This document discusses navigating open source business models in the cloud era. It addresses two myths: 1) that increasing total addressable market is necessary to increase relevance, and 2) that open source software business is about commoditization. It argues that the cloud has changed dynamics and recommends knowing where your software fits on the commoditization spectrum, and leveraging the cloud through options like marketplaces, XaaS offerings, and integration platforms rather than trying to compete directly with cloud providers.

1. © Copyright 2017 Pivotal Software, Inc. All rights Reserved.
It’s Not About Your Features:
Navigating Open Source Business Models in the Cloud Era
Dormain Drewitz
@DormainDrewitz
September 11, 2017

2. Moi
( )

3. While it was once a controversial statement,
more and more software projects are
acknowledging that their primary competition
is not another software project, but cloud
platforms offering similar functionality as a
service.
- Stephen O’Grady, RedMonk
https://redmonk.com/sogrady/2017/08/01/how-to-compete-with-the-cloud/

4. That which makes the cloud, fades to the background

5. Myth 1:
To increase our relevance, we need
to increase our TAM

6. TAM Magic Math
Current
market
Adjacent
Market AAdjacent
Market B
Adjacent
Market C
-50%
0%
50%
100%
150%
200%
250%
$300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200
5yearCAGR
Incremental 5-year TAM

7. TAM Magic Math
New TAM
Current TAM
20%
22%
24%
26%
28%
30%
32%
34%
36%
38%
$- $500 $1,000 $1,500 $2,000 $2,500 $3,000
5YearCAGR
Incremental 5-year TAM

8. Now you’re
fighting a war on
multiple fronts
Where are you going to focus
your R&D efforts?

9. Now you’re
fighting a war on
multiple fronts
How are you training your field
to sell into multiple use cases,
against multiple competitors,
to multiple buyers?

10. Meanwhile…

11. Myth 2:
The open source software business
is about commoditization

12. Cover with Image
What most people think of…
“The relational database
market is a $9 billion a year
market. I want to shrink it to $3
billion and take a third of the
market.”
- Mårten Mickos, former CEO of MySQL

13. Last 5 Years: 2 Sides of Commoditization

14. Last 5 Years: Now Add Cloud

16. How

17. Know Which End of the Barbell You’re On
Source: Lance Goyke, Flickr
Know which end of the barbell you’re on

18. Open Source Software Business is Software Business
“Build a big business on top of and
around a successful platform by adding
something of your own that is both
substantial and differentiated.”
- Peter Levine, Andreessen Horowitz

19. Convenience is the killer app.

20. Cloud is Convenient. But…

21. Which one of these features overlaps with yours?
Source: https://techcrunch.com/2016/12/02/aws-shoots-for-total-cloud-domination/

22. Hedging your bets
Cloud
Marketplaces
XaaS offering
Application Platform
Integration

23. Dormain’s Unscientific Assessment
Cloud Marketplaces XaaS offering PaaS integration
Utility pricing Yes Yes Maybe
Account control Sort of Yes Sort of
On-prem option No No Yes*
Engineering/Support
effort
Low-Moderate Moderate-High Low-Moderate
GTM effort Low High Moderate

25. Cover with Image
Pivotal’s big, contrarian bets
“We did not go for the
commoditization play…[and]…
deliver a service-like
experience even with software”
- James Watters, SVP of Product

26. “Products that easily fit into existing
workflows and toolchains are more likely to
be adopted. Consider how you can build or
partner to create simple, out-of-the-box
integrations.”
- Rachel Stephens, RedMonk

27. 2

28. 2
Service
Broker
Kubernetes
Service
Catalog
(alpha)
Cloud
Foundry
K8s
App
CF
App

29. The Pivotal Network

30. Resources/Recommendations
Stephen O’Grady, “The Software Paradox”
A16z Podcast: “Monetizing Open Source Enterprise Software”
Monkigras 2017: “The Power of Convenience”
OpenServiceBrokerAPI.org
TUESDAY @ 2:45pm: Alex Ley, “Providing Services to Cloud Native
Platforms with the Open Service Broker API”
Gartner, “To the Point: Cloud Platform Marketplaces: Disruptive or
De Facto Routes to Market?”, June 2017, David Yockelson

31. $200 DISCOUNT CODE: S1P200_DREWITZ