Boldly Open

The new meme in the Open Source business blogosphere seems to revolve around an hybrid model pioneered by MySQL who (surprise!) is considering the addition of proprietary components for paid customers. Fabrizio agrees with the move, noting how a support model can only bring you this far as best customers turn into worst nightmares once they realize they have become competent enough to support their Open Source stuff. I agree on the conclusion (commercial Open Source, as we know it, won't be there in a few years' time, and a hybrid model will surface), yet I don't quite subscribe to the motivation.

Think of software as a car. People need cars. Some people actually like cars. A few are actually mad about cars. It's hard not to find value in wheels: at a very least, they bring you from A to B, but in most cases they appeal to your ego. A lot of people will save to buy a better ride and will anxiously anticipate the moment they'll get to experience that new car smell. Serious comparisons are drawn, comparative reviews are discussed on owners' forums, endless discussions arise between fans of different brands: it's a value-driven market where price matters, but it's just a row in the table, and the perceived value of a shiny iPod integration goes way beyond the price of a few cables and a plug.

The problem with commercial Open Source is that it doesn't sell cars. They sell insurance. And, guess what, people hate insurance. Every car owner needs to be covered, but I find pretty hard to imagine people doing lots of research on the fine print of insurance contracts. What really matters is price: the cheapest alternative that ticks that legal box is a great candidate for the winning spot. There is no value perceived in insurance: you need to have it, and that's it. There is no retention, either: the cheapest one wins no matter what, and people will happily jump the cliff and switch to a different supplier if that saves a buck or two.

Open Source needs to realize that the basic equation is free distribution vs. greater adoption. Adoption will bring participation, uptake, references, better software and all that. Adoption in itself, however, will provide just marginal business if the upsell proposition is based on insurance alone: there will be no drooling customers eagerly waiting at the register to buy support, as the insurance model is neither sexy and nor useful per se. The marginal value of priority updates, coverage against ambulance chasers and a throat to choke should stuff hit the fan is far from being a compelling proposition, and any baitware/crippleware tricks such as gated access to professional services for licensed customers alone are just sneaky ways to build an unstable and controversial relationship with customers who will be signing a contract, then start looking for alternatives such as aggregators, systems integrators or roll-your-own to provide them with a boot to kick the vendor backside with.

This is why most commercial Open Source as we know it, is doomed to fail. Unless vendors stop moaning about the conversion funnel and start rolling up their sleeves and provide value beyond insurance, a lot of VCs are going to be disappointed. Meanwhile, a lot of companies out there are making billions with Open Source already, as they use it to create, enter, and subvert markets, generating opportunities via community-based open development, and using Open Source as a component of a bigger picture. There is no need to look forward for the first Open Source billion dollar company: it's been there for a while already, and it's a hybrid.

In no particular order:

• relocating when you're in your late 20's is a different matter than doing the same when you're in your late 30's. Completely.
• A long term rental in the UK is 6 to 12 months. A long term rental in Italy is 6 to 12 years. Keep that in mind next time you talk to an agent.
• The creativity of Londoners in slicing and dicing terraced and period houses is amazing. No, I don't really fancy climbing a ladder to get to the kitchen, nor I'm a fan of a bathroom with the loo in the basement and the shower on the first floor.
• Try to remember that $4 for a Tube ride is par for the city, don't gasp when confronted with the money drainage on your Oyster: it's like having a "newbie" sticker on your forefront (as I'm afraid it is using a top-up card, for that matter).
• Either quit smoking or don't forget to pack a lot of cigars when flying back from Italy. Or be a billionaire so that you can actually afford tobacco. Not necessarily in this order.
• Now that you have a proper house, good luck with understanding how utilities actually work.
• While at it, don't even try to get started in opening a bank account, as climbing Mount Everest on a limp definitely looks like an easier endeavor.
• Keep meeting amazing people, incredible customers and awesome partners. Get used to the London pace of doing business, which is like skateboarding on the roof of a Shinkansen.
• Don't let London suck all of your time as of late. Resume tweeting/blogging, bring your golf bag over, shop for nice food and enjoy some quality time in the UK. When you're not traveling to San Francisco, Italy and Amsterdam in the next two weeks, that is.

Good news from Matt. IDC reports:

"IDC believes that if open source software is to continue its penetration into mainstream and enterprise environments, the ecosystem must evolve to include many service providers that are knowledgeable about open source software and can handle the integration, implementation, and training needs of end users in particular."

Gee, just slightly change the wording and that could well be Sourcesense's elevator pitch. Matt comments:

"Would the industry be better off with more and better-qualified consultants? Absolutely. Actually, a better way to ask this might be, would the industry be better off with more consulting companies actually owning up to how much open source they're already implementing? The answer to this is a resounding "Yes!" Accenture, SAIC, Cap Gemini, etc. are all using a tremendous amount of open-source software, but generally aren't working with the project leads/maintainers to do so (and I suspect aren't telling their clients about it, either)."

Given the sheer number of projects we participate and give back to (among which a whole bunch of Apache stuff, Spring, Ruby, Terracotta), not to mention the ever growing list of partners we help  in their market penetration exercise, that fits my bill as well. Still not convinced? Read what Marc Fleury has to say:

"Those who build the 'Mc Kinsey' of Open Source software, with the legitimacy of the heads of projects, will control the internet's infrastructure."

 Or, more specifically:

"[...] there is a viable niche in the future of OSS software in services. Note the 2 qualifiers to Matt's blanket statement. 1/ niche 2/OSS not 1/all 2/of software. The services models will scale. I always find myself amused when people broadly claim that 'Services don't scale, everyone knows that'. Because you know, IBM GS, McKinsey, Bain, Accenture, Atos Origin, CapGemini, you name it, these are all 2 bit little shitty companies, right?"

If you do the math, it's easy to understand why I'm having a great time. Ours is the place to be: our sustainable services-based business model fits hand in glove with the Open Source paradigm and ecosystem, we are growing our international presence, we met or (more often) exceeded our targets so far, we are expanding our partner network and we are constantly getting new customers and upselling existing ones. Our team is growing at an impressive scale, and I'm thrilled to see so many bright minds  sitting in our offices, with a long queue of people alike willing to join us.

As we finalize plans for our next fiscal year, the numbers in front of me are just mind boggling and make me wonder about how far we went since two years ago, when Sourcesense was me, a desk and a small cheque from a few savvy investors. Add lots of fun (and FF miles!) on top of this, and you will easily understand why I have this big smile on my face: I just love my job.

While I was happily missing flights and losing bags, something major was happening in Sourcesense-land, as Sergio was busy releasing the 1.0RC1 version of Scarlet. Link-hovering people with a good memory might have noticed that the home page has changed, as our Open Source Jira clustering solution is now hosted on Sourceforge. A full bag of goodies is included in this release, among which you will find an upgrade to the latest and greatest Jira and Terracotta versions, as well as major performance enhancements and the usual bug fixes.

With 1.0 just down the road, this is your latest chance to try and test Scarlet, provide feedback and ask for new stuff before feature-freeze, so don't miss the opportunity and head for the download page!