almost unlimited desire for enterprises to drive more functionality for the business - whether that is new ways to engage with customers, new ways to enable employees - customers themselves are getting used to a digital engagement model led by the Facebooks of the world, so your expectation is your bank's going to have a consumer experience as good as Facebook.

And so you think about if you're in banking and in technology, you have this big legacy ecosystem, all these regulatory requirements, you're now trying to build new systems of engagement, you're trying to modernise what you're doing.

Everybody wants to talk about the new sets of technology, whether it's public cloud or containers, as a way to instantiate - containers and how you use containers to get to cloud is probably the single biggest technology thing that you hear about, but what you hear about as much as that is, hey, we're now realising the technology is the easy part. It's about culture. How do we actually go about a more cultural transformation?

The theme of my keynote is not about the technology, it's not even about methodology like agile or devops. It's almost a new mindset required to innovate that companies are going through and several companies out there are talking about how they're working together through that process.

We're not a professional services company, but because we've been doing open source for 25 years, people naturally come to us and ask for our help and thoughts as they think about the cultural transformation they need to go through, to be able to leverage the technologies to be able to deliver at the pace that their business customers expect.

We're in a period of time, over the next five years, where the predominant technology architecture is going to emerge. And there are two ways that's going to merge.

It's going to be native public cloud architectures, which I would... these are big partners, I don't mean this in a negative way, but the public clouds will try to innovate and differentiate. Use the analogy of Unix - a container platform on Amazon is going to be different than Google's, which is going to be different than Microsoft.

The public clouds are starting to look and feel more like Unix, than Linux, because they are all slightly different and they're drifting further apart, as they all work to innovate, rightly so for their customers.

Our vision is a much more horizontal view of the world. When we looked at Red Hat Enterprise Linux back in the day, I would argue one of our biggest sources of value we provided was if you built an application for Red Hat Linux, three years from now and you wanted to do a hardware refresh, you had a lot of choice. If you put it on Solaris, you had one choice.

And we really drove hardware margins down to single digit, and we provided a lot of flexibility in terms of where and how you ran an application. When you think about the cloud now as a deployment models and a container platform is being equivalent of an OS, we absolutely, passionately, strongly believe that we need to have the equivalent of a Linux, a consistent infrastructure stack that runs across all deployment models.

And so what OpenShift is, and the reason we hear so much about it - we'll talk about the features of OpenShift - but fundamentally, it is the only infrastructure stack that is the exact same bits, whether you run it bare metal, you run it on VMware, you run it on Amazon, Google, Alibaba, AWS, across all the major clouds. It's the only way you can have consistency all the way through.

Our model is very much in this world going forward, we're either going to end up with vertical stovepipes again - these are all great partners of ours - or we're going to have a consistent infrastructure stack a la Linux that runs across all of them. And so that's what we're really working to drive.

Frankly, I guess why IBM was so interested in Red Hat, is sharing that vision of this hybrid multi cloud with a consistent infrastructure stack.

"And just to be clear, I want to differentiate that from what a lot of people are doing who are saying, 'we can provide you a management tool to manage stuff across', well, management tools just provide the visibility of different infrastructures of the clouds, what we have is actually the same infrastructure instantiated across the clouds. So you have a homogenous way that you're building and running applications, and we can spend the next two hours going through why we think that it is a much better approach for customers in the short run, and in the long run, in terms of strategically maintaining flexibility and maintaining the choice over the long run."

Will Red Hat take any concrete steps to safeguard its culture?

"What I've always said to all of our employees is as a standalone company, as long as we deliver for our shareholders, we add strategic latitude to do what we want to do, which was a lot of work with open source communities.

We're now going to be owned by IBM. And I would rather be owned by IBM, which is passionate about open source and a big contributor, than a bunch of mutual funds out there that could care less. But still, our best way to be able to continue to do the investments we want to make, and drive open source forward is to hit our commitments, beat our commitments and continue to grow.

"So I think we have a better capability as part of IBM to be able to deliver against our aspirations for open source than we could as a private company. But you know, I'm not sure what concrete steps we can take, beyond that, other than I think we are in a place where we will grow faster and therefore be able to do more open source."

On working with IBM in enterprise hybrid cloud

"Unfortunately, without regulatory approval, we have to be very careful what we can talk about. I will say broadly, I think IBM and Red Hat share the same vision of hybrid multi cloud. And I'm really excited that with their breadth and scale, and our infrastructure stack and what we're doing in open source communities, that we can provide a tremendous, tremendous value to enterprise customers as they're looking to move from traditional to hybrid and multi cloud."

On Red Hat culture surviving and thriving

"That is one of the things that keeps me up at night as much as anything else. And just a little bit of quick background to digress just for a second.

If you think about software companies, it's hard to define what is a sustainable source of advantage from a software company. Think about industrial companies, sustainable advantage often comes from scale, I make more units of something I can make it cheaper than others - it's why you'll have a lot of new automakers popping up because there becomes a scale associated with those things.

Then secondly, it's so individual in terms of developers and developers can be hired away, then it's unclear you can build a capabilities-based advantage. And bluntly, if you look at software companies, there are not a lot of software companies that have had four or five hit products, right. I mean, not to pick on people, you know, the ones who work on the database, and then they basically bought everything else that's in their portfolio. And, you know, CA had their original management tool, and they bought a lot of stuff.

A lot of companies have one great product, and then they buy a lot of stuff, but there are not a lot of companies that have a serial of great products. I think the simple reason is, it's hard to come up with a source of advantage that makes you better at coming up with the next new thing, than some startup or someone else.

As the CEO of a software company, and I think of myself as a bit of a strategist, I've obsessed over that for years, right? I truly believe that Red Hat does have a sustainable source of competitive advantage and around our capability to work with upstream communities and catalyse that and turn it into enterprise products. And the reason it is different than most software companies is that most software companies, again, you can go hire 10 developers and pull the right knowledge you need. You can hire 10 people in Red Hat and that matters because it's not knowledge, it's culture that drives our ability to engage in upstream communities, and how we engage with customers, how we create products, so we really do have a culture-based source of advantage. And, you know, we went from leader in Linux to leader in OpenStack, to leader in containers.

The reason we can do that is because we can catalyse communities across those things. And so you have very few companies that have ever been able to do that, and I would argue will be able to do in other categories in the future, but only if we can maintain the culture. So our culture and our source of advantage are inextricably linked. And so, as I think about us going forward, we spent a lot of time even as an independent entity, it's okay, how do we bring people in and bring them into our culture? And so we spent a lot of time saying, how do we make sure we hire people based on references from other Red Hatters? How do we do our onboarding program? Our big focus this year is trying to better define manager behaviours that we expect from our managers that we think are most accretive to culture. Because behaviours, what people say they do, how they spend their time, are the soft cues that reinforce culture.

So we want to be even more directive for our managers to say: 'hey, here are the things that are both most accretive to helping support our culture'. A big project going on right now is to work to define those. It's a big cross-functional team. And again, as part of IBM, I believe we will grow faster, we as Red Hat will grow faster in the IBM portfolio, because with their size and scale we'll grow faster, which means we're going to be hiring more Red Hatters faster. And so getting even crisper about defining the cultural components that are important and importantly what leaders and others need to do to help inculcate reinforcement culture of the people here, and to bring people in and get them passionate about the culture is going to be critical to our success.

But specifically?

Well, innovation requires constructive conflict. So part of it is how do you build a culture of - a lot of people come around and say, you guys are all happy and you're growing so fast, and they come in and they first say, 'man, that's really harsh'.

We've had this lovely little bit with IBM, where we'll have these meetings, and they're all so nice and light and we'll be like, 'that sucks', or 'that's ridiculous'. And we're just used to operating that way. We don't mean it in a bad way. We assume positive intent. We coach on positive intent. We really try to drive passion around the mission and purpose around open source, but we really do try to encourage this kind of creative abrasion.

"Which a lot of people feel is really, really harsh. But we really think that's how the best ideas emerge. It's really, really focused hard around that side as well, so we want to get passionate people in, if they're not passionate about open source, we'll get them passionate about open source. So we look for cues, and we hire people about what they've been passionate about the past, what gets them really energised. And can we direct that towards our mission? And then it gives this comfort with ambiguity, but also because when you're innovating you have got to be comfortable with ambiguity, but also, frankly, a relatively thick skin. Because, we do praise a lot when things go well, but if people disagree, they're very happy to say that's a really bad idea. And that takes some getting used to, but it's such a core part of our culture."

Copyright © 2019 IDG Communications, Inc.

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