open source as a viable business model
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1© 2010 Open Dynamics
Open Source CompanyCan Make Money Meh?
@tiensoonVP of Technical Consultancy, Open Dynamics
• Often dubbed as “The Joget Guy” at community events
• Time zone transporter
• Responsible for consulting, training, enterprise support and community building for Joget Workflow
• Open source workflow application builder started by Malaysians, and gone global!
• Led and managed by Open Dynamics Sdn. Bhd.
• Open Dynamics also incorporated in California, US
• 21 months
• 40,000 downloads
• 800 adopter sites
19 ✈ 14,000 ✈ 40,000
12 months
9 months
Strong Traction
800 adopter sites
600 community members
19 partners
Why Open Source?
Open Source != Freeware
• “Think free as in free speech, not free beer”
• Always remember: Source code is one of the deliverables too!
Given Enough Eyeballs, All Bugs Are Shallow
• 600 registered community members worldwide
• Beta release is tested in use cases of multiple localities
Viral and Rapid Growth
• 40,000 downloads
• 800 adopter sites
• If 5% of adopters are qualified leads, you have 40 leads to be gunning on, in less than 2 years!
Release Early, Release Often
• Oct 2009 – v1.0.0
• Apr 2010 – v2.0.0 Beta
• Jul 2010 – v2.0.0
• Jun 2011 – v3.0.0 Beta
• 23rd Aug 2011 – v3.0.0
6 months
3 months
11 months
2 months
Feedbacks for Future Product Roadmap
• No matter how technically cool and advanced your product is, it’s useless if it doesn’t meet targeted use cases.
• Large community size
• More use cases
• Product that meets the needs
Real Case Study: Joget Workflow
• v1 – “Workflow Management System”
• v2 – “Do More, Code Less”
• v3 – “Transforms Your Processes into an App”
Users are not just automating processes, but building application!
More Brains and More Hands
• Open source ecosystem allows users to help and contribute:– Critical bug patches
– Translations
– Documentation
– Forum support
– Plugins
• Ultimately, it benefits everyone
Challenges of Running an Open Source / Open Core Company
Full-Time Commitment
• Running a company, is not the same as running a part-time project as personal hobby
• To stay committed on the fast track, product development is a full-time job (same as any other serious startup ideas)
Reality: Everyone Needs $ to Survive
• How to fund:
– product development?
– the operational team before revenue touches break-even point?
Fund Raising
• Convince an Angel to fund your MVP (minimal viable product) or pre-release.
• Get commercial companies to sponsor your project:
– Financially, or
– Developers
OSS Space is Very Competitive Now
• Your OSS product is competing very intensely with other OSS options too!
Find your niche, understand your market viability! It’s a business after all.
Global Product Marketing is Tricky
• Mediums:
– Community-driven evangelism
– Media exposure (TeachCrunch, GigaOM, RWW, O’Reilly Media, Mashable, and etc.)
– Tech shows as presenter
– Interviewed by relevant tech channels
Global Product Marketing is Tricky
• Things get easy if you:
– Are a celebrity developer / successful technopreneurwith proven track record
– Have a celebrity investor in your Board of Advisors
– Have connections with relevant tech medias
• Free-of-charge POC??
• Asian market = Not scalable sales
“Can you come to my office and present to my team?”
Free Software … and …
Who is Willing to Pay?
• Reality check: There are some adopters who won’t pay whatever you do.
• But, there are also some adopters who know value and will still pay!
Who is Willing to Pay?
E.g: xxx,xxx downloads → yyyy adopter sites →
n% qualified leads
Paying at The Point of Value
• Dedicated support package with SLA
• Training services
• Consulting services
• Product implementation services
• Complimentary tools that simplify the jobs
• Plugins for enterprise deployment environment
Open Core?
• A company produces a product that is mostly available as open source, but then there are some closed source components around the open source “core”.
• Community Edition & Enterprise Edition
• Examples: Jaspersoft, Alfresco, Magento, Pentaho
Know Your Adopters
• Google Analytics is your best friend.
Know Your Customer Acquisition Cost
• What is your total costs of customer acquisition?
– Marketing events
– Google AdWords
– Sales presentations
Avg. Customer Acquisition Cost = Total Acquisition Cost
No. of Customers
Profit per Customer?
There’s Never Been a Better Time for OSS
Than Now
Education is Already Done by Successful OSS Pioneers
• Companies like MySQL AB and Red Hat have done enough education to the enterprise sector on viable OSS model.
The Global Enterprise IT is Putting Attention on Open Source Adoption
• Accenture survey from 300 large organizations in both the private and public sector (5th Aug 2010) finds:
– 69% anticipate increased investment in 2010
– 38% expecting to migrate mission-critical software to open source in the next 12 months
– 50% are fully committed to open source in their business
Open Source as a Viable Business Model:
Using Jaspersoft as Example
JasperReports:Yearly Adopters Gain
• Total downloads in 2010: 1M (based on Jaspersoft’s CEO –
Brian Gentile’s input)
• Assuming adopter conversion rate is 2%
• New adopters in 2010 = 1M * 2% = 20,000
JasperReports:Yearly Support Subscribers Gain
• Assuming support subscriber conversion rate is
2%
• New support subscribers in 2010 = 20,000 * 2% =
400
JasperReports:Yearly Revenue Growth
• Assuming each support subscriber pays $5,000
• New stream of revenue gained from support subscription, in 2010 = 400 * $5,000 =
$2,000,000
$2M Recurring Revenue
• Support subscription is recurring revenue.
• And the conservative figure of $2 million annual recurring revenue, is just coming from 1 service –support subscription.
Open Source Company Can Make $ Meh?
Undoubtedly, it’s a proven scalable business model!
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