How Open Source Changed the World

Below is a copy/paste TL;TD summary of a great Tech Crunch article on the past/present/future state of open source development. Highly encourage you to read the entire article, but here are some of the major points.

Not these points are from the article and don’t represent any statements of future direction of Rock or Spark.

Open-source companies like Redhat, MongoDB and Elastic have real market worth measured in the billions of dollars.

Changes have occurred in the market:

  • Gen1 = Open Source – Redhat, MySQL
  • Gen2 = Open Core – Cloudera, Hortonworks
  • Gen3 = SaaS – Elastic, MongoDB

Gen3 Points

  • More than 90% of the lines of code in these projects are written by the employees of the company
  • These businesses can interweave open source software with commercial software so customers no longer must worry about which license they should be taking
  • community still plays a pivotal role
    • asks for enhancements and improvements; it points out the shortcomings of the software
    • acts as the QA department for open source software
    • reward great software with positive feedback, which will encourage broader use
  • Changes in the community’s role over time
    • the community is not as involved as it used to be in the actual coding of the software projects
  • Fundamentally, the software is never “sold”; it is adopted by the developers who appreciate the software more because they can see it and use it themselves rather than being subject to it based on executive decisions. In other words, open source software permeates itself through the true experts, and makes the selection process much more grassroots than it has ever been historically. The developers basically vote with their feet. This is in stark contrast to how software has traditionally been sold.
  • Side-by-side, a closed source software company will generally be able to charge more per unit than an open source company.
  • When something is cheaper, more people buy it. That’s why open source companies have such massive and rapid adoption when they achieve product-market fit.
  • Another great advantage of open source companies is their far more efficient and viral go-to-market motion.
  • This virality allows for open source software businesses to be far more efficient than traditional software businesses from a cash consumption basis. Some of the best open source companies have been able to grow their business at triple-digit growth rates well into their life while maintaining moderate of burn rates of cash.
  • Open Source to Freemium – One last aspect of the changing open source business that is worth elaborating on is the gradual movement from true open source to community-assisted freemium. As mentioned above, the early open source projects leveraged the community as key contributors to the software base. In addition, even for slight elements of commercially-licensed software, there was significant pushback from the community. These days the community and the customer base are much more knowledgeable about the open source business model, and there is an appreciation for the fact that open source companies deserve to have a “paywall” so that they can continue to build and innovate. The notion of freemium is that you can basically use it for free until it’s deployed in production or in some degree of scale.

 

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