Open Sources | Rodrigues & Urlocker » Selling open source just keeps getting easier

January 25, 2007 | Comments: (0)

Selling open source just keeps getting easier

TAGS: Open Source

One way to know that the open source market is maturing is to analyze how fast companies are able to get to significant revenues. By "significant" I mean $10M and on a sharp, upward ramp. When I started in the business of open source (2000, with Lineo), it was horribly difficult to pull in $1M in revenues, much less $10M.

Now? The ink will still be dry on your VC term sheets when you cross that threshold. Really.

With each successful open source venture, it becomes easier and easier to make money from open source software. I created this chart to show this. I'm familiar with the sales figures of a hefty swath of open source vendors (Don't ask - I won't tell you), and so was able to plot "Time to Sales" against actual bookings. For each company, Year 1 represents the first year of actively selling product.

Some of the sales I list here are projected. Some are actual. I've checked and double-checked projections against the actuals of other open source companies, and so feel pretty comfortable with the results. Here's the breakdown:

• JBoss: Years 1-4 (Actual)
  
• Company A: Years 1-3 (Actual), Year 4 (Projected)
  
• Company B: Years 1-4 (Actual)
  
• Company C: Years 1-3 (Actual), Year 4 (Projected)
  
• Company D: Year 1 (and some of Year 2) (Actual), Years 2.5 - 4 (Projected)
  
• Company E: Years 1-4 (Projected, but based on initial quarters)

This data shows that it's becoming easier to make more money faster in open source. It's not that the companies are getting better, but that the market is becoming more accepting.

Granted, not every open source company exhibits this pattern of growth. But the strong ones do, and there are an increasing number of solid, viable open source companies. Each year it becomes easier to sell to enterprises as they adopt more and more open source. Each year, it becomes more and more profitable, more and more quickly, as an open source entrepreneur.

And, hence, each year it becomes more and more dangerous to be part of the Proprietary Bloc. What would you do if you were in this position? Maybe this, and this, and this?

Regardless, there's never been a better time to join the open source software revolution. As we do, we should remember the open source pioneers that came before us, and paved our way to profits. Red Hat, SUSE, JBoss, Sourcefire, MySQL, SugarCRM, Mozilla, and others have made it that much easier to raise and make open source money today.

Posted by Matt Asay on January 25, 2007 08:44 PM

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