Is Open Source a Good Strategy for your Startup?

Steffany Boldrini @steffbold Lecole Cole @lecole

#bigdataSV

Have you used any of these Open Source projects?

6.5M companies/year

Pros

Huge adoption

Exposure / Free marketing*

Raises profile of founders through media

Volunteer technical resources from community

Easier to get funding, but only with adoption number

* Can be good or bad

Cons

Users not using product properly & ranting about it: hackernews, blog posts, etc

Engineers that join for love of open source have a hard time with monetization

People associate product as free

Hard to monetize on support only, especially if your product “works great, we’ve never had any problems, thank you!!”

Internal war between teams on what improvements should be open sourced vs paid for

Bigger/smaller companies providing your product as a service and making money from it - i.e. Open container project

Cons (cont’d) Renewal churn rate very high on support-only model, as people

gain knowledge of product overtime

Balancing when offering free support to free users, so companies are successful. i.e. an incredibly large company is using for a customer facing project, they run into a major issue that brings them down for hrs, they think the problem is with your product, not the way them implemented. What do you do? Fix issues? Let them fail and see a blog post on hacker news the next day about how much your product sucks?

Will likely change CEO’s & founding team as early execs are focused on adoption & it’s not clear where to draw the line towards monetization

Will upset some users when charging a lot for one feature they’re interested in

To Take Into Consideration

License: VERY important (Apache vs AGPL).

- Commercial license that you’d be able to sell under AGPL would allow your customer company to modify your code & NOT have to open source it. This is important for large enterprises. Your customer will have to pay you for that license, otherwise they will have to open source their own changes to your code. This is not applicable under Apache license.

How do you keep momentum within the company while trying to achieve mass adoption

Other companies that can fork your code and compete against you

How to Monetize

Make clear differentiation between free vs paid product (i.e. Mulesoft, Pentaho)

What did RedHat do right?

Exits

Most have been acquired: Sourcefire $2.4B, Novell $2.1B, MySQL $1B - all AGPL

A couple of IPO’s: Red Hat $10B, Hortonworks $1B – both Apache

TBD: Cloudera, MongoDB, Docker, Datastax, Elasticsearch

Q&A