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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

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Is Open Source a Good Strategy for your Startup?

  • 1. Is Open Source a Good Strategy for your Startup? Steffany Boldrini @steffbold Lecole Cole @lecole #bigdataSV
  • 2. Have you used any of these Open Source projects?
  • 4.
  • 5. 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
  • 6. 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
  • 7. 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
  • 8. 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
  • 9. How to Monetize  Make clear differentiation between free vs paid product (i.e. Mulesoft, Pentaho)  What did RedHat do right?
  • 10. 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
  • 11. Q&A

Editor's Notes

  1. Mongo raised 311M in 8 rounds Docker raised 150M in 3 rounds – 300k revenue
  2. 1. German Students found 40,000 MongoDB databases were completely open for read and write access – didn’t activate access control and authentication “
  翻译: