Open Sources | Rodrigues & Urlocker » Lessons learned from Open Source: Making Sales While Making Friends

July 26, 2006 | Comments: (0)

Lessons learned from Open Source: Making Sales While Making Friends

TAGS: Business, Economics, Open Source, Open Source

Matt Asay, bon vivant, kung-fu master and man-about-town is delivering a session on how companies can partner to create more sales and more opportunities for OSS adoption while avoiding the spectacular failures he's experienced in the past. I am going to attempt to live-blog this session.

So why do we need to figure out open source models?
Open source is changing everything about sales, support and implementation of software. This correlates to open source advantages associated with innovation and cost savings.

Lesson 1: We are not successful by association
Open source may be hot that doesn't mean you are--there will be many failures for each success
Open Source is not a tagline

Lesson 2: Friends are nice: Cash is critical
Downloads=friends; customers=cash
You need friends but cash means survival

Matt is making a point about JBoss that once they had brand recognition and validation their average sale and customer number went way up. This leads to:

Lesson 2 revisited: Pushing the Pull
Marketing is critical
Invest in tools to convert friends to customers
Question from the audience: what kind of marketing?
Matt cites SugarCRM as an example of successful PR - PR is perhaps the open source company's best form of marketing.

Lesson 2 re-revisited: Does this mean that open source (cost) advantage is overstated?
No, but it does mean that the benefits should taper off over time. If you're still arguing about how you're cheaper after five years, you've failed. The conversation should quickly switch to superior software and service, not price. At any rate, after 5-7 years the cost advantages start to go away (you start hiring direct sales, etc., which makes the P&L look more like a traditional software company. But by that time your incumbent competition is dead.)

Lesson 3: Scaling to fit your model
Year 1-100% pull
Year 2-Inside sales (100% proactive pull)
Year 3-Inside + direct
Year 4-Direct + inside
Year 5-Direct

Lesson 4: Think "user community" not developer community
Your company will do 85-100% of the core development work, but you should rely on your user community to greatly assist on localization, roadmap, bug spotting, etc. Users matter a great deal.

Lesson 5: Be where your customers are
Goes back to Matt's argument that OSS doesn't need to be in the Valley. Or, rather, that you should have a strong US presence (because that's where the current market is), but need not set up perma-camp in the Valley.

Lesson 6: Don't make your customer think about licenses
Clarity is everything in the sales process.

Lesson 7: basic ingredients for success
Market timing
Prepare for participation
Great initial code base
Degree of applicability
Modularity of code--Matt takes an aside to show us an unrelated soccer clip, which was a supposed explanation of modularizing anything. [Matt comments: Arsenal is relevant to everything. That clip made my entire argument.]
License to fit the need

Lesson 8: basic ingredients for success
Documentation is critical
Price cannot be your primary value driver
Enterprises have been taught to distrust sales

Lesson 9: Be permeable
Be open, not just in code but in relationships with everyone in the universe

Ultimately open source is not about price. It's about being the best software on the planet.

Posted by Dave Rosenberg on July 26, 2006 10:54 AM

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