"I had not yet finished my first cup of coffee and I was convinced that the world was ending, but for the saving grace of open source."
Run Your Open Source Company Like Any Other
Among four tracks for breakout sessions, I mostly attended the track targeted at CEOs/CMOs (as opposed to the CIO, lawyers and product dev tracks) which covered running, financing, valuing and promoting an open source business. The session called “After Wall Street’s Chernobyl: Funding Open Source through the Downturn” featured various angel and venture investors who advised running an open source company like any other, meaning:
- Growth can be sacrificed if it results in profits and the preservation of capital.
- 2008 was a difficult year and only got tougher at the end with the credit crisis. Plan accordingly.
- Grow and acquire customers profitably.
When considering entrepreneurs for funding, the investors look at:
- What is the size of the existing market?
- Can you show latent demand for your product?
- A sales and marketing model that has high volume and low average selling prices is attractive to them right now.
- Have you been successful with prior venture funding in the past? (“We have to be in love with your product.”)
My takeaway: All of this is exactly what an investor might say to any company â€“ open source or otherwise. Stated another way: these are real companies with real products and customers. Therefore, you need a real business model. How quaint.
In a session called “Whatâ€™s Open Source Worth,” a panel of open source CEOs sang from the same level-headed hymnal:
- Recessions cause businesses to reevaluate capital expenditures and that can mean moving away from monolithic vendors and toward the web and open source
- Open source can be a beacon of hope as a new way to lower costs
- It has to work, but with open source, the buyers can try before they buy
- Even if a buyer is worried about the relatively small size of the open source company, there is value in the notion that a project can outlive any single company.
This all sounded great to me and, I suspect most of the attendees at this standing-room-only session. What I found both humorous and a little sad was that when the hotel computer used for presentations (that was not being used for this session) went into screen saver mode, we all sat and looked at the Windows XP logo projected on the screen in the front of the room for the better part of an hour while these CEOs extolled the virtues and value of open source. Trivial? Yes, but dog food is dog food and appearances and symbols do count for something.
Remember When The Internet Was Cool?
Back in the mid 90s, I was a small part of the huge IBM public relations team that was helping to roll-out IBM’s e-business strategy and vision. Every product IBM announced had to tie into the brand new and sparkly idea that companies – big, important serious companies – could somehow use the Internet to do business, and IBM was the company that was going to help them do it.
It was a great strategy and a great business model and a great marketing campaign and now, a little more than a decade later, it seems utterly laughable.
But that is the nature of technology, whether it’s computers or automobiles or toothbrushes: what was once “gee whiz” is now “ho-hum” and just an accepted part of our lives.
It seems that’s where open source is now. A decade ago, it was a radical notion of a new software development paradigm. Today, it is an accepted and vitally important part of the IT computing infrastructure that powers businesses and organizations worldwide.
It is no more or less cool than any other technology (except Twitter, but that’s another topic for another day). It just is.
And sure, the recession is providing a catalyst for people to take a second or third look at open source, but when the economic dust settles and we’re back on a growth trajectory, open source must stand on its own as a problem solver.
The good news (and it is good news) is that based on what I saw at OSBC, we’re already there.
In a sales opportunity, never lead with open source. Nobody cares. (There it is again.) If you solve a customer problem, you make the sale.