1© 2010 Open Dynamics

Open Source CompanyCan Make Money Meh?

@tiensoonVP of Technical Consultancy, Open Dynamics

• Often dubbed as “The Joget Guy” at community events

• Time zone transporter

• Responsible for consulting, training, enterprise support and community building for Joget Workflow

• Open source workflow application builder started by Malaysians, and gone global!

• Led and managed by Open Dynamics Sdn. Bhd.

• Open Dynamics also incorporated in California, US

• 21 months

• 40,000 downloads

• 800 adopter sites

19 ✈ 14,000 ✈ 40,000

12 months

9 months

Community-Driven Translations

http://translate.joget.org

Strong Traction

800 adopter sites

600 community members

19 partners

Why Open Source?

Open Source != Freeware

• “Think free as in free speech, not free beer”

• Always remember: Source code is one of the deliverables too!

Given Enough Eyeballs, All Bugs Are Shallow

• 600 registered community members worldwide

• Beta release is tested in use cases of multiple localities

Viral and Rapid Growth

• 40,000 downloads

• 800 adopter sites

• If 5% of adopters are qualified leads, you have 40 leads to be gunning on, in less than 2 years!

Release Early, Release Often

• Oct 2009 – v1.0.0

• Apr 2010 – v2.0.0 Beta

• Jul 2010 – v2.0.0

• Jun 2011 – v3.0.0 Beta

• 23rd Aug 2011 – v3.0.0

6 months

3 months

11 months

2 months

Feedbacks for Future Product Roadmap

• No matter how technically cool and advanced your product is, it’s useless if it doesn’t meet targeted use cases.

• Large community size

• More use cases

• Product that meets the needs

Real Case Study: Joget Workflow

• v1 – “Workflow Management System”

• v2 – “Do More, Code Less”

• v3 – “Transforms Your Processes into an App”

Users are not just automating processes, but building application!

More Brains and More Hands

• Open source ecosystem allows users to help and contribute:– Critical bug patches

– Translations

– Documentation

– Forum support

– Plugins

• Ultimately, it benefits everyone

Challenges of Running an Open Source / Open Core Company

Full-Time Commitment

• Running a company, is not the same as running a part-time project as personal hobby

• To stay committed on the fast track, product development is a full-time job (same as any other serious startup ideas)

Reality: Everyone Needs $ to Survive

• How to fund:

– product development?

– the operational team before revenue touches break-even point?

Fund Raising

• Convince an Angel to fund your MVP (minimal viable product) or pre-release.

• Get commercial companies to sponsor your project:

– Financially, or

– Developers

OSS Space is Very Competitive Now

• Your OSS product is competing very intensely with other OSS options too!

Find your niche, understand your market viability! It’s a business after all.

Global Product Marketing is Tricky

• Mediums:

– Community-driven evangelism

– Media exposure (TeachCrunch, GigaOM, RWW, O’Reilly Media, Mashable, and etc.)

– Tech shows as presenter

– Interviewed by relevant tech channels

Global Product Marketing is Tricky

• Things get easy if you:

– Are a celebrity developer / successful technopreneurwith proven track record

– Have a celebrity investor in your Board of Advisors

– Have connections with relevant tech medias

• Free-of-charge POC??

• Asian market = Not scalable sales

“Can you come to my office and present to my team?”

Free Software … and …

Who is Willing to Pay?

• Reality check: There are some adopters who won’t pay whatever you do.

• But, there are also some adopters who know value and will still pay!

Who is Willing to Pay?

E.g: xxx,xxx downloads → yyyy adopter sites →

n% qualified leads

Paying at The Point of Value

• Dedicated support package with SLA

• Training services

• Consulting services

• Product implementation services

• Complimentary tools that simplify the jobs

• Plugins for enterprise deployment environment

Open Core?

• A company produces a product that is mostly available as open source, but then there are some closed source components around the open source “core”.

• Community Edition & Enterprise Edition

• Examples: Jaspersoft, Alfresco, Magento, Pentaho

Know Your Adopters

• Google Analytics is your best friend.

Know Your Customer Acquisition Cost

• What is your total costs of customer acquisition?

– Marketing events

– Google AdWords

– Sales presentations

Avg. Customer Acquisition Cost = Total Acquisition Cost

No. of Customers

Profit per Customer?

There’s Never Been a Better Time for OSS

Than Now

Education is Already Done by Successful OSS Pioneers

• Companies like MySQL AB and Red Hat have done enough education to the enterprise sector on viable OSS model.

The Global Enterprise IT is Putting Attention on Open Source Adoption

• Accenture survey from 300 large organizations in both the private and public sector (5th Aug 2010) finds:

– 69% anticipate increased investment in 2010

– 38% expecting to migrate mission-critical software to open source in the next 12 months

– 50% are fully committed to open source in their business

Open Source as a Viable Business Model:

Using Jaspersoft as Example

JasperReports:Yearly Adopters Gain

• Total downloads in 2010: 1M (based on Jaspersoft’s CEO –

Brian Gentile’s input)

• Assuming adopter conversion rate is 2%

• New adopters in 2010 = 1M * 2% = 20,000

JasperReports:Yearly Support Subscribers Gain

• Assuming support subscriber conversion rate is

2%

• New support subscribers in 2010 = 20,000 * 2% =

400

JasperReports:Yearly Revenue Growth

• Assuming each support subscriber pays $5,000

• New stream of revenue gained from support subscription, in 2010 = 400 * $5,000 =

$2,000,000

$2M Recurring Revenue

• Support subscription is recurring revenue.

• And the conservative figure of $2 million annual recurring revenue, is just coming from 1 service –support subscription.

Open Source Company Can Make $ Meh?

Undoubtedly, it’s a proven scalable business model!