Mike Olson, the Chief Strategy Officer at Cloudera, eloquently articulated the philosophy behind their business model in this LinkedIn article titled The Cloudera Model. I highly recommend anyone working on open source platforms and building value on top to stop coding, and read this article. Like right now!
I would like to highlight one quote from the article:
You can no longer win with a closed-source platform, and you can’t build a successful stand-alone company purely on open source
Finally somebody said it!
For years, I have been convinced of this model. I have often wondered how pure open source companies actually make money and justify such large valuations without offering any kind of monetization other than offering training, support and development services on top of the open source projects. Some do it via dual-licensing model, as Mike points out in his example of how SleepyCat worked it before getting acquired by Oracle.
Now, I don’t know if this is the best model that Mike has articulated, but it is close to Winston Churchill’s idea of democracy where he said something along the lines of:
…it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.
I feel the similarly about the Mike’s call, and I believe this is the best model of all the models out there currently to think of how you want to build a company and balance between open source and closed source to create unique value on top of open source. For most part, it seems that people agree with Mike’s article (based on LinkedIn comments and tweets). Those that don’t agree are in denial.
Use, contribute back, innovate (both open and closed) and create value – that sounds like a good viable business model.