27 Nov 2022

Capturing Value with Open Source Software

[quick-thoughts draft]

Open source software has generated a lot of value for the world. It has also generated a lot of value for the companies that have built their businesses on top of open source software. Yet, the value captured by the open source software community is still very small compared to the value generated by the open source software community. More than 90% of companies use open source (State of Open report by open UK). Open-source software is the foundation of 99% of the world’s software (GitHub Octoverse report Oct, 2022, Venturebeat article).

Value generated by open source software

Businesses built on top of open source software

distribution-of-businesses-built-on-top-of-oss

oss-security-risk-analysis

Open source software used by businesses

OSS used by business broadly fall under these categories:

  1. Operating Systems
  2. Software Tools
  3. Application Frameworks
  4. Cloud Native Technologies

Open source software business models

Open core

Freemium

Dual licensing

Support

Hosting

Restrictive Licensing

Open source Software as a Service (SaaS)

Open source Infrastructure as a Service (IaaS)

Open source Platform as a Service (PaaS)

Open source Software Development Kit (SDK)

Open source Hardware as a Service (HaaS)

Open source Data as a Service (DaaS)

Revenue streams for open source software

Revenue Stream Examples
Selling support Red Hat, Canonical, SUSE
Selling services AWS, Google Cloud, Azure
Selling software MongoDB, ElasticSearch, Redis
Selling hardware Apple, Samsung, Raspberry Pi, Arduino
Selling data Facebook, Google, Amazon
Advertisements Google, Facebook
Subscriptions Netflix, Spotify
Freemium Slack, Zoom, GitHub, GitLab, Docker,
In-app purchases Spotify, Netflix, Apple, Google,
Platform fees Android Play Store (Google), Microsoft Store (Microsoft), Apple App Store (Apple), Steam (Valve), Epic Games Store (Epic Games), Discord (Discord)
Donations Linux Foundation, Apache Foundation, Mozilla Foundation, Wikimedia Foundation, OpenStreetMap Foundation, Wikipedia,
Selling training, certifications Udemy, Coursera, Pluralsight, LinkedIn Learning (Lynda), Udacity, edX, Khan Academy,
Selling event tickets Linux Foundation, Open Source Summit, ApacheCon, FOSDEM, PyCon, JSConf, NodeConf, DockerCon, KubernetesCon, CloudNativeCon, OpenStack Summit
Consulting Red Hat, Canonical, SUSE
Selling books O’Reilly, Manning

Selling event tickets

Examples: Linux Foundation, Open Source Summit, ApacheCon, FOSDEM, PyCon, JSConf, NodeConf, DockerCon, KubernetesCon, CloudNativeCon, OpenStack Summit oss-events-wordcloud

Startups capturing value with open source software

A sample set:

Startup Value Offered Value Capture Latest Funding Total Funding
Anyscale.com Code, Scale AI and Python Applications Effortlessly. Based on Ray OSS Free, usage-based Pricing $99M Series C2, Aug 23, 2022 $259M
Budibase.com Code Build apps, forms, and workflows using no-code tools. Freemium, usage-based cloud Pricing $7M Seed3, Nov 4, 2022 $9.2M
Hasura.io Code Build modern apps, APIs 10x faster using instant GraphQL Licensing, cloud service + usage-based Pricing $100M Series C, Feb 22, 2022 $136.5M
Plausible.io Code Privacy-friendly Google Analytics alternative pageviews/usage-based Pricing ? ?
Supabase.com Code Firebase alternative with full PostgreSQL, Auth, Storage, Edge functions, Subscriptions and instant APIs Freemium, cloud service + usage-based Pricing $80M Series B, May 10, 2022 $116.1M

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