Kai Staats takes Terra Soft Solutions to next level

LOVELAND – In its 10 years, Terra Soft Solutions Inc. went through a few transformations, but its most recent could be the biggest.

The company is the developer of Yellow Dog Linux, an open-source operating system also known as YDL. In its early years, Terra Soft focused on supporting the Apple Macintosh platform and became the only company licensed by Apple to resell its computers with Linux pre-installed.

However, that all changed when Apple announced it would move from the PowerPC processor to Intel.

Terra Soft reacted quickly to develop a niche in the Cell processor market, leading to stronger ties with IBM and Sony. It also led to the latest chapter in the Terra Soft saga.

On Nov. 11, Tokyo-based Fixstars purchased Terra Soft, forming subsidiary Fixstars Solutions. The companies have not released financial details of the transaction, but Terra Soft founder Kai Staats will stay on with Fixstar as chief operating officer.

Staats hit the ground running after the acquisition – or rather kept running. Just days after announcing the acquisition, he was off to the SuperComputing 2008 conference in Austin, Texas, along with his co-workers, new and old.

Staats took a little time out of his busy schedule for an e-mail interview with the Business Report:

NCBR: Has acquisition always been a possibility for Terra Soft? Have you entertained previous offers?

Staats: The potential for acquisition is about being willing to sell, yes, but more importantly about someone wanting to acquire. Some companies are built to be sold, an acquisition the most common exit strategy. While I was open to the possibility of selling Terra Soft, and had entertained two conversations twice in Terra Soft’s history, it was not until working with Fixstars and Miki-san (Satoshi Miki, CEO of Fixstars) that this became a real opportunity.

NCBR: What was Terra Soft’s relationship with Fixstars prior to the acquisition?

Staats: Fixstars had for the prior two years used Yellow Dog Linux in their work with IBM, Sony and their systems which use the Cell Broadband Engine microprocessor.

NCBR: Was selling the company a difficult decision to make?

Staats: Not at all. A risk, yes. But a difficult decision, no. The timing was right.  The acquiring company was a good fit. But most important, I was ready to let go because I recognized that through the acquisition my team and our product line would be accelerated beyond the level that we would otherwise continue on our continued path.

NCBR: How will your role/responsibilities change as the COO of Fixstars?

Staats: Very similar to what I was doing as CEO, actually, but with opportunity for  more focus on key customer relations and systems integration and knowledge sharing between our North American and Japanese offices.

NCBR: The Fixstars Solutions subsidiary is headquartered in San Jose. Is that office already set up?

Staats: While working through the due diligence of the acquisition, we were also busy establishing the new company in San Jose. There are no permanent employees in that office location yet, but that team will be built in 2009. My team remains as we were with Terra Soft in Loveland, with home offices in Montreal, Quebec and Victoria, B.C.

NCBR: What does this acquisition mean for you and the Terra Soft team?

Staats: With the offering of a complete ecosystem – meaning hardware, operating system, and optimized applications – we will be focused on deliver of turnkey, vertical market solutions such as medical imaging, industrial inspection, and financial modeling. This is the best means by which we can deliver systems built upon the Cell processor, which otherwise presents a challenge to many code developers due to the rather immature, multi-core programming paradigm and associated tools.

NCBR: Do you anticipate growth at a faster pace as a part of Fixstars?

Staats: Much faster.

NCBR: What will be the biggest change for you, personally?

Staats: I am truly excited to work for someone else for the first time in 13 years, as it frees me to focus on my strengths and worry less about my weaknesses.

NCBR: What will be the biggest change for the Terra Soft team?

Staats: Greater financial stability. Being part of a larger, international organization. With the addition of Japan, we now have four – soon to be five – countries represented by our employee and contractor base. This has been a highlight for me, personally, as I see cross-cultural business interactions as a bridge to greater personal empathy and understanding.

NCBR: Looking back at the past 10 years, what was the biggest challenge Terra Soft faced?

Staats: The chicken-and-egg reality of trying to gain the trust of larger organizations who recognize and appreciate the value of our products but questioned our ability to support them or their customers. We could not grow our team without larger customers, but could not gain larger customers without growing our team. With Fixstars, we have moved from a half dozen engineers to over 80. With the largest Power architecture Linux development team in the world, this is resolved.

NCBR: What was the biggest success?

Staats: There were many. Building a company for which my employees enjoyed working. Every product launch. Travel across the world. Building personal relationships with talented, smart, kind and caring individuals that transcend the confines of business. Navigating the challenging, intricate relationships in Sony and IBM. Helping process the images from the Mars rovers. Working with Lockheed Martin, the Sony SCEI (PS3) and B2B (BCU-100) teams. And beating the odds again and again and again when so many people said it was impossible.

NCBR: Any regrets?

Staats: None. There were many mistakes, but there is no value in regretting them. Experience comes in many forms, and positive or negative at the moment, it remains a valued experience.

NCBR: Would you consider starting another business in the future?

Staats: Already have two in motion.

NCBR: What challenges do you see in the future for Linux operating systems, and what challenges has Linux already overcome?

Staats:  In recent years, larger organizations have adopted open-source paradigms, finding value in embracing the open-source community as a means of delivering a higher quality product with less internal overhead. IBM once painted the sides of New York City skyscrapers with Linux advertisements, but now it is Google that is causing radical shifts in open-source product development. Ten years ago it was exciting to see Linux adopted in any new device, but now it is so commonplace that no one thinks twice. Televisions, cell phones, real-time image processing systems on-board military aircraft, land, and sea vehicles; embedded medical image processing systems (ie: CAT) and weather modeling supercomputers all run Linux.

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