The secrets of successful open source business models

Stefan Vetter - Friendly

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This is an automatic translation (DeepL) of a talk at DINAcon 2023. The original slides will be published shortly.

Notes (by Oleg)

In the realm of open-source companies, transparency reigns supreme. From accounting to contracts, everything is laid bare online. The rationale behind monetizing open source is straightforward: it ensures simplicity, sustainability, and scalability. Many free software developers operate part-time for companies utilizing their products.

Notably, open source has become a lucrative sector, with companies like MongoDB, Elastic, Databricks, HashiCorp, and Confluent, although some face criticism for pivoting away from strict open source licenses. Various open-source business models exist, such as Open Core (offering a free core with paid plugins/services), Hosting (providing the product as a service), Marketplace (akin to Google Play Store with commissions on sales), and Advertising (as seen in Chromium/Chrome/Brave/Edge). Scalability, margins, and defensibility, Pros and Cons, are compared by Stefan in a table.

While the Marketplace model appears promising, the strong network effect ("winner takes all") poses a challenge for alternatives like F-Droid against the dominant Play Store. Distributors like Red Hat or SUSE adopt a service-selling approach, with subscriptions resembling a form of hosting. In contrast to Silicon Valley's focus on exit strategies, the middle-European perspective emphasizes sustainability for smaller companies.

A notable example similar to Friendly's approach is Buffer. An open company, they stay true to their open source foundations - the CTO of Friendly serves as a product/community lead, contributing code and funds to the respective foundations. While rarely questioned about the impact of their transparency, companies like this often express willingness to connect with others and share insights through blogging and other publications.

{ hacknight challenges }

Take a small step towards online transparency by making a key aspect of your business visible to the public. This could be a simplified version of your financial reports, a breakdown of a recent project's success metrics, or an overview of your team's contributions to an open-source project. Share this information on your company website or social media platforms, and encourage feedback from your audience.

Engage with the open-source community by actively contributing to a project relevant to your industry. Encourage your development team to participate in coding sprints, bug fixes, or feature additions. Document your contributions and the impact on the project. Share this experience on your company blog or through industry forums. This not only enhances your company's visibility but also strengthens your ties with the open-source community.

Organize a workshop or webinar on the benefits and challenges of transparent business practices. Share your journey, lessons learned, and best practices with other businesses aiming for transparency. Invite guest speakers from both open-source and traditional business sectors to provide diverse perspectives. Encourage open discussions and create a platform for networking. Document the insights gained from the event and share them through industry publications or collaborative platforms, further positioning your company as a thought leader in transparent business practices.

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23.11.2023 15:40 ~ loleg

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23.11.2023 11:58 ~ loleg


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