Open Source Business Models


This is a blog I’ve wanted to write for a long time. In fact, I’ve written and rewritten it several times, leaving it in draft stage every time as I’ve reworked my own thinking and seen practical examples of things I didn’t anticipate play out. The draft blog I had been writing had grown to over 20 pages in length and I found certain bits had been duplicated or superseded elsewhere on the Internet. What sparked me finally doing this now this was the recent troubles at Mozilla, which in short have resulted in them laying off roughly 25% of their entire staff and a refocusing of their engineering efforts on commercial products. In order to get this out, I’ve decided to break things down into smaller, more consumable pieces. Thus, this is going to become a blog series of a variety of ways in which open source software “lives on” by having contributors which are dedicated to writing code.

You may wonder what qualifies me to write this, and from my own vantage point, I spent 5 years leading product management for Elasticsearch at Elastic and have since moved over to Kong, another open core company. I share this as a perspective that some open source consumers may not get to to see: why someone may want to build a business around open source and how they may go about thinking to do so. My thoughts aren’t perfect, and you’re welcome to leave comments as such down in the comment section.

You may also wonder why you should care. Or in other words, who is this blog series intended for? I’m mostly writing this for business-minded folks to talk through some of the economics. But really, many “normal” software users should care: you likely use quite a bit of open source software every day. For example:

  • This blog is written and published in WordPress, an open-source blog platform.
  • You might notice it has a little “lock” symbol in the URL bar, which indicates it’s secured through SSL. That security is done through OpenSSL, an open-source encryption library used by the majority of web servers in the world.
  • You may be browsing here on Google Chrome. Chrome is based on their open source Chromium project. Recently, Microsoft’s Edge browser also switched over to being based on Chromium. The Firefox browser is also open source.
  • Android devices are based on Linux, an open source operating system.

As a consumer, you probably should care about the funding of open source projects at least because the software you’re running may have bugs, including security vulnerabilities, that could compromise your credit card or passwords or files on your computer… and if nobody is getting paid to actually fix those bugs (or not getting paid what they’d get paid doing some other lucrative software development), those bugs may go unnoticed or unfixed for months or years. In fact, if the open source software you’re using has no active development or people to pay the bills for server hosting, indeed the software may become entirely unavailable. (This is true by the way for paid software as well: underfunded software with bad business models has led to a variety of hardware/software not working or with significant bugs.) There are many counter-arguments to this: popular open source software may be picked up by the community after as a contingency plan and sometimes as a growth plan. The practicality of that depends on the type of software and the specifics of the license and community model, which I’ll get to through this series.

These posts will show up in the category “Open Source Business Models” on this blog and I’ll update this main post with links to each post as they’re created.

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