Open source as a business strategy

Bill Portelli shares his insights on open source and how it can drive company-building.

Open source software development, long steeped by misconceptions, can be an effective business strategy for companies and startups looking to seed, scale and grow.

Bill Portelli, Managing Director, CEO Quest

Bill Portelli is a Managing Director at CEO Quest in the Silicon Valley. He has co-founded and led startups to IPO and M&A exits, including CollabNet and CCT, and has been awarded the Davos Technology Pioneer Award by the World Economic Forum for his leadership in internet and open source.

“Twenty years ago, when I co-founded CollabNet, enterprise executives were wary of using open source because of IP, security and quality issues. The notion that an organization could trust source code from someone you didn’t know, or that a vendor could somehow give away software and make up for it in volume could seem outlandish. But open source is not simply free software, nor does it mean that everyone can copy, edit and distribute the code in any manner they choose. Rather, with a thoughtful development and license approach, open source can be a better way to build software and drive adoption on the web in a collaborative way.”

In 1999, Bill was running a $500M Product / Service BUs at Cadence Design Systems. Like most $B+ companies, his software development team employed a multi-site, multi-continent development structure. At the time, software development tools and processes were optimized for local-area networks protected by firewalls. They were not optimized for the web. They were neither collaborative nor efficient.

“Clients observing bugs in the code were having to call customer support and wait 9 months or a year for the next release,” Bill explains. “Major customers were so frustrated that they were offering to contribute their engineers and kept asking me how to collaborate. But the tools didn’t exist.”

“I started researching open source not as free software, but as a better, more collaborative approach to building software by distributed teams. That’s when I bumped into Brian Behlendorf, who had set up the tools and processes that drove Apache to become the #1 web server, bypassing Microsoft and IBM. Essentially, he helped set up the tools for open source development in the cloud.”

The Apache Group and its members understood early on that software isn’t stable over time. In an interview with Forbes in 1999, Behlendorf explains that software — a living organism rather than a static asset — needs constant maintenance. That is why it benefits from multiple developers constantly reviewing and improving the code.

Based on this understanding and supported by enabling tools and software development processes built for the web, the members of the group could work together in a distributive, more agile, and collaborative way. These open source projects reduced costs, increased speed of development, and improved the quality of software. The Apache development team overtook the giants and became the dominant web server of the dot com boom.

“I kept asking myself, ‘What is the magic that enabled twelve people — who had never worked together or visited each other, and were armed only with rudimentary tools on the web — to build superior software that was adopted virally?’”

Impressed by the success of open source software development approaches, and realizing that these more open and agile development approaches could radically improve software speed and quality for the enterprise, Bill went on to co-found CollabNet with Brian, a company aimed at driving open source development processes and enabling distributed agile software development in the cloud.

As a CEO advisor, Bill’s open source experience shapes his approach, and he tries to integrate what he calls the “science of open source company-building” into his work. At its core, it’s about integrating high-velocity try-and-buy approaches, open source or otherwise, into the enterprise sales model. It’s about getting your product out the door — getting it visible — not only to development but also to the users. But like any good method, it starts with your business objectives.

“Before choosing a license or making your code available, you need to understand your customers, their pain points, the segments you’re going after, and the ways software is bought and used in that segment,” he explains. “Then you can decide if you’ll use a cloud SaaS strategy, an open source strategy, enhance the traditional enterprise sales model using a Sales Ready Product approach, or whatever else. If you then decide to open source your code, you can shape your software licensing strategy and find the balance between openness and proprietorship that works for you.”

To find that balance, Bill suggests a few questions that need to be answered: Who do you want to have access to your code? Your competitors? Your users? What types of access? Your development process? And why? Economically, what are you trying to achieve?

Compared to 20 years ago, enterprises today, are more willing to use open source. First, because they understand its value, and second, because community development and vendor support approaches have rendered IP-related security concerns less widespread.

But as more and more companies choose this path, Bill is clear on the importance of advancing thoughtfully. He stresses that the work doesn’t end once your open source project is public. Collaboration is a two-way street and your company won’t thrive unless you invest time into making your project interesting and effective.

“Everybody wants to make money, we all have bills to pay. But when you look at the data, money is not the #1 driver for many developers, and certainly not for an open source developer. For the open source community, it’s about working on cool, cutting-edge stuff; it’s about a community; it’s about learning, innovation, and promotional relations. Then there’s also the satisfaction of knowing that you made a real difference in the world.”

If you want your commercial open source strategy to be effective, you need to know how to harness that drive.

1. The first step is clarity.

“Establishing your community rules of engagement is categorically important to running a good open source project. Be clear on how much of the code is going to be opened by your organization, how much is going to be closed, how much is going to be commercial. Let the community know what your goals are and you’ll maintain developer goodwill and enthusiasm.”

2. The second, architecture.

“You need to establish a set of tools and processes around your project to organize collaboration over its entire lifecycle. Ensure the code is well architected with rock-solid integration points. Make sure your development process is well documented. And finally, ensure you have put in place the basic distributed software development platform essentials for version control, bug tracking, build, test, release, documentation, and collaboration.”

3. Finally, leadership.

“Don’t underestimate the value of a strong community leader and a visionary committed to making your project meaty and healthy,” explains Bill. “Strong leaders will attract talented open source developers and help to mediate differences of opinion in the community. Just as importantly, your commercial organization needs to articulate clear goals and demonstrate a continued commitment to develop and support the open source project.”

“If you’re solving a really interesting, deep problem, promote it, publish it, bring in a community around it, and then nurture that community. Remember to stay honest about what you’re trying to do and you’ll be successful.”

After the interview, we asked Bill why he joined CEO Quest. He shared that he valued the opportunity to work with a great team of like-minded CEO coaches who all want to help build impactful companies.

“I believe we’re making a difference. I think we are profoundly impacting industry by accelerating great companies, building great products, teams, and customer bases. We are driving technology solutions into the market, and in doing so, we are impacting both enterprises and society.”

For more information on Bill and CEO Quest, visit