Matt Asay recently posted about this China Martens article for which he was interviewed. In it the question is asked as to whether or not we're in the Open Source 2.0 bubble. Yes, we are — so what?
VCs invest in companies all the time. Many of those companies fail. Execution is hard work and VC funding hides a myriad of bad decisions until it's too late. Jo Tango from Highland Capital Partners is quoted in the article saying:
What won't ever change are: What value are you
offering so that you can charge customers? How can revenues exceed
costs? How can you build a business thoughtfully over time so that it
is sustainable?"
Exactly so.
Part of the problem is that we love to categorize things. Is it a hardware company or a software company? Is it an open source company or a closed source company? The categorization I especially love to despise is "hybrid company".
Geoff Moore in his April 2004 Open Source Business Conference keynote offers up an example that may break us out of that problem of narrowing our thinking around labels. He talks about "pizza" companies and the concept of core customer value propositions and business context. For Dominoes Pizza it's all about 30 minute delivery. The pizza is context. For Chucky Cheese it's all about animatronics and the childrens party atmosphere. The pizza is context. For Papa Murphy's however, the take-and-bake pizza is core.
For all the companies on parade at the OSBC East conference this past couple of days, it doesn't matter whether it's a software company or a hardware company, and how they're using open source. Open source is irrelevent to the discussion.
A company exists to provide a return to it's stakeholders. It does this by having lots of happy customers that give it money time and again, and tell all their friends about how happy they were giving it money. (And I believe you succeed at that by having happy employees focused on making those customers happy.) But while the statement of that is simple, the execution is hard work.
I don't wish any of the companies I saw at this Open Source Business Conference ill will, but I also think many won't exist in three years time. Even for a company with a viable business model and a great offering, execution is itself still hard work. (And I'm not convinced all the companies I saw have great offerings.)
And just as open source is somewhat irrelevent to the discussion about business models and offerings, the reverse is also true. Regardless of the brilliant successes and train-wreck failures of these companies (and all of the others that are getting funded in the open source space), collaborative development with complete source code access remains an incredible way to develop software and FOSS licensing remains a powerful business tool for finding and engaging customers. We don't use the internet any less after that bubble burst, nor will we use open source any less either.
I couldn't agree more with your premise that in the Open Source world it's all about execution. The Open Source world provides companies with a whole new set of tools. Tools do not make a company. It's how you use them. My company does ERP for SMB's and leverages OS. OS has given us tools to more keenly leverage a different business model within ERP. We could do it without OS, but our differentiator who ring a little hollow.
Posted by: WA Tonra | 10 November 2005 at 07:43