Free open source software (FOSS) can be a comptetive advatage as part of a company’s business model. You need to break it apart — “free” and “open source”
The idea of using “free” as part of a the business model is nothing new. TV viewers didn’t pay for content — advertisers did. Likewise, you don’t pay for adobe acrobat reader. Free is a good way to get adoption. Obviously revenue has to be derived somewhere else.
With regard to “open source,” there are many reasons why this development methodology is advantageous to a software startup. Licensing software — charging for the right to use — is effective for gaining revenue. But it provides little incentive for others to contribute to the code. The open source development methodology has proven an effective mechanism for crowd source development, QA, and documentation of a product. It can also help a company attact talent — would you feel more passionate about developing an open source product that anyone can use, or a closed commercial product?
Used together, “free” and “open source” — can be a powerful combination for a startup, where the cost of capital is high. FOSS software also has a built-in distribution channel (linux) and even promotional infastructure.
The hard part for most software startups, regardless of the license of their software, is developing the business model, and executing a marketing plan before they run out of money or energy.
Here at Gluu, we’ve had to pivot the business model a few times to figure out how to make it work. It’s not easy. But we’ve never waivered on our commitment to free open source software. We believe this component of our business model will ultimately enable us to prevail in our market.