What Porgy wants to discuss with you today is the open source business model, not open source itself. Open source itself is an extremely great thing, and it is also an important cornerstone to promote the development of the global Internet to this day. Without open source code, even a large number of commercial software products would not be born. However, the nobility of open source does not mean that it is noble and correct to use open source as a business model. On the contrary, open source is only a means to some extent in business, not a model. If open source is regarded as the core competitiveness of the company, such a company is destined to not go far.
01
The success story of open source
One of the most basic logics of the open source business model is to open products in the open source community, attract a large number of free developers and enthusiasts, make their own technology the cornerstone of this field, and implement it through paid functions or providing cloud services. commercialize. This idea is very beautiful, and there are some successful cases that seem to be real, such as Hashicorp, MongoDB, Confluent, Elastic, Gitlab, etc. seem to be successful commercial companies built on open source. However, when we take a closer look at these companies, there are some notable characteristics:
Constructed an independent software ecosystem
With the operation mode of a commercial company
The main revenue comes from Europe and the United States
are losing money
Taking MongoDB as an example, it actually created a new type of document database, which is different from traditional relational databases. The data construction method of SchemaLess makes it very suitable for some relatively dynamic business scenarios, such as the game industry, so that it has a very strong independent ecology and application field. As a representative product of NoSQL, it has gained a huge base of users and developers. . The success behind this is not so much brought about by open source, but rather because the new data structure and its free promotion strategy have won a large number of developers. Of course, it also won the favor of the capital market. However, in terms of commercialization, it is still mired in a quagmire, temporarily unable to get out of the loss-making situation, and other open source manufacturers also have similar problems.
In fact, commercial companies such as Redhat and Suse that build distributions based on open source software are more likely to achieve commercial success because they are based on the Linux community built by developers around the world. Another case also appeared on PostgreSQL, and there are a large number of commercial service companies around this open source database.
On the other hand, for large companies such as Google, Facebook, and Microsoft, their open source is not essentially to build an open source business model, but to realize their strategically more ambitious intentions by making some software open source, such as Google through Android To extend his search, video and other cloud services, through k8s to challenge the dominance of AWS in the field of cloud computing and so on. Microsoft acquired a large amount of code data by acquiring GitHub. Obviously, OpenAI makes full use of this part of the data.
However, cloud vendors such as AWS are simpler. They directly take open source software and provide it as cloud services after modification. On the contrary, they can obtain greater commercial benefits than open source software provider companies.
02
Cloud is the business model
Why does this happen? The main reason is that the behavior of open source itself and the business model of the enterprise are essentially two different things. For a business to work, you have to generate revenue from your customers, someone has to pay for your products and services, and you have to do it in an industrialized way. Why is everyone talking about the cloud model and the SaaS model now? Because this approach turns software from a traditional delivery project into a real deliverable service, which can be consumed on demand and in volume, and integrates computing and storage resources.
Therefore, we see that cloud computing vendors that turn open source software into services are making a lot of money, while open source software itself is eating dirt. From the perspective of business model, the cloud model of using the Internet for software delivery is far ahead of the traditional business model of seeking commercial functions or commercial support for open source software. The provision of software services in the cloud has nothing to do with open source. There are even companies like aiven.io that provide managed cloud services based on open source software, and their development is not bad.
On the contrary, no matter whether this open source software is welcomed by fans or not, if it cannot provide cloud hosting services, then this kind of software is doomed to return to the traditional license business model and cannot obtain large-scale income. In fact, both Mongo and Elastic are actively cooperating with cloud vendors to obtain huge revenue through cloud hosting. To this end, they also modified their open source agreement to prevent others from taking their products for cloud hosting.
We can find that if this open source project does not have the ability to provide services in the form of cloud services, it will not be easy to succeed in business. The design of how to provide services in the form of cloud services is also full of challenges. We can look at the difference between Hashicorp's cloud models on Terraform, Consul, and Vault, and we can find that different types of products do not actually design cloud service models well.
Cloud services that are truly recognized by a wide range of users in the market may not necessarily be open source. We can see that Datadog outperforms its open source counterparts. Likewise, Snowflake outperforms a large number of open source data warehouses. They even perform better than the manufacturers of traditional license methods. Therefore, when it comes to business models, the real business model is a comparison between the cloud service model and the traditional software model, and the open source business model does not actually exist.
03
Wishful thinking that venture capital is doomed to fail
With the emergence of some successful open source commercial companies in the capital market in the European and American markets, some Chinese venture capital companies have also begun to invest a lot of money in Chinese open source companies, especially in 2021. They believe that as long as these companies can gain a large number of users in the open source field, regardless of whether they can be commercially successful, they are at least likely to succeed in the capital market. However, in China, there will be very, very few such open source companies that can truly succeed.
Commercialization is only possible if it becomes popular open source software. In order to prove that they can become popular open source software, domestic open source companies are proud of the number of Stars, and even spend money to buy Stars. But in fact, the vast majority of open source companies are unable to build a real open source community, and ultimately develop by hiring a large number of engineers themselves. At the same time, this initial thought itself makes the intentions of this type of company quite suspicious. Perhaps their core business model is to earn venture capital money.
Entrepreneurs of a large number of open source companies themselves come from engineers of some major Internet companies, rather than mature entrepreneurs. They may have certain technical capabilities, but most of them are not familiar with commercial operations, and some even suffer from "open source moral supremacy", regard open source itself as a career, and believe that open source will win. They are endlessly engaged in open source, but they have no commercial ideas and thinking at all, and have entered the point of self-deception, lost in the praise of a bunch of community prostitution engineers. But a company will not succeed if it cannot provide effective value to customers, and most of its products cannot be provided as cloud services.
With the relative decline of Chinese Internet companies due to various reasons, the chances of these open source companies being acquired and exited have become very small. With the emergence of anti-globalization trends, it is unlikely that Chinese open source software will succeed in the international market. As for whether the U.S. stock market will accept open source software from China, there is no successful case yet. At the same time, open source software that cannot complete the PMF in the future may be just a "small project" that is not well-received. Domestic Xinchuang has nothing to do with whether it is open source, and it is doomed to fail to achieve great commercial success.
For venture capital firms that have invested in these projects, they can only pray that these founders can come out of the illusory "open source" and really think about how to create value through commercialization. Otherwise, they will soon write off these companies.
04
in conclusion
In fact, we will find that even very successful open source software and communities still have difficulty fulfilling their commercialization goals. So why are startups that claim to be open source business models successful? Users and customers are two different concepts, and the business model itself has nothing to do with open source or not. If you can't convert open source users into commercial customers, then the open source business model is doomed to be illusory. Of course, if venture capital continues to support the development of China's open source software ecosystem, that is of course a good thing. It's just that the investment money needs to be treated as a donation, not an equity investment. After all, some open source software itself has been donated to foundations, and the property rights are not in the hands of commercial companies.
Open source software is forever, and the so-called open source business model may be doomed to a dead end. The open source business model is a false proposition. And commercial companies based on open source must be clear that your future must be cloud service.
Author | Talking Porgy
Editor丨Wang Mengyu
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Introduction to Kaiyuanshe
Founded in 2014, Kaiyuan Society is composed of individual members who voluntarily contribute to the cause of open source. It is formed according to the principle of "contribution, consensus, and co-governance". It has always maintained the characteristics of vendor neutrality, public welfare, and non-profit. International integration, community development, project incubation" is an open source community federation with the mission. Kaiyuanshe actively cooperates closely with communities, enterprises and government-related units that support open source. With the vision of "Based in China and Contributing to the World", it aims to create a healthy and sustainable open source ecosystem and promote China's open source community to become an active force in the global open source system. Participation and Contributors.
In 2017, Kaiyuanshe was transformed into an organization composed entirely of individual members, operating with reference to the governance model of top international open source foundations such as ASF. In the past nine years, it has connected tens of thousands of open source people, gathered thousands of community members and volunteers, hundreds of lecturers at home and abroad, and cooperated with hundreds of sponsors, media, and community partners.
