THERE IS NO VALUE IN BITS!

June 24, 2007

Michael Tiemann at the OSI has an interesting blog post on why open source should make good business sense. The last part is particularly interesting:

As for three “ideas” to avoid when building an open source business:

1) Believing that you need venture capital to start an open source business. In the same way that “Breast is Best” for rearing healthy babies, I believe that 95% of all venture capitalists will do more harm than good when it comes to investing in open source companies. I believe they will pick the wrong ideas, fund them for the wrong reasons, and then complain bitterly when their investments fail. Instead of trying to educate an industry that doesn’t understand open source (yet), look for ways to create your company organically. I would estimate that today there is 10x more money being knowingly wasted on poor proprietary solutions than is available for all software VC, and this suggests a remarkable opportunity to do well by customers who have already demonstrated a need and a willingness to pay. Convince them that you can staunch their losses with open source, and then spin out to success!

2) Per-incident support models.

3) The cynicism that making money in open source makes it proprietary. This is a toxic view for several reasons:

  • It leads one to justify creating proprietary software
  • It leads one to mingle, layer, hybridize, or otherwise infect open source with proprietary software
  • It confuses the fact that open source is a development model and making money is based on a value proposition. THERE IS NO VALUE IN BITS!

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