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Professional Open Source Challenges of building a business in open source Marc Fleury, Ph.D

Professional Open Source Challenges of building a business in open source Marc Fleury, Ph.D Founder & CEO September 16, 2014. Selling Free Software. “Guys, this is not a bad business plan, It’s a HORRIBLE business plan” -- A VC, Feb 2000. Developer Tactical Enterprise.

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Professional Open Source Challenges of building a business in open source Marc Fleury, Ph.D

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  1. Professional Open Source Challenges of building a business in open source Marc Fleury, Ph.D Founder & CEO September 16, 2014

  2. Selling Free Software “Guys, this is not a bad business plan, It’s a HORRIBLE business plan” -- A VC, Feb 2000

  3. Developer Tactical Enterprise JBoss Inc Professional Open Source JBoss Group LLC Small Consultancy 2000 2001 2002 2003 2004 2005 The Evolution of JBoss • 1999 : EJB-OSS Project • 2000 : Training & Consulting • 2001 : Documentation for sale • 2002 : JBoss Group LLC & Support • 2003 : Expansion with new OSS projects • 2004 : JBoss Inc, Venture Funding, J2EE 1.4 • 2005 : JEMS, JBoss Network

  4. 1st generation business model 2nd generation business model No business model Non-profit Professional Open Source Packagers FSF MySQL JBoss RedHat SuSe Compilers Text utilities Operating systems Web servers Database Middleware BSD 90’s 2005 80’s What is Professional Open Source • A natural evolution of open source • Up the stack • Methodology for high quality software and support at low cost • Full time developers, Roadmap, release cycles, maintenance, 24X7 Support, Indemnification, Community, Partners, Enterprise Class Customers. • A real software company

  5. JBoss Business Model • Traditional Software Company Attributes • Professional Methodology • Product Mgt, Development, QA, Distribution, Support • Core development staff are JBoss Inc employees • Revenue from services • Professional Support • Training • Consulting • Non-Traditional Attributes • Zero license revenue! • Highly leveraged for minimal expenses • Recruiting best talent from Open Source community • Distributed QA & feedback loop through OS community • Low cost Internet-based software distribution • Transparency

  6. JBoss App Server Tomcat JBoss Cache Hibernate JBoss jBPM JBoss Portal … JBOSS Microcontainer Community Adoption • Large community • Over a Quarter of a Million Developers • 500+ contributors over time, 100+ Committers, 30+ core (JBoss Inc) • 120,000 Forum Posts, 3,000+ commits per month, order(s) of magnitude on competition • #1 in development • More than 5 Million downloads • >40% Market share in TogetherSoft User Survey • #1 in ISV/OEM • Adobe, Aether, Arjuna, Ascential, Autodesk, BMC, Borland, Brightline, Compiere, Compuware, Computer Associates, e.Piphany, EMC, Filenet, HP, Informatica, Intuit, Iona, Ivis, Jamcracker, Librados, Mainsoft, McKesson, Mercuary, MySQL, Novell, PingID, Seagull Software, Siebel, Siemens, Sterling Commerce, Unify, Unisys, Versata, webMethods, Wily and many more all use JBoss today • #1 in app server growth at SI’s • CRN survey puts JBoss Certified Consultant at #2 in fastest growing certification with large systems integrators (Symantec is first) • #1 in IT production • 34% market share (SDTimes, BZResearch) • OnJava.com

  7. Customer Adoption

  8. Customer Satisfaction JBoss Support Survey, November 2004. 184 Customer responses for JBoss, 84 BEA, 28 IBM, 14 Oracle, 14 Other – Full Report - http://www.jboss.com/pdf/supportsurvey.pdf

  9. Analysts – JBoss is Safe • “JBoss uses its technical and business innovation in the J2EE application server market to take on the software industry giants. JBoss delivers the best of both worlds: It is free, portable and standards-based, and it enjoys popularity among a growing number of developers.“ – Gartner, Feb. 2004 • “Today it has the hottest J2EE app server in town, zooming from zero to 60 with happy customers and new investment.” – SD Times in awarding JBoss Top Deployment Platform for 2004 for the second year in a row. • “JBoss and Tomcat are more than ready for projects in the enterprise. Firms like CNBC are making big bets on the Java servlet engine Tomcat, while companies like MCI and Wells Fargo Bank use the JBoss application server.” – Forrester April, 2004 • “The modular architecture and AOP capability puts JBoss AS at the forefront of this sector.” – Butler Group – May, 2004 • “JBoss is attempting to put Professional Open Source on par with proprietary alternatives and intends to build out its middleware stack over the next two years. JBoss Inc. is driving the JBoss platform to ubiquity, leveraging the open source model’s standard-setting power along with a range of partners from HP, Unisys, CA, and Novell to small IT support and services organizations.” – DH Brown, July, 2004. • “Open-source JBoss 4.0’s achievement of Java 2, Enterprise Edition (J2EE) compatibility is a big step toward wider adoption of the product and open-source Java in general.” – Gartner, July, 2004 • JBoss has astounded naysayers and alarmed competitors with its consistent growth. Fellow open source application servers Geronimo, backed by Gluecode, and Jonas, Red Hat's choice, are scrambling to keep up, while JBoss wins sales at BEA's expense. - The 451 October, 2004

  10. JBoss/OSS in Government • OSS provides natural escrow • OSS puts client in driver seat • OSS pricing models more scalable for clients. • JBoss • Early adoption of JBoss JEMS in US Govt agencies • Disa, Darpa, Navy, Mitre, Justice, State… • Govt integrators adoption • Largest deal to date in EU (French IRS) • JBoss Government group • Drew Ladner: ex-CIO of treasury head group

  11. Doing it yourselves DEEP THOUGHTS

  12. The vendor perception of OSS • Free developers! • Free marketing! • Free sales! • Free QA! • Free distribution! • De-facto standards! • It’s so hot right now!

  13. No Lincenses The vendor reality of OSS

  14. Deep thoughts: Critical mass • No critical mass? • High cost of development, sales, QA, marketing • Just like any “normal” startup • No licenses to grow on • Maintenance base takes time to build • Poorly performing stage of business model • Critical mass • Low cost of sales, marketing, distribution, QA • Still pay for dev must optimized talent • 20x your own size (JBoss @100 == 2000) • Highly performing stage of business model • Getting lucky! • Critical mass is a rare event

  15. Deep thoughts • Subscription based revenues • Highly predictable and renewable • Daily revenue recognition. • Easily cash flow positive • New trend in enterprise buying anyway • Measure the business with cash flow and renewability vs GAAP profitability • That is the way 50% of WS will value you • Stability of the pricing in 2nd generation vs 1st.

  16. Perfect Storm conditions • Increasing impact of the net on software development. • OSS and net are symbiotic • Economic climate • Value is important, pay for usage not for shelfware • Growing acceptance of Open Source • Good value, good support, good price • Value created is shared with users • Savings in companies, value in ours • OSS is here to stay

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