Wall Street Journal writer Elizabeth Dwoskin reported last week that, “On a sunny November day, representatives of roughly 75 well-funded startups gathered at San Francisco art gallery for a first-time meetup.
“Each of the companies in attendance was building a business based on distributing open-source software, which means that any developer can distribute, modify, or openly share the product code.
“The companies met that day to address one of the most vexing questions in the industry: how to profit off technology that is free. Open source has been a powerful engine of innovation, but early efforts to capitalize on it by providing technical services around it haven’t generated dazzling profit.”
The Journal article explained that, “Open-source projects underpin services offered by companies such Facebook Inc., Twitter Inc., and Uber Technologies Inc, and open-source-based operating systems such as Linux power many corporate servers, financial trading platforms, and Android phones. However, companies that offer such software as their primary product by and large have found it rough going.
“Since most open-source firms don’t have a product to sell, they historically made money by selling technical services—essentially tech support and consulting services—that help companies take advantage of free tools.”
However, Ms. Dwoskin pointed out that, “Even though established open-source businesses don’t generate the kinds of revenue or profit that investors expect of software companies, there’s been an explosion of funding to open-source startups in recent years.”
Last week’s Journal article added that: “In recent years, engineers from large tech companies have turned many popular open-source projects into companies. In 2014, a group of LinkedIn Corp.’s engineers took their open-source, big-data software, Apache Kafka, and founded Confluent, a startup aimed at commercializing the technology.
“Venture capitalists are eager to fund such companies despite open source’s middling track record for generating profit. They say they see a huge market in spreading the innovations that have helped companies such as Facebook serve massive numbers of customers with unprecedented efficiency to businesses beyond Silicon Valley.”
