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Open Source As a Business

peter-zaitsev2In this special guest feature, Peter Zaitsev, Co-founder and CEO of Percona, addresses a hot topic due to the public debate on the long term viability of the open source business model that started when the previously staunch open source supporter, Monty Widenius, creator of MySQL and most recently MariaDB Corporation publicly deemed it “unsustainable.” Peter Zaitsev is the co-founder and CEO of Percona, a provider of enterprise-class MySQL® and MongoDB® solutions and services. He is co-author of “High Performance MySQL” published by O’Reilly, one of the most popular books on MySQL performance. Peter blogs regularly on MySQLPerformanceBlog.com and speaks frequently at conferences worldwide.

It’s a script we’ve seen played out many times in the open source community. A great software idea becomes popular, and continues to be developed by a core group of people. Those people build a business around servicing the software. The business grows, and so does the company. In an effort to sustain growth, the company chooses to monetize their software.

The business logic for this timeline is very clear, and from a certain point of view, hard to refute. Businesses exist to make money. Despite servicing a customer base that believes in the principles of open source, many companies choose – after a time – to abandon those principles to a larger or lesser degree for a traditional software business model.

So are pure open source business models impossible?

This old question has been reignited in the last few days following an announcement by Michael “Monty” Widenius regarding MariaDB Corporation’s “unsustainable” open source business model. To quote his exact words:

The Open Source model presents challenges to creating a software company that has the needed resources to continually invest in product development and innovation.

Taking MariaDB MaxScale 2.0 – the critical component for running MariaDB at scale – from a GPLv2 to a proprietary business source license (BSL) started an uproar in the MySQL/MariaDB open source community. For years Monty has been pushing MariaDB as the “true open source alternative” to Oracle-owned MySQL. In this blog post, for example, Monty makes a plea for community support in saving MySQL from Oracle’s profiteering:

However just putting money into development is not proof that anything useful will ever be delivered or that MySQL will continue to be a competitive force in the market as it’s now. As I already blogged before, a fork is not enough to keep MySQL alive for all future, if Oracle, as the copyright holder of MySQL, would at any point decide that they should kill MySQL or make parts of MySQL closed source.

Given his staunch and passionate defense of the open source model in the past, it’s ironic that Monty is now reversing course with MaxScale, a critical component of the MariaDB infrastructure. Many MariaDB supporters feel betrayed by this move, as evidenced by the explosion of tweets from users and customers.

But what does this incident prove? That it is impossible to thrive with an open source software business model, and MariaDB has chosen the only way to stay alive? As someone who has heard this argument many times during my ten years of running Percona, I beg to differ.

So why do companies use open source software? What is its value to enterprises?

As an enterprise, using open source software provides a great deal of control and flexibility over your day-to-day operations. Open source software allows you to do business with companies that give you the best service, support and price. It prevents you from vendor lock-in with proprietary software.

Upgrades, new features and annual increases in subscription prices are standard for software. Unless you want to spend vast sums of money to change your proprietary software vendor’s roadmap, getting your fixes faster than they want to do them is probably not an option. Using open source software, on the other hand, provides the flexibility to meet your timelines.

The advantage to the enterprise in using open source software entails:

  • Control — Using open source software lets you control how your tools help you meet your business goals.
  • Flexibility — An open source license allows you to modify tools yourself, or hire a third party to modify them, to suit the specific needs of your business.
  • Cost — Open source software requires little to no up-front costs.
  • Reliability — The software generally has been road-tested very well.
  • Longevity — If a commercial software company fails, you lose support for the tool. An open source software tool generally doesn’t have this limitation, and can live on through its community.

When starting an open source company, one of the most important things to do is to decide your highest priority: is it achieving the fastest growth and highest valuation possible, or a commitment to open source principles?

This isn’t a trick question; there is no right or wrong answer. But the two options often conflict. Open source companies are formed as an alternative to commercial software companies. Open source is a reaction against the ramifications of commercially licensed software. It is, therefore, somewhat ironic to hear open source software companies discussing how commercial-license software practices are necessary to survive as a business.

To a company backed by investors, and a board of directors looking to maximize revenue and market capitalization, open core or BSL licenses are an attractive prospect. However, the reasons for moving to a monetized-software model misses the point of open source companies.

Customers of open source software use it to match their particular business environment. Today, even enterprise companies – with their need to innovate and contain costs in an ever-changing market – are being lured to open source software solutions.

Big or small, what the open source customer is looking for is not someone who only supports their existing tools, but someone who can support their environment. And that environment is one where tools often can and do change.

I would argue that the only way to stay in business for a 100% open source company is to provide quality services. Services are your primary business value. If you establish a level of trust with a customer through the services you provide – and focus your solutions on solving their business problems – you will win as an open source company. If you bring this level of impartiality to your customer, and your customers trust you to give them the best solution – you will succeed.

Being a successful open source company means prioritizing the value of your customer solutions over selling software. Making the values that your customers care about your values is a successful business strategy.

One of the most successful, and profitable, open source businesses is Red Hat. In all the Linux-related software associated with Red Hat (tens of millions of lines of code), they rely on the open source community to innovate and improve their software, and work to integrate those improvements, while providing the code under an open source license. They earn their revenue from the services they provide.

Being a successful pure open source company isn’t impossible — it just requires a commitment to the principles for which the open source community stands. This commitment might require setting a growth strategy that places an equal value on customer solutions and outcomes as it does on profitability.

You can be profitable, and grow, by embracing these principles and showing your customers how it provides them with better business outcomes.

 

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Comments

  1. Nopitty Nope says:

    How many of the “give me everything for free” do not charge for their own work? Or work for companies who provide all products and services for free?

    The answer: none.

    It’s a childish attitude at best, blatantly hypocritical at worst.

    If you want something, you have to give something in return for it. Open Source can absolutely be the basis for a viable business, just like mathematics is. Some people are better at math than you, so you pay them to do the math, or teach you how to do it. You don’t just ask a math teacher to solve all your math problems, any time you want, with ever increasing difficulty, with nothing to offer in return of value to the mathematician. And in that way, Open Source can be monetized as a service (we’ll do the math for you), as support (we’ll teach you to do the math), or as a product (we’ll give you a black box that does the math). Anyone who says otherwise is a con-man.

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