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Monday, March 18th, 2002 7:51AM
BREAKING NEWS
Copyright 2002 by The TriangleTechJournal -- No part of this website may be copied, reprinted, or reused without express permission of The Triangle TechJournal.
Source Says Young Founded "Lulu Inc."
Which Acquired OpenMind's Assets

The Triangle TechJournal: March 18th, 2002
www.triangletechjournal.com

By Elliott West, Online Editor

CARY --  According to a source that spoke on condition of anonymity, Red Hat founder Bob Young has started a new venture that just acquired a local Dot Com.

The well-known founder and early leader of Red Hat who made millions from his sales of Red Hat stock after the firm went public recently started a new company called Lulu, Inc. (www.lulu.com).

The source says that Lulu Incorporated has bought the assets of online textbook publisher OpenMind Publishing Group.  Financial details of the deal were not available.

OpenMind: Online Textbook Publisher

OpenMind was a Dot Com founded in 1999 and was launched out of the Fusion Ventures Incubator in Durham.  The firm created online versions of textbooks that can be changed and edited by professors through an online interface created by OpenMind. 

Students can access the textbooks through an Internet connection or could order a CD-ROM version or a hard-copy if they desired.  Students paid a fee to use any version of the books offered by OpenMind, but that fee was much lower than they would normlly pay for regular printed books.

According to the source, professors and students who are using OpenMind's online textbooks did not experience any disruption in service during the transition of assets.

OpenMind founders Paul Elliot and Bradley Shultz could not be reached for comment on the report and workers at their Cary office would not comment when asked about changes at the company.  Both of the founders now work for other publishing companies and are no longer work full-time with OpenMind.

However calls made to the OpenMind phone number now say "welcome to Lulu Enterprises, home of Lulu Press and Lulu Technology Circus."

Young must have had known for some time that he would at least be using the Lulu name in a new venture.  In a bio on Young in the University of Michigan's Journal of Electronic Publishing in 1999, he lists his contact e-mail as bob@lulu.com.

In addition, there were advertisements in the July 2001 issue of Inscriptions Magazine, an online magazine for professional writers, that listed Lulu Press as a "new publisher in Durham, NC."  The advertisement said the firm was seeking writers for booklength projects.

And most recently, a few weeks ago, an advertisement appeared in the job listings section of the News and Observer soliciting applications for work at a new startup in the area called Lulu.com.

Interest In Open Source

The TechJournal has learned that Young had an interest in OpenMind from almost the very beginning and was in talks with the founders about a potential investment in the company as early as 2000.

OpenMind was a seemingly perfect match for Young.  Red Hat, which sells a version of the open source operating system called Linux, owes much of its success to the recent push to the open source movement. 

"Open source" refers to software or other intellectual property that is accessible and useable by the general public with no royalty fees or other payments necessary.

OpenMind's business model was not based on open source technology, but the firm had some open source leanings.

For example, it created the OpenSource Text Initiative (later called the OpenText Project) that helped to collect and distribute texts and literature that were free of any royalties.  Such materials included items like maps, Shakespeare works, etc.

No Investment

However, despite Young's interest, it has not been publicly revealed that Young ever invested any money in OpenMind itself.

OpenMind did raise around $2 million from other funding sources, including venture capital firm Fusion Ventures of Durham, but that money was starting to run dry.

OpenMind Seeking Funds

By all accounts, OpenMind's product was very well received in academic circles and the firm seemed to have no problems signing up professors across the world to use their online textbook technology.

In an interview with the TechJournal last year, the firm had revealed a robust listing of four year colleges, community colleges, online universities and even high schools that were using its online textbooks.

In the last few months however, OpenMind's future was in doubt.  Despite bringing in a new CEO late last summer to specifically raise more funding for the company, OpenMind had problems finding new investors. 

OpenMind was not alone -- their problem was a very common one in a time when other Dot Coms and tech firms were having similar woes across the country, especially after the terrorist attacks in September.

Bob Young: Rescuing OpenMind?

Although the firm had revenues from students who used OpenMind's online, CD, or print versions of the textbooks, the firm had burned through much of its cash by the end of 2001.

Several workers were either let go or left on their own accord and by January, the staff of around 15 had dwindled down to around 5 workers.

Founders Paul Elliot and Bradley Shultz no longer worked full time at the firm and have since pursued job offers at other publishing firms.

Although OpenMind may have continued to operate on its own revenues at a lower burn rate, the acquisition by Lulu keeps the doors open. 

With the status of Bob Young and his clout as a founder of a billion dollar company, professors and students will most likely be able to enjoy using some version of the online textbooks for some time to come.

In an interview with the TechJournal in our September 2001 print edition, Young seemed to indicate that he was getting an itch to start something new.

When asked in that interview what he would do next, he indicated that after stepping down as the leader of Red Hat, he was ready to get back into the game.

"I am an entrepreneur first and foremost by instinct and will be watching some interesting businesses that I will tell you about as soon as I am ready to discuss them publicly," Young said in the interview.

TTJ
Monday, March 18th, 2002 7:51AM
BREAKING NEWS
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Red Hat Founder Bob Young Buys OpenMind
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Bob Young returns to running a company and has founded Lulu, which bought OpenMind's assets.