What happened at Canonical

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We ask the person sitting across the table from us what it’s like to work at Canonical and they stare at their drink for a while contemplating the question: “Most companies purely want to make money,” says the Canonical employee, who we’ll call ‘DeepC’ as they want to remain anonymous. “Whereas I feel, in Canonical it’s been almost like… ‘play thing’ is the wrong word, but it’s kind of like a sandbox of ideas.”

The exciting and sometimes frustrating Canonical sandbox has lost a lot of its buckets and spades in the last month. The company that financially backs the Ubuntu distribution, which is used by tens of millions of Linux users, is in the process of a massive transformation.

Growth and profitability

On April 5, Mark Shuttleworth, the millionaire founder of Canonical, announced on the company’s blog that the firm would be trimming down to focus on growth areas and all financial support for Unity, its flagship and default desktop environment, would cease. The distribution would switch back to Gnome by 18.04 LTS, the desktop that Ubuntu had dropped in favour of Unity over six years ago (and it now appears that Gnome will become the desktop from 17.10 onwards).

With one swipe, Shuttleworth not only killed Unity, but the company’s whole convergence strategy involving a unified mobile phone and desktop OS (essentially, Microsoft’s Continuum but better) and with it at least six years of work and tens of millions of pounds in investment.

The official line was a need to focus on profitability: “The choice, ultimately, is to invest in the areas which are contributing to the growth of the company,” said Shuttleworth. “Those are Ubuntu itself, for desktops, servers and VMs, our cloud infrastructure products (OpenStack and Kubernetes) our cloud operations capabilities (MAAS, LXD, Juju, BootStack), and our IoT story in snaps and Ubuntu Core.”

IPO iceberg

But Canonical’s sudden U-turn on Unity is the tip of a rather large iceberg that has ploughed through departments dumping staff in its path, and this hulking chunk of ice has ‘IPO’ chiselled on its side. Based on performance-related shares that were being offered to the remaining staff by Shuttleworth (we’ll come back to that later), we’d also estimate that the IPO is slated for four years’ time.

To get to IPO, the company has decided to seek outside investment, as revealed by the Register, so within two days of the blog post, Canonical managed to run town halls explaining its IPO ambitions to staff scattered across the globe (the company has many remote workers living in over 80 countries), and announcing the departure of popular CEO, Jane Silber, and the return of Shuttleworth as chief executive officer.

Jane Silber

What the corporate press release detailing Silber’s departure – which turned up the following week – didn’t say is that Silber was very upset, either by her own departure or what was about to happen to the staff. One employee described her as openly weeping while Shuttleworth awkwardly patted her back, telling Silber this was actually a step up for her.

Silber was admired by many staff and described in glowing terms by a number of them as a ‘transformational leader’. She will take a seat on the Canonical board after a three-month handover period.

Within hours of the town hall meetings, a list of affected departments was sent out indicating that roughly a hundred employees were potentially at risk of redundancy – and then the contract terminations started. Some details of the redundancies have leaked out to various news sites and while Canonical itself hasn’t been that forthcoming, its own actions have created quite a leaky boat.

Word from the ground

TechRadar Pro was contacted by employees concerned that what was happening to them should become known outside of the company, and we corresponded with a number of Canonical employees who spoke under a condition of anonymity. 

“It was clear to all my colleagues for quite some time,” said one employee. “People were leaving Canonical already and everybody expected some adjustments around April.”

But as another employee commented: “Nobody expected the adjustment to be as brutal.”

A flurry of 5-10 minute video calls began on Monday 11 April and by Tuesday evening roughly 40 contractors were fired across the globe, or “dumped” like “chattel” as one staff member described it.  Subsequently, TechRadar Pro has seen data, dated around this time, confirming that at least 83 staff members were affected in this initial stage with 29 employees already fired, one resigning and 53 waiting to hear their fate. 

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Contractors in the US experienced possibly the harshest terminations: a number describe being told not only that their sign-ins wouldn’t work that same day, but their health insurance coverage would be cut off, too. One employer described how they had to scramble to cancel medical treatment that they could no longer afford to have. “I was treated like a criminal,” said one particularly unhappy staff member, while some contractors who had worked for the company for over 10 years were given two weeks’ notice.

What was particularly upsetting for one staff member was the prospect of losing their bonus. Canonical has an annual performance evaluation period in April. This is the time when all employees have discussions with their managers and their bonuses are calculated, which can be up to 10% of a person’s salary. “That process was pushed to May just few weeks ago… now we all know why,” said the employee.

We need to state at this point that all the redundancies and terminations were performed according to the employment laws of each country involved, but Canonical is a company that likes to describe itself as a ‘big family’, and family don’t tend to act like this unless you’re the Borgias, or as one employee put it: “This is not how you treat your friends who helped you in their free time, who sacrificed valuable family time for you and for your projects.”

Canonical cause

That last quote might seem naive to anyone working in the corporate world, but Canonical’s painful transformation has to be framed in the context of its origins as a company that sees open source as an empowering force for good and positive change.

Even its Linux distribution, Ubuntu, is named after an African philosophy that is concerned with humanity towards others. To quote Archbishop Desmond Tutu, a person with Ubuntu has “a proper self-assurance that comes from knowing that he or she belongs in a greater whole and is diminished when others are humiliated or diminished…”

Working for Canonical, particularly when it comes to long-serving employees, was and is more than a job: “People joined Canonical for ‘the cause’”, explained one staff member. “We have been fighting for the movement of open source and we all were passionate about making the Linux client (desktop, phone, TV, etc) happen. People made compromises at Canonical that nobody would do anywhere else. People worked around the clock, spent weekends and nights on workshops. We all adapted to difficult time-zones to work together with very remote colleagues. We all were – and still are – full-time evangelists of Ubuntu.”

Mark Shuttleworth

Shares and shares alike?

This is perhaps why Shuttleworth has offered share options to all employees. TechRadar Pro was supplied with a transcript of what was said at town halls prior to lay-offs, where Shuttleworth stated: “We'll set aside a block of equity for every employee today, uh, and no matter what happens to you as an individual, um, you can bet that you have a stake in Canonical going forward. It's really important to me to recognise that everybody who is at the company today has played a role in getting us here.”

However, to add to the bitter feelings of some departing staff, no mention of the shares was included in the severance contracts that they were required to sign. Opinions were divided over whether shares would be forthcoming – one employee described it as “super-naive” that staff would ever see them after termination. We asked DeepC about this, who speculated that the lack of any mention of shares in contracts was a legal issue: “The shares for everyone were meant to be considered like a gift rather than an obligation, so he [Shuttleworth] has said that he will give it, but he hasn’t put it down in writing because he’s not really sure how it’s going to work.”

In the lead up to IPO, Shuttleworth has also set aside equity for the remaining staff: “Going forward, we're going to take 10% of the company and we're going to write options on that 10% to align everybody's interest in the very specific goals that we're setting year-by-year on this path towards the possibility of being a public company.”

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DeepC also confirmed most of these details, including that equity would be paid out “in the bonuses over the following four years building up to IPO.”

Phone pain

One of the insider emails we received included extracts of employees’ parting comments to their co-workers, and one highlights something that some have failed to acknowledge – that the Ubuntu Phone is the closest to a free and open source mobile phone that the market has seen: “In the end, I think that we managed to ship the phone with the largest percentage of GPL software on it, ever,” says the anonymous staff member. “Not sure that we could ever really prove that, but I'm just gonna say it: free-est phone EVER! Now being stuck deciding whether Apple or Google will violate my privacy first seems primitive.”

Now that UBPort has announced that it will continue to develop the mobile side of Unity and given its past work with Fairphone 2, we could also see Canonical’s work contributing to the most ethical and open source phone on the planet in the future.

However, Canonical insiders close to the mobile side of the Unity project are also angry about the timing of the project’s closure. They claim that it was two to four months from being a real product that people could use, particularly with regard to convergence.

“This is a very common complaint and frustration with how Mark [Shuttleworth] operates,” says DeepC. “He’ll have an idea, but he won’t commit the appropriate resources to make it happen. Some people look at in a very literal way and get annoyed … but if you look at it objectively, really what he’s trying to do is to disrupt things, shake things up, but he doesn’t actually want to be involved in that business. He doesn’t actually want to become a phone OS manufacturer, he just wants to make a few ripples in the pond of phone OSes.”

Spiro, developed by RobotCheers, is powered by Ubuntu

Firm focus

The days of treating the company as an expensive hobby or tolerating acceptable annual losses (the group lost $3.3 million – around £2.6 million – in its last accounts) are now over. The firm’s focus needs to be on what works for the business, which Shuttleworth believes is Ubuntu, cloud and IoT.

On the OS side, according to Barton George, the man behind bringing Ubuntu to the Dell XPS and Senior Architect at Dell EMC, Ubuntu (and Linux) is selling well: “We don’t release specifics around sales volumes and financials, however, customer demand remains high and our engineers and developers continue to work with partners to develop the most innovative solutions to meet their needs.”

Gnome may not be a popular desktop choice for all Ubuntu users, but it’s a pragmatic answer for a company that wants to efficiently support the desktop for the average user as well as professionals. With all the usual community drum-beating that centres around a new Ubuntu desktop release, it’s easy to forget Ubuntu’s dominance in the cloud and 17.04 now supports the widest range of containers, from snaps, LXD, Docker and Kubernetes, as well as OpenStack’s latest Ocata release.

This transformation has been painful for Canonical, plus it’s also unclear how much damage has been done to its reputation among open source professionals. 

Canonical will emerge from this transformation a more efficient – and likely profitable – corporate entity, but as long as Shuttleworth has access to a public Google+ account, it will always be a colourful company to report on. However, calling many members of the free software community “deeply anti-social” and “muppets” may not be particularly beneficial when the company floats on the stock market.

Note: Canonical was asked for a response to the key points covered in this article on April 11, but did not reply before publication.

(This investigation was first reported in issue 178 of Linux User & Developer).

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