Open Source, Closed Sauce
"We're giving away the filet mignon for free, but we're charging for the sauce"
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I have been an open source and free software advocate most of my life. I don't care too much about the philosophical differences between free software and open source software. For me it's a matter of code quality. In such a regard, I agree with Linus.
It's the only way I know about that allows me to create great software
Open source, even when only contributed to by a single individual, results in a position where the administrator of the project becomes forced to deliver brilliant code. Nobody wants their dirty laundry to be seen by the entire world, so when the laundry basket is on the village square, inevitably it tends to end up empty over time. However, if we assume open source delivers better code, we're still left with the problem of paying our bills, and creating a sustainable business model from our code. How do we do this ...?
We're giving away the filet mignon for free, but we're charging for the sauce
The above is an analogy I tend to resort to when people without knowledge about open source asks me how I intend to earn money from my little venture. Most people enjoys a good meal at a restaurant, even though we can create the same meal at home for half the price. The reasons are because we don't have to do the dishes, we get served by a polite waiter, and the restaurant might have a beautiful view allowing us to escape our own lives for a brief moment. It's really that simple for a software company too. Most people reading this can probably easily register a Droplet at DigitalOcean for $5 per month, install WordPress on it, and make it run in a couple of hours. However, if you register an account at WordPress.Com, you don't have to worry about DOS attacks, you don't have to worry about backups of your database, you don't have to administrate your own Linux distro, and you don't have to mess around with DNS records - So when I help friends to setup a website, I tell them to register an account at WordPress and follow the wizards. It's simply more convenient. Slightly more expensive, and they can't install plugins, but it's easier. Less hassle and less work. I have registered many such websites myself. It's the software equivalent of "going to a restaurant and enjoying a meal" ...
I signed a VC contract last Friday. According to numerology, the date was a day for prosperity, growth, and new business opportunities. The average westerner might laugh from such ideas, but Toyota refused to build factories during their hyper growth period in the 70s and 80s without consulting Feng Shui consultants. Even if you don't care, one of your employees might care. There are lots of things I don't believe in, but I still show respect for. I consider such a mindset to be a corner stone of being a leader, and of course as the CEO of this little venture, I will meet a lot of people who believe in things I don't believe in myself. However, I tend to answer such people with the following ...
I'll believe in you if you believe in me
Anyways, I signed a contract for funds to commercialise Magic a couple of days ago, and I need to figure out how to create a sustainable business now on top of an open source product, that people can arguably use for free, and I love my little filet mignon analogy from above in such regards.
In fact, it was a former colleague of mine who made me believe this was possible. He was a good frontend developer, a master of Swift and iPhone apps. When I showed him Magic, he said "getting this unto a server is easy for you, but for many others this is difficult". This was more than a year ago, and I had my little aha moment as he told me his feelings about it. Hence ...
All I need to do is to remove obstacles, and people will want to pay me
It's really that simple. I've tried to make it as easy as possible to install Magic, and many will probably use the open source version, install it on their own VPS, and never pay me a single dollar. My bet however, is that many will want the convenience of not having to mess around with Docker images, DNS configurations, and VPS administration. Some might not even have an idea of how to do such things. Well, I'm building a restaurant, where I am serving free filet mignon. If you want to, you can download my free filet mignon and do everything yourself. I don't mind, in fact I encourage you to do so. However, if you want the extra sauce, I'll charge you. Now I only need to build a restaurant. The product itself is highly mature and stable, so the next step is to create an automatic onboarding system, where people can register, almost the same way they register a WordPress account, to taste our delicious sauce together with their steak. In a way, this becomes the synergy between open source and closed source, or as I like to refer to it as ...
Open Source, Closed Sauce
This allows us to use open source as the means to deliver a brilliant product, creating great code, scrutinised by the world at large, providing meaning to our lives on top of an ideology I happen to love myself, based upon sharing knowledge, teaching others, and empowering the little man who cannot afford to pay for our sauce. While at the same time it allows us to create a sustainable business model delivering free software. Basically ...
Win, win, win!
Anyways, if you're administrating an open source project yourself, maybe there are some ideas about how to turn it into a sustainable business in this article. I hope so, because after all, I truly love open source! But I prefer my filet mignon with sauce myself ... ;)
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