Should Every Startup Release its Product As Open Source?

January 28, 2008

I’m an entrepreneur developing a web service who is suddenly waking up to the advantages of releasing my product as open source. The recent purchase of MySQL by Sun and on a smaller scale the latest funding round for Automattic make it clear that open source can make great business sense, but as a newbie wrestling with giving away potentially valuable IP, I have questions:

  • How do you mitigate the competitive risks?  Making your software freely available does some wonderful things to potential competitors, but you’re telling me that my company creates revenue streams from a product that I’ve given to anyone who wants to copy my business model? What if someone with a great idea forks our code and creates a compelling competing community? How do we maintain control of the releases?
  • How do you motivate, organize, and manage the community? Are there proven techniques to harness your most valuable resource?
  • What kinds of applications lend themselves to open source? It’s easy to see how databases, languages and operating systems make great sense as open source since they directly benefit the developer community working on them. But what about a media platform? A UGC site? An ad supported publisher? Is there a list of criteria?
  • What does the company actually own at the end of the day to make it valuable to investors? The documentation? The proprietary products you’ve built on top of the open platform? What else?
  • Do I want to be a service business with 1,000 or 100,000 customers? How do you keep them all happy with low-touch support.
  • Question for VCs: What percentage of your portfolio is open source and, more importantly, what would you like it to be?
  • Question for anyone: What are the definitive books, blogs or other sources of information on open source business models?
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