The document discusses open source software business models and community practices. It describes how software sharing has occurred since the 1940s through organizations like IBM SHARE and MIT's Project Athena. It notes that writing good software is hard work and companies shared software before the Open Source Definition. The document also discusses how open source projects and communities evolve from individual committers to broader ecosystems including users, developers, products and services. It emphasizes that open source is about engineering economics and gives Red Hat as an example of a company focused on customer success through open source.

1. Open Source Software
Business Models Redux
Stephen R. Walli
@stephenrwalli
stephen.walli@gmail.com

2. There is NO Open Source
Business Model
Stephen R. Walli
@stephenrwalli
stephen.walli@gmail.com

3. A Story

5. 1997
~750,000 LoC
~$10,000,000
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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6. Interix
~$100,000
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7. Interix + ACT
~$140,000
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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8. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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9. $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
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10. Build vs. Buy

11. Build vs. Buy vs. Borrow

12. Build vs. Buy vs. (Borrow & Share)

13. Open Source Software is about Engineering Economics

14. 1950 1960 1970 200019901980 2010
Code sharing
At Princeton
IAS in late
1940s
IBM “SHARE”
Conf & Library
Begins 1953
DECUS
Conf & Library
Begins 1962
MIT Project
Athena Begins
1983
1BSD Released
1977
AT&T Shares
First UNIX tapes
early-70s
Free Software
Foundation
Launches 1985
2nd DoJ vs IBM begins
“Software Bundling
is Anti-competitive”
1969
IBM response is to
unbundle HW, SW, &
services pricing
1st DoJ vs IBM
Consent Decree
“Hardware Bundling
is Anti-competitive”
1956
Open Source
Definition 1997
USENIX Begins
1975
Linus Releases
Linux 1991
Apache httpd
Released 1995
Apache Software
Foundation 1999
OSDL Forms
2000
OSDL Re-forms as
Linux Foundation
2007
U.S. Congress
Adds Computer
Software to
Copyright Law
1980
GCC
1987
emacs
1975
We’ve shared software since we’ve written software

15. 1950 1960 1970 200019901980 2010
Code sharing
At Princeton
IAS in late
1940s
IBM “SHARE”
Conf & Library
Begins 1953
DECUS
Conf & Library
Begins 1962
MIT Project
Athena Begins
1983
1BSD Released
1977
AT&T Shares
First UNIX tapes
early-70s
Free Software
Foundation
Launches 1985
2nd DoJ vs IBM begins
“Software Bundling
is Anti-competitive”
1969
IBM response is to
unbundle HW, SW, &
services pricing
1st DoJ vs IBM
Consent Decree
“Hardware Bundling
is Anti-competitive”
1956
Open Source
Definition 1997
USENIX Begins
1975
Linus Releases
Linux 1991
Apache httpd
Released 1995
Apache Software
Foundation 1999
OSDL Forms
2000
OSDL Re-forms as
Linux Foundation
2007
U.S. Congress
Adds Computer
Software to
Copyright Law
1980
GCC
1987
emacs
1975
We’ve shared software since we’ve written software
Writing good software is hard work

16. 1950 1960 1970 200019901980 2010
Code sharing
At Princeton
IAS in late
1940s
IBM “SHARE”
Conf & Library
Begins 1953
DECUS
Conf & Library
Begins 1962
MIT Project
Athena Begins
1983
1BSD Released
1977
AT&T Shares
First UNIX tapes
early-70s
Free Software
Foundation
Launches 1985
2nd DoJ vs IBM begins
“Software Bundling
is Anti-competitive”
1969
IBM response is to
unbundle HW, SW, &
services pricing
1st DoJ vs IBM
Consent Decree
“Hardware Bundling
is Anti-competitive”
1956
Open Source
Definition 1997
USENIX Begins
1975
Linus Releases
Linux 1991
Apache httpd
Released 1995
Apache Software
Foundation 1999
OSDL Forms
2000
OSDL Re-forms as
Linux Foundation
2007
U.S. Congress
Adds Computer
Software to
Copyright Law
1980
GCC
1987
emacs
1975
Companies shared software before we had the OSD
DEC Ultrix
1984
SunOS
1983
OSF/1
1992
Red Hat
1993

17. 1950 1960 1970 200019901980 2010
Code sharing
At Princeton
IAS in late
1940s
IBM “SHARE”
Conf & Library
Begins 1953
DECUS
Conf & Library
Begins 1962
MIT Project
Athena Begins
1983
1BSD Released
1977
AT&T Shares
First UNIX tapes
early-70s
Free Software
Foundation
Launches 1985
2nd DoJ vs IBM begins
“Software Bundling
is Anti-competitive”
1969
IBM response is to
unbundle HW, SW, &
services pricing
1st DoJ vs IBM
Consent Decree
“Hardware Bundling
is Anti-competitive”
1956
Open Source
Definition 1997
USENIX Begins
1975
Linus Releases
Linux 1991
Apache httpd
Released 1995
Apache Software
Foundation 1999
OSDL Forms
2000
OSDL Re-forms as
Linux Foundation
2007
U.S. Congress
Adds Computer
Software to
Copyright Law
1980
GCC
1987
emacs
1975
Companies shared software before we had the OSD
(Writing good software is hard work)
DEC Ultrix
1984
SunOS
1983
OSF/1
1992
Red Hat
1993

18. Collaboratively-Developed Liberally-Licensed Software is
about Engineering Economics

19. Another Story

20. A Story of Red Hat in Three CEOs

21. 1994 1999 2008
A Story of Red Hat in Three CEOs

22. 1994 1999 2008
A Story of Red Hat in Three CEOs

23. 1994 1999 2008
A Story of Red Hat in Three CEOs

24. Red Hat is a software company that
is focused on making its customers successful
Red Hat is a software company that
is very good at the engineering economics of open source software

25. So What About the Business Model?!?!!?

26. Committers
Contributors
Community
EcosystemProject
Products
Services
Books
Training
The Evolution of an Open Source Project

27. Committer(s)
+
Code

28. Developers
Committers
+
Code

29. Developers
Committers
+
Code

30. Developers
Users
Committers
+
Code

31. Developers
Users
Committers
+
Code

32. Developers
Users
Committers
+
Code
Books
Contractors
Products
Distributions
Consulting
Training
Support
Building the Ecosystem

33. How do you increase your user base?

34. How do you increase your user base?
(Because that’s where you’ll find your developers)

35. How do you increase your user base?
(Because that’s where you’ll find your developers)
How do you encourage developers?
(Because these are your future contributors)

36. How do you increase your user base?
(Because that’s where you’ll find your developers)
How do you encourage developers?
(Because these are your future contributors)
How do you make it easy to contribute?
(Because this is the growth and success of your community)

37. How do you increase your user base?
(How do you make it easy to install/configure/use the software?)
How do you encourage developers?
(How do you make it easy to build/test/experiment?)
How do you make it easy to contribute?
(What do you communicate to your community)

38. Open Source Community Practices
Project Exes
published
Project Build
Automated I
Project Install
Automated
Complete Src
published
Project
BugTracking
Project Build
Automated II
Project Test
Automated I
Project Test
Automated II
Basic Arch
Description
Project
License
Mission
Statement
Code of
Conduct
Forums, Email
Comms
Platform
FAQs, Howto
Governance
Contributoion
Guidelines
Events
Community Development
Software Construction Maturity

39. Open Source Community Patterns
Project Exes
published
Project Build
Automated I
Project Install
Automated
Complete Src
published
Project
BugTracking
Project Build
Automated II
Project Test
Automated I
Project Test
Automated II
Basic Arch
Description
Project
License
Mission
Statement
Code of
Conduct
Forums, Email
Comms
Platform
FAQs, Howto
Governance
Contributoion
Guidelines
Events
Community Development
Software Construction Maturity
Encourage
Users
Encourage
ContributorsEncourage Developers

40. Committers
Contributors
Community
EcosystemProject
Products
Services
Books
Training
The Evolution of an Open Source Project

41. Committers
Contributors
Community
EcosystemProject
Products
Services
Books
Training
Corporate
Contributors
The Evolution of an Open Source Project

42. Committers
Contributors
Community
EcosystemProject
Products
Services
Books
Training
Corporate
Contributors
Customers
The Evolution of an Open Source Project

43. Open Source Community Practices
Project Exes
published
Project Build
Automated I
Project Install
Automated
Complete Src
published
Project
BugTracking
Project Build
Automated II
Project Test
Automated I
Project Test
Automated II
Basic Arch
Description
Project
License
Project
License
Mission
Statement
Code of
Conduct
Forums, Email
Comms
Platform
FAQs, Howto
Governance
Contributoion
Guidelines
Events
Provenance
Tracking
Repositories
Protected
Dependencies
Documented
Contributions
Auditted
Provenance
Management
Committers
Indemnified
Committer
Governance
Trademark
Management
IP Management Activities
Community Development
Software Construction Maturity

44. Open Source Community Patterns
Project Exes
published
Project Build
Automated I
Project Install
Automated
Complete Src
published
Project
BugTracking
Project Build
Automated II
Project Test
Automated I
Project Test
Automated II
Basic Arch
Description
Project
License
Project
License
Mission
Statement
Code of
Conduct
Forums, Email
Comms
Platform
FAQs, Howto
Governance
Contributoion
Guidelines
Events
Provenance
Tracking
Repositories
Protected
Dependencies
Documented
Contributions
Auditted
Provenance
Management
Committers
Indemnified
Committer
Governance
Trademark
Management
IP Management Activities
Community Development
Software Construction Maturity
Encourage
Users
Encourage
ContributorsEncourage Developers
Encourage/
Manage Corp
Contributions

45. Committers
Contributors
Community
EcosystemProject
Products
Services
Books
Training
Corporate
Contributors
Customers
The Evolution of an Open Source Project

46. TRANSITION

47. Engineering/
Partner?/
Customer?/
Committers
Engineering/
Partner?/
Customer?/
Contributors
Community
EcosystemProject
Products
Services
Books
Training
Partner/Customer
Contributors
The Evolution of a Corporate Open Source Project
Setting Customer and Partner Expectations in Community is Critical

48. Engineering/
Partner?/
Customer?/
Committers
Engineering/
Partner?/
Customer?/
Contributors
Community
EcosystemProject
Products
Services
Books
Training
Partner/Customer
Contributors
The Reality of a Corporate Open Source Project
Setting Customer and Partner Expectations in Community is Critical

49. Customers versus Community
(Money vs. Time; Expectations are different; Conversations are different)

50. Customers versus Community
(Money vs. Time; Expectations are different; Conversations are different)
Partners versus Community
(Don’t mix business with community)

51. Customers versus Community
(Money vs. Time; Expectations are different; Conversations are different)
Partners versus Community
(Don’t mix business with community)
Products versus Projects
(Success metrics are different; OKRs and KPIs are different)

52. Engineering/
Partner?/
Customer?/
Competitors?/
Committers
Engineering/
Partner?/
Customer?/
Competitors?/
Contributors
Community
EcosystemProject
Products
Services
Books
Training
Partners/Competitors
Contributors
The Reality of Corporate Open Source Projects
Setting Customer and Partner Expectations in Community is Critical

53. Collaboratively-Developed Liberally-Licensed Software is an Engineering
Economic Imperative
(We’ve Shared Software Since We’ve Written Software)

54. Collaboratively-Developed Liberally-Licensed Software is an Engineering
Economic Imperative
(We’ve Shared Software Since We’ve Written Software)
There is no Open Source Business Model
(Good Companies Solve Customer Problems)

55. Collaboratively-Developed Liberally-Licensed Software is an Engineering
Economic Imperative
(We’ve Shared Software Since We’ve Written Software)
There is no Open Source Business Model
(Good Companies Solve Customer Problems)
Successful Open Source Projects Follow Well Known Patterns
(No Scale without Discipline)

56. Collaboratively-Developed Liberally-Licensed Software is an Engineering
Economic Imperative
(We’ve Shared Software Since We’ve Written Software)
There is no Open Source Business Model
(Good Companies Solve Customer Problems)
Successful Open Source Projects Follow Well Known Patterns
(No Scale without Discipline)
Don’t Confuse Customers, Partners, Community, Products & Projects
(Corporate Open Source Projects Require Different Thinking)

57. How do you make money when you give away the product for free?

58. How do you make money when you give away the product for free?

59. What problem are we solving for our customers?

60. What problem are we solving for our customers?
How do we make our customers successful?

61. What problem are we solving for our customers?
How do we make our customers successful?
What can we do to make our community healthier?

62. What problem are we solving for our customers?
How do we make our customers successful?
What can we do to make our community healthier?
How do we make our community successful?

63. Questions & Comments
stephen r walli
stephen.walli@gmail.com
@stephenrwalli
http://stephesblog.blogs.com
http://opensource.com
https://medium.com/@stephenrwalli/

64. No Scale without Discipline
(This is an Attribute of Software)
Orders of Magnitude
(1000:100:10:1)
Freeloaders are important!
(It means you’re doing it right)