Lately when I speak before new business prospects, current and potential investors, government agency representatives, and even our company’s board of directors, I talk about what I believe constitutes community for an open-source based company. My presentations include evaluation and explanation of the place of the open-source community as a company asset.
Last November, Ashlee Vance of the NY times wrote: “… open-source software has become more of a corporate affair than a people’s revolution.”
In this post, I will try to share with you my reasoning, experience, and conclusions about presenting the open source community as a corporate asset instead of a techie revolution.
We all know it is a pleasant advantage to be supported by a community. It is even more advantageous when your enterprise is supported by a professional community. When an open-source based product is being adopted by the open-source community, the owner or company that built the product is being empowered by the community.
The strength of community empowerment can be seen in these four arenas:
1. Development team
Fellow open-source developers around the world may enhance your team by providing coding assistance or by committing their skills in order to advance your product roadmap.
Early adopters become a veritable online QA team, helping to make your product better, and more user-driven.
Installations on a user’s site are faster and viral. There are no sales efforts invested for deployment, and almost no marketing efforts required.
Community bloggers spread the product information to other users in a very objective way.
It is also persuasive and effectual that commonly-faced issues like infrastructures, bandwidth and tools licensing are being offered and provided by various vendors in support of OSS products.
However, once you've decided to take your company this one step forward, you will need to better explain the term "community". It is not enough to just raise the above advantages. You need to evaluate its part within your company valuation.
Well that’s easy if you are discussing this issue with technical guys working with you (especially if they started as Java programmers), but let me tell you, when it comes to a meeting with your VC's – it’s a fight!
So here is my 2 cents worth for those of you who are running a company operating in the OSS arena.
This kind of advice is what community is for:
• First, show revenue
This is the biggest question and generates the most important answer. Over the last decade we've learned that companies offering OSS products can also generated revenue (e.g. Redhat, Mysql, SpringSource, Jboss, etc). If your company can show revenue generated from the OS product – present it first!
Show progressive download trends of your product. It will help you predict sales of services or of the future commercial version.
• Downloads peaks
Bundle downloads picks with released versions. This will show that your product is being installed and users are following it.
• Be mature
Open source community members are fast adopters, so don’t show-off with a 1st year product. For people who know this business – that means that you will go down before going up.
A portion of today's open source users are also big enterprise organizations. Use them (if you are allowed to) as a reference – use at least one logo that even your mother will recognize.
• Business model
Make sure that your business model brings added-value to your community. You can predict a certain percentage out of your community will be willing to pay for your product. You can justify that prediction only if happy customers realize added-value on-top of the OS product they purchased.
• OS Companies P/E ratio
Maybe you don’t know, but open source companies' Price/Earnings ratio is 3 times greater than other technology companies. Part of the reason is the community behind the product. Enrich your debate with data such as RedHat P/E compared to Oracle's P/E – you'll be surprised …
• Translate community contribution to money
Be “budget wise”. You can show how much marketing, QA, sales, etc., you have saved per year by sharing your product with the community.
This is “one side of the coin” which is more focused on presenting “community for managers”. You need the following background to support it. Since you are part of the community, the way you know this information is much different than the way others outside the community know the same information. Make sure you remember it…
Community is a group of people that share the same interest, knowledge, experience and more or less the same background. The OSS software community is a mature one considering that it offers the following benefits:
It's big enough to have impact on vendors, and dedicated enough to assure that the future of software and services will function like the community believes it should.
The OSS community is structurally formed by functional division groups (SW languages, tools, expertise, etc.). This type of grouping allows open source companies to be more focused and useful both in the market and to each other.
3. Group leaders
Most OSS group leaders are seniors in the software industry. The leaders of some of these groups have true leadership skills. Rather than accomplishing the administrative functional expectation of booking the next meeting or contacting guest speakers, they actually represent their group, and communicate effectively between the group and the community. They will be found pushing whatever is best for the community, sharing knowledge, and using the group background to influence and promote the best interest of the community. If you head a group, but you don’t do these things, don’t call yourself a leader!
The OSS community knows by now that competition is good! Community should always push for greater competition. Otherwise the health of the community is threatened. When all the individual members and groups that make up the community care about the quality of the products delivered by the community, the community remains healthy and strong. When this concern for competition decreases, so does the value of the community, then we can just say it's not a community but a group of people who use the same tool or software.
5. Community isn’t a Flock
Keep clearly in mind the difference between a “community” and a “flock”. Don’t just adopt what's common. It's the user's responsibility to make sure that he is not just a follower! Every user is needed by the community because user-feedback helps drive the next version. Each of the community's members owes feedback to the OS contributors. Each of the contributors needs to listen to all responses about the product and keep it a user-need-driven.
Combining all of the above points, you can easily defend the fact that your community is part of your company's assets and should be part of its evaluation process.
Reading Ryan Bigg's blog "Want it? Give" also puts in order the community role and I do feel that a lot of OSS providers share most of Ryan's thoughts.
As for JFrog we are proud that Atrifactory is an open source based product under the LGPL license. Artifactory is also available on a Cloud and Pro versions which are commercial. Our community was there for us for the last 3 years. I know it, not just because of Artifactory's downloads success, but also because of the many additional things I've learned about community while fighting to recognize it as part JFrog's achievements.