Panelists:
Opening comments:
Dave Power, Fidelity Ventures -- open source is a way of getting a headstart and a way to build a community, but it is not a business model in itself
Peter Fenton, Accel Partners -- open source is one of the top three disruptive forces in the software industry, we don't make a bet on organic uptake but it has to be there, a viral broad and growing community around an open source product -- there has to be run time, or production value -- the oxygen that allows you to charge for support and thirdly there needs to be demand side economies of scale -- a dominant provider vs. many small providers, and lastly there has to be product drift over time -- sendmail doesn't have much product drift for example, that is the key to harvesting revenue streams for open source vendors
Tim Guleri, Sierra Ventures -- As Peter said, there has to be an organic uptake of the product, it has to be a group of people that has control over the way the open source community contributes to that open source product
Steve (?) -- we are looking at companies that are building applications on top of an open source platform
Moderator Question -- as venture capitalists you are making significant early bets, what are the business models you are making on open source?
Dave -- three models that make sense -- 1) a dual licensing model, an open source version but also a commercial version that they can make money on; 2) enhancing open source software with proprietary software and 3) a service model
Peter -- those are the revenue models. But as a VC we want a scalable, high margin revenue model. Consulting companies shouldn't be looking for venture money.
Tim -- there is a commercial tipping point at which big companies have deployed a certain amount of an open source product and then someone asks, is there a commercial version of this product?
Steve -- we are in a period of transition in the way that corporate america thinks about open source -- they have started to embrace it with the caveat that they still want to have a commercial vendor that gives them comfort that there is a support function -- but will they continue to evolve? will they become completely comfortable with using open source without the need to have a commercial vendor associated with these technologies?
Moderator Q -- relationships with the communities, as the products become more commercial how does the community react?
Dave -- in each case in the beginning there is a community leader of the open source product, a person that reaches out and then there are hundreds of thousands of downloads, that creates a community. But over time as you get more successful the companies that form around these products are doing more and more commercial software development so there is a challenge about how these companies continue to nurture that community that got them started. We are in a window where there is an opportunity for startups to do something special here -- but large companies are starting to figure out how to manage these open source communities.
Peter -- the starting point is some mercurial founder that gets the ball rolling, and builds a viral contributor base but this shifts over time. Once a project is established the issue becomes maintaining and this requires a different kind of support from the company built around the project
Tim -- we make sure that we fund, maintain, and make sure the open source community thrives -- in our market segment we keep the commercial and open source in sync (security product)
Moderator Q -- Where is the value of open source over time?
Dave -- the value will be up and down the stack
Peter -- anywhere you can get huge distribution efficiencies and broad developer interest
Tim -- every segment of software will get affected in a positive vein by open source. I think the SMB space is where a lot of this innovation is going to occur -- maybe GM won't want to run their financials on open source, but the 10 person parts company will want to.
Audience Q -- comment on standardization for interconnectivity APIs
Tim -- standard XML protocols that are self describing
Peter -- standard product sets - JBoss, mySQL, running on Linux -- a standard open source software stack and that drives standards
...
Chief Customer Officer of Catalytic - an AI and Automation company providing Fortune 500 companies with the ability to rapidly reduce the cost of every day business activities while simultaneously increasing quality, employee satisfaction, and customer loyalty.
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