Can Open Source be a Golden Goose ?

The most common question I get while talking to people about Zold is, how the heck will you make money? For those of you who don’t know, Zold is a startup creating world class Open Source EduTech products for higher education.

When I tell people that I will let them have my code and that too for FREE, I love the expressions on their face! The best reaction usually comes when I tell them that they can sell the software further, without paying me anything (YES, it’s true). We are giving away a lot for FREE and getting some really cool reactions. So I would like to share my opinion and learnings on Open Source as a business model from my journey so far.

Is it possible to have a business around Open Source? Yes. Check out Red Hat and WordPress. I agree on the fact that, unlike Red Hat, WordPress is not a billion dollar company. Most other open source companies are NOT valued at a billion dollar either. But if you look closely, these companies may not be the ones creating Billions and Trillions of dollars, but they are creating a lot of VALUE. Let’s just take an example of WordPress, Matt Mullenweg created WordPress and is making quite a bit of money using wordpress.com, which happens to be one of the most visited sites on the internet. What is more wonderful is the fact that there were 17861 jobs posted on Freelancer related to Wordpress just in quarter 4 of 2014. That is something. More than the money, Matt created a revolution that created more jobs. Valuation of wordpress.com in market is TOO small in comparison to the impact it has on the companies and families dependent on WordPress entirely.

So enough about the vision, let’s talk about HOW TO MAKE MONEY FROM OPEN SOURCE:

1. Cloud Services : As the company leading the development of the whole project, you have access to the engineers who know the platform inside out, best security practices (and patches), devops, almost all other skills and leads necessary to create a cloud platform. Cloud means, monthly revenue that can scale ;)
2. Services : The creator of the Open Source is usually the most obvious choice for enterprise customers when it comes to services like customization, deployments.
3. Partners : You can choose to have partners and forward the leads to them. It’s better to have partners here to maintain the quality of services. From the perspective of revenue, this is an additional stream of revenues. Odoo has done a great job with this model.
4. Training Services : This may not be applicable to all Open sources, but a majority of Open Source organizations, specially the ones dealing with enterprise, can offer training services or strike a deal with some training partners.
5. Affiliates : How about getting a commission from GoDaddy for referring their VPC? With your Open Source you can do that.

This is not a comprehensive list of revenue models around Open Source, but should give you an idea that it’s possible to create a company around Open Source and free software. It’s not “free” as in free beer. It’s “free” as in freedom. More than the revenues and valuations, you create a ripple that can be of much greater value than any money in your bank account.

Thanks for reading this far. You can reach out to me on aman@zold.co, I am usually not dangerous and love talking about business, technologies, music and spirituality.