Heard of Linux? If you haven't, you should come out of your cave. Linux came into its own in 1999, sweeping along a pile of investors eager to cash in on, well, they're not really sure. Just like dot-coms, Linux has become a synonym for "easy money" on The Street. Little do most investors realize that they are taking themselves for a ride.

Hate to break it to folks, but Linux is free. That's right, free. While this may not come as a surprise to a lot of people, those same people can maybe explain how anybody intends to profit from Linux. VA Linux, for example, had one of the biggest IPOs ever, climbing 3000 percent over its initial offer. What does VA Linux do? Sells boxes with Linux installed. Where does their money come from? Hardware, most likely.

Corel, normally in a death spiral, also posted great stock gains when their brand of Linux got investors foaming at the mouth. So what sustains this model? Free software. Someone with more economics experience than me is going to have to explain this one. Not all Linux distributions are free, though. Corel, for example, sells Linux in various packages. The more you pay the better your user experience. Likewise, Red Hat sells and supports Linux.

So I guess what we have is a new service on the market, not a new product. Is this a viable market? Of course. Are the IPOs worth their markups? No way. Should all the investment lemmings whose tech know-how could fill a thimble with room left over continue to invest in Linux start-ups? Yes and no.

No, because like much of what we see happening to dot-coms today will most likely happen to Linux tomorrow. As Andrew Leonard so succinctly puts it in Salon, "Whenever you see this many lemmings gathered together in one place, you just know a steep cliff has got to be nearby."

On the other hand, people should continue to invest in Linux companies because they are, unwittingly, pushing a great idea into the mainstream. The free software movement is getting a hell of a push from clueless investors. With any luck, this free market frenzy will push Linux to critical mass and allow, for the first time, the free exchange of ideas in a business sense. No longer will it be our technology versus their technology but our ideas mixed with their ideas. The question on investing in Linux companies now revolves around "why." Should you invest to make a quick buck? No. Should you invest to help launch a new way of sharing ideas? Yes. Can humanity handle this kind of sharing after the past thousands of years of idea-hoarding for personal gain? I've no idea.

But it would be nice.

Copyright © 2000 Stephen Van Esch All Rights Reserved

Stephen Van Esch is a writer and instructional designer living near Toronto, Canada. He is the owner and CEO of the Text Pound (http://www.textpound.com)