251: How a Humble Typewriter Salesman Started a Software Company Now Worth Billions, With Red Hat Co-Founder Bob Young

The Open Source CEO Bob Young’s journey from renting typewriters to co-founding an open-source software company to founding a self-publishing platform. Entrepreneurship carries a lot of prestige these days. But back in the 1970s, when one freshly minted, Canadian college grad decided to start his own business, the only real perk was a business card that read, “Bob Young: President” that he could show to his mom. This, Young explains, was the single greatest benefit of starting a business back then. It wasn’t about the money, the eager investors, or the thousands of devoted fans (he didn’t have any of those). He just hoped he could reassure his mom that she didn’t have to worry about him anymore. “We now have the smartest kids in our high schools going to college to study entrepreneurship,” he says. “Whereas, back in my day, all the smart kids went and got ‘real jobs’ as lawyers or accountants or whatever and became CEOs of big corporations, and it was us dumb kids who started businesses because no one would employ us.” For Young, that meant printing up a fancy business card and, with a little money from friends and family, buying a small, failing typewriter rental business for cheap. From there, though, things got interesting. Young quickly pivoted from typewriters to computers, until a mid-career stumble led him to the world of open source software, a field in which he thrived. Young has since gone on to found Red Hat, a multinational company that offers non-proprietary software solutions to businesses. In 2018, IBM announced it would acquire Red Hat for around $34 billion. Today, Young is at the helm of a few businesses, including self-publishing platform Lulu.com, continuing his passion for democratic, open distribution models that favor the little guy. But despite his 40 years in entrepreneurship, he still lists just a single skill under “Specialties” in his LinkedIn bio: typewriter sales. “I’m a typewriter salesman, and that is the value I bring to the companies that I’m involved with,” Young says. “I’m a sales and marketing guy, and I have to hire smart accountants and smart engineers and smart product managers, because those are skills that I don’t have. My one contribution is in the sales and marketing side of the projects I’m involved in.” When Success Turns Sour Young realized almost immediately that his first business had to evolve, and fast. Shortly after he bought the typewriter rental business, he dug through old customer records to find those listed as inactive, and began calling them to try and entice them back into the fold. One of the businesses that had often rented typewriters from the previous owner was a phone company called Bell Canada. After speaking with the office manager, a sweet woman who invited him to come visit even though, “when you come by all I’m going to do is show you why I don’t need your services anymore,” Young headed off to downtown Toronto to meet with her. As she walked him through the open-plan office building, he saw several hundred employees, who only four years previously had used rented typewriters, at work in their cubicles. They were all staring into computer screens. “We then, immediately of course, got into the computer equipment rental business,” Young says, laughing. He managed Hamilton Rentals from 1979 until he sold it in 1984. He then founded Vernon Computer Source, another equipment rental business, that same year. In 1992, Young was on cloud nine. He had just sold his second computer rental business to technology services company Greyvest Capital, Inc., mostly for shares in the company, and took a stable, comfortable job there. Then came NAFTA (the North American Free Trade Agreement), which eliminated tariffs between the United States, Mexico, and Canada. That led to financial troubles for Greyvest, and suddenly Young’s life ceased to be as stable as he’d expected. “In ’93, I found myself in Westport, CT, unemployed with a net worth of something less than it had been when I graduated college 15 years earlier, only now I had three children, a wife and a big mortgage.” Just as Young had made his next big step forward in his career, it had all come crashing down around him. But looking back on this time in his life, Young is grateful for this heartbreaking failure, because he links it directly to the birth of Red Hat, Inc. Trying on a New Hat Shortly before its demise, Greyvest sent Young to New York to pursue the Unix workstation (a special computer designed specifically for scientific or technical endeavors) market, asking him to get to know the users in the big financial services companies and engineering companies in and around the city. Greyvest was in pursuit of new rental and leasing customers, and this was precisely what Young did best. To accomplish this, he had been attending evening user group meetings and offering a helping hand. He had even started a modestly sized newsletter. But when the bankruptcy of Greyvest forced him to walk away from the computer rental business for good, his goals shifted. What if, he wondered, he could transform his newsletter into something more? As Young explains, the true value of an online newsletter doesn’t lie in the subscriptions. It’s all about the mailing list. Products of value to those particular customers can be marketed and sold using the list. And so, ACC Corp. was born, and through it, Young transformed his mailing list into a catalog filled with programs and software that catered to his audience: the ACC PC Unix and Linux Catalog. Linux and Unix were two similar but competing operating systems initially released in the early 1970s. The major difference? Linux was free and open sourced. Unix was not. Through the catalog, he had the greatest success in the sale of Linux-based products, so when he asked his customers to share what else he could add to his catalog, and they directed him to a tiny project filled with potential called Red Hat Linux, he was intrigued. Red Hat Linux promised to be a new and improved version of the Linux Young’s customers already knew and loved, so Young knew he needed to check it out. Young called the creator, Mark Ewing, who was working out of his spare bedroom and his own bank account, and asked him to send over 300 copies of Red Hat Linux for him to sell through the catalog. Silence. Young questioned Ewing’s hesitation to do business with him. Ewing explained that he had only planned to manufacture 300 copies of Red Hat Linux in total. Young meshed his big dreaming style with Ewing’s engineering prowess, and the two co-founded the version of Red Hat, Inc. that still thrives today. He had taken a circuitous route to the software industry, but he was grateful that he finally arrived when he did. “Whether it was Steve Jobs or Bill Gates, they’re both contemporaries of mine and it’s been fun sort of growing up in the industry watching those guys be successful,” he says. “I was late to the party of success, but I was pleased with Red Hat’s success.” Young served as the company’s CEO from its founding in 1993 until shortly after the company went public in 1999. “Once we became a public company, and we had 400 employees, I realized I’d never worked for a company of 400 employees, much less managed one,” he says. As he faced down the wild host of new rules, regulations, and responsibilities that came with being CEO of a public company, Young recognized that the best thing he could do to ensure the company’s success was to embrace his own weaknesses and step away. “One of the tricks to being successful is to be self-aware,” Young says. “None of us—no human being—is anywhere close to being perfect. In fact, I’d argue that most of us are barely adequate, even among the most successful of us. But if you know what you’re good at, and you know what you’re not good at, then you can build organizations that protect themselves from your failings.” Young also recognized an entrepreneurial wanderlu