The 2 Best Ways to Build a Business Around Open Source Software

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What advice do you have for people who want to start open-source projects/companies? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Answer by Neha Narkhede, Co-founder and CTO at Confluent, on Quora:

There are many things to think about when building and starting a company. However, I’ll say a few things that are particularly different about building a business around open source technology. First, open source isn’t a business model; it is a go-to-market strategy. Done right, it really solves one of the hardest problems in building a business -- getting traction for the product. Focusing on developer evangelism and community building is key to adoption of open-source technology. In the early days of Apache Kafka and even now, this is a big part of what I and the team do. Second, while building any business, it is important to understand the new buyer and then influence them. For most open-source businesses, the developer is the new buyer. This fundamentally changes the role of marketing in open-source companies. Third, there has been a constant evolution of open source software business models since Red Hat blazed the first trail. The two common OSS business models that are successfully pursued by many companies like Cloudera, Elastic and Confluent are:

  • Open Core. This typically involves a capable core product which is free and open source. Around the core, a commercial entity provides proprietary software that adds to or extends its capabilities. These add-ons are sold as commercial software, often bundled with support and services.
  • Cloud-hosted services built using open source software. This involves selling the product as a service. Around the open-source core, proprietary software components are added like monitoring dashboards, multi-tenancy and cross-datacenter replication.

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