Sounds like the latest Harry Potter novel, doesn't it?

Over the weekend a couple friends and I went up to Vermont to take part in a motorcycle ride with a bunch of people from all over the north east. A couple dozen people were expected to show up. On the day before the official ride we went out for a quick run up and around the notch itself. The road up to the notch was twisty and narrow. We reached the apex and started our way down. I was leading the other two and around one particular hairpin turn I heard the sound of tires sliding over pavement and a crash. I looked in my mirror and caught a glimpse of one of the other riders rolling over the ground, her bike rolling over on top of her. I went down another turn, turned around and came back up, passed the scene of the crash and turned around back down the hill. During that turn I dropped my otherwise perfect bike right on the ground. All 600 lbs of it. That made two accidents in a span of 20 feet of pavement.

Linda is a trooper.

Linda turned out to be largely alright. A skinned up knee, some pretty impressive bruises and some ruined gear, but pretty upbeat about the whole thing. Since we called the police to try and get a flatbed to come and pick up the bike she also got a free ride to the hospital. I think they hear "motorcycle accident" and launch all available ambulances even if you say you don't want one.

Her bike did not fare so well. A bent fork, a possibly bent frame and missing foot peg makes it un-ridable and very possibly totaled. It got a ride out on the back of a flatbed. My bike had cosmetic damage: scratches on the main left fairing, fender, mirror and tailpipe. I was able to ride it away.

Looking up the hill from the accident scene.

I figured the weekend was over, but Linda insisted that Lon and I go for the main ride on Saturday. We did, running with half a dozen other riders up into the Appalachian Gap on Rt. 17. A truly amazing ride, all things considered. We ran up to the Gap about as fast as our inner animal survival instincts would permit and I learned how far both me and my bike would lean if pushed to the limit.

Pausing to let the adrenaline recede.

The view from the top of the Gap.

Our announcement is public. This is gratifying after being part of a several-month effort to put it all together. Since I've been involved with these discussions at the board level and also as a participant in the advisory council that was put together to help us flesh out these ideas and make recommendations, I've had the chance to see the ideas grow from their infancy into what we've announced today. So here's the quick rundown.

First, the question of what we've done. What we've done is reasonably simple. We've created a corporation. That corporation is wholly owned by the Mozilla Foundation. While the new corporation is not a non-profit, it's important to understand that the primary goal of the new corporation is exactly the same as the parent: "To promote choice and innovation on the Internet.". The primary goal is not to create value for shareholders. This is a fundamentally different goal that you see in the creation of what we call "for profit" companies. (We're actually quite careful in our nomenclature to say "taxable subsidiary" instead of using "for profit subsidiary") Simply put: the new sub is not a product venture, it's not looking to IPO and it's not out to just make cash. It is nothing more than a mechanism for achieving the goals of the Mozilla Foundation and the Mozilla Project.

Much of the activity that you used to see from the Mozilla Foundation has been transferred to the subsidiary. This includes releasing and building Firefox and Thunderbird. However, the Mozilla Project as a whole will remain with the Mozilla Foundation. This means that the Foundation is responsible for maintaining the health of the overall Mozilla Project, setting policies and promoting the developer community aspects of the Project as a whole. Because of this, developers who are currently participating in the project shouldn't see much change in the way that they interact with the Project or the individual developers who happen to work for the Corporation.

End users, which I like to count as a separate group from the community members, will see no changes. Contrary to published reports we're not going to be charging money for Firefox or milking our users for cash. We don't believe that that's good for our users or our product's success. We believe that a continuing focus on a positive user experience is the key to adoption of our products, and therefore a healthy Internet.

Now for the harder question of why. Why choose to create a new entity that's taxable instead of doing everything inside of the structure of a non-profit? The answer, as with all things related to tax law, is complex. The FAQ question on this topic jumps right from the value created by Firefox to the kinds of things we can do as a result of that value but kind of skips over the decision process that we had to follow to get from "well, there's value here" to "OK, we need to create a new company."

First, the problem. Under non-profit tax law there are various kinds of contributions that you can accept. Individual donations, corporate donations, etc. Tax law lays out tests to determine if you are a non-profit: certain types of revenue that come from various sources and are the result of different kinds of activities have to meet certain percentage requirements. We've got some relationships that create revenue that at some point in the future might make it difficult for us to maintain our non-profit status based on those tests. Those relationships have given us the resources to make Firefox and Thunderbird successful so we didn't think that it would be right to our users and our community to end those relationships. At the same time, our non-profit status is very important to us. We didn't feel it was an option to give that up either.

The second aspect to the problem is that non-profits are somewhat limited in the kinds of advertising and relationships that they can establish. We felt that we wouldn't be able to engage in the kinds of activities (revenue-generating or otherwise) or engage with other companies in the kinds of meaningful ways that would make our products as successful as they could be. Simply put: business know how to talk to other businesses, but they don't really know how to talk to non-profits.

So these were the problems we were facing. We thought that our solution was quite nice. It means that the Mozilla Foundation is still firmly in control over the Project as a whole while allowing a separate corporation to maintain the various business relationships and promotion required to make our products successful. And because of the corporate structure, it means that the Mozilla Foundation, though elections of the board and the via the Project maintains the ultimate authority over the the code and the subsidiary.

So in the end it's not a big deal for a lot of people; Our end users and developers shouldn't see many changes. We hope that this allows us more flexibility in the future in creating more value for our users, as well as being able to support the Project. We feel that this is a reflection of the positive health of the Mozilla Project and an indicator of the success of Firefox and Thunderbird as tools for delivering the value that the community has done such a great job of putting together.