Tech companies often get a lot of media attention either when they’re new and shiny startups or when they sell out to a larger company in the ever-coveted exit. Today I’m writing about a company that doesn’t fall under either category: Vancouver-based ActiveState. This is a tech company that has been around for over 15 years, and does a lot of work with free software (Firefox and Cloud Foundry).
Yaara and I went for a visit to their offices, to see what it’s like and learn a bit about how giving away stuff for free works as a business model.
Left to right: Todd Whiteman, Komodo Technical Lead; Komodo’s monster mascot; myself; Yaara; Mike Kanasoot, Komodo Marketing Manager
The first thing many of you guys would want to know is what ActiveState gives away for free. In a nutshell:
- Komodo Edit, a programmer’s text editor with lots of power.
- Stackato, a cloud hosting product. It’s complex, but in a nutshell, it’s sort of like Heroku but on your own servers. Stackato isn’t free for commercial use, but ActiveState gives away development copies for free.
- There’s another powerful developer product ActiveState sometimes gives away for free, but I’ll tell you more about it later on.
When you compare ActiveState with Red Hat or Ubuntu, it doesn’t look like they’re giving much away for free. That’s one thing this visit underscored, at least for me: Free stuff is great, but you also need to have a simple and solid business model to make money and survive for years. Red Hat does it with support; Komodo does it with Enterprise sales.
ActiveState’s office isn’t flashy, but it’s certainly nice. Above you can see the space they use for developer huddles, and this is the “zen chair” developers use when they need a moment away from the screen, to contemplate a tricky problem:
ActiveState puts coders together: Teams sit close together, there are no cubicles, and the offices are very quiet. Marketing VP Toph Whitmore was actually whispering as he showed us around the developer workspace. There’s a definite sense of real work getting done.
Free Doesn’t Mean Easy
I have a thing for text editors, which is how I originally came to know ActiveState: They make the free, and excellent, Komodo Edit. This is a programmer’s text editor with a boatload of powerful features, and it’s completely free and open-source. It is also based on Firefox, which made it even more interesting for me. ActiveState basically takes Firefox’s guts and customizes it into something completely different.
This isn’t always easy: Mozilla decides to make changes in Firefox that break Komodo features, tells us Eric Promislow, Komodo’s senior developer. ActiveState’s Komodo developers are in constant communication with Mozilla, but the teams don’t always agree on what “broken” means, really.
Free Stuff Isn’t Always An Ideology
Throughout our interview with ActiveState, one thing became clear: This is a company dead-set on the Enterprise market. 97% of all Fortune 1000 companies are clients of ActiveState, including big names like Credit Suisse, NASA, and Boeing. So why would a company trying to make money off huge corporations care about giving away stuff for free?
Talking to Mike Kanasoot, Komodo’s Marketing Manager, I got the impression that it’s about community involvement. ActiveState makes a point of attending lots of industry events, and combined with free products, this means people talk about the company. I can tell you I would not be writing this piece if Komdodo Edit wasn’t being offered for free, for example.
When I asked Toph Whitmore about this, he referred to giving away products for free as sort of a stepping stone. In other words, it’s a practical choice — it just makes business sense. So while Mozilla, upon which Komodo is based, is very ideological about being free, ActiveState is more pragmatic about it. Free just works for some things (such as word of mouth).
Another compnay that’s very pragmatic about giving away stuff for free is Google, which provides a ton of free products and services to keep as many eyeballs on their pages (and ads) as possible. That’s not the only reason Google came to mind: While Komodo is Firefox-based and ActiveState does lots of work with Mozilla, Yaara could not help but notice that ActiveState’s engineers all used Chrome to demonstrate their work during the meeting:
… Except When It Is
All of this is not to say that ActiveState doesn’t care about free software, or just uses it for its own means. Komodo itself is open-source, which is a boon for anyone trying to build a third-party editor based on Firefox.
But that’s not the only thing: Komodo Edit has a big brother called Komodo IDE. This is a $295 IDE with some seriously cool features like pair-programming (work on the same piece of code with another coder, at the same time, using two computers), powerful debugging, and more. But as I said, it costs $295… except when it doesn’t: It turns out that if you contribute to an open-source project, you can get Komodo IDE entirely for free.
This is similar to the licensing model JetBrains uses for their excellent IDEs: It also gives away licenses for open-source contributors. JetBrains trumpets this free license option, while ActiveState doesn’t really highlight it (I did not realize it existed until it came up in the meeting). At any rate, this is one more reason to contribute to open-source projects, if you’re not already doing so.
Not All Flowers and Sunshine
So, at the end of the day, any company needs to make money — and giving away stuff for free ties into it, but can never be an end-all. Meeting with ActiveState was interesting, and sobering: It is all too easy to get wrapped up in how cool free products are and forget that the people who make them need to eat, too.
I’d like to thank ActiveState for having us — it was a fascinating meeting, and it was great seeing the developers behind one of my favorite text editors. We’ll be touring Canada in the next few months, meeting with interesting tech companies and interviewing them. Do you know of a Canadian tech company with a great story or product? Let me know in the comments, and we might visit them, too.