Staff, projects shed as Ubuntu maker Canonical tries to lure investors

Shuttleworth: 'No part of the business had sacred cows'

Exclusive Canonical, the maker of Linux distro Ubuntu, is axing staff and closing projects under a sudden commercial get-fit regime.

On Wednesday, we reported Ubuntu is killing off its never-delivered Unity 8 technology and switching back to GNOME for its desktop user interface. Today, The Reg has learned that Canonical has axed more than half the team who worked on Unity – which was an effort to build a single Ubuntu UI spanning phones, tablets, PCs and other devices.

Those Unity staffers who couldn't be found suitable jobs elsewhere in the open-source shop are being let go. Jobs are also going in other parts of the organization. The cuts came after Canonical founder and millionaire Mark Shuttleworth's decision to seek potential outside investors. These investors determined that Canonical was overstaffed and some projects lacked focus.

Unity 8 was axed after seven years' investment because it's been determined it could not make money. Sources told The Register that Shuttleworth asked each Canonical department to lay out their best, neutral and worst-case scenarios for business in the wake of the outside-funding exercise.

In the best-case scenario, The Reg understands, departments would suffer a 30 per cent headcount reduction but in the worst it was 60 per cent. It's not clear how many staff have gone, but Canonical is believed to have a workforce of 700.

The cuts were part of a package to have departments function according to what Shuttleworth called "industry-standard" metrics – revenue, costs and margins. He wouldn't comment on the 30 and 60 per cent figures but admitted there were "adjustments" outside Unity.

"No part of the business had sacred cows," he told El Reg.

Shuttleworth resisted cutting some departments because he believed growth in the next few months would bring them into line with those metrics. Those who escaped cuts are support and consulting, the latter helping customers set up and run Ubuntu-powered clouds. Headcount is increasing in security and containers – high-growth areas, according to Shuttleworth, who said Canonical is making "tens of millions" in revenue and growing at "tens of per cent".

"Rather than cut now and hire, it made sense to keep people now," Shuttleworth said. "If we want to be inline immediately we have do this. We are growing we will be in line in a quarter."

Unity, however, was the big loser. Past editions of Unity will be supported, but there's no new development. According to Canonical's founder, the move has been forced by high growth in enterprise and the cloud.

"If we are going to take outside money and go public, how efficient do we need to be? In a very cold commercial sense, we have to bring those numbers into line and that leads to headcount changes. One of those pieces I could not bring into line was Unity," he said.

"We can't go through that market process and ask for outside investor money when there's something that big that doesn't have a revenue story. That's the pinch we got into."

He downplayed a potential IPO, rather saying that the exercise is designed to get Canonical in a position where it's attractive to investors.

Canonical is private, founded in 2004 by Shuttleworth, who made his money selling an early security consulting firm to Verisign and then investing. He remains the distro biz's single largest backer.

"We need to look at those things and say, 'Could we run a marathon in six months to a year?' and we could, but to do that we need to get a bit fit. Since we can do that we should do that," he said. "That means the whole of the company is not dependent on me – nobody is going to put money into me." ®