Why startups use open source and why they should be open to others
In the last few weeks, I have been talking to a few government offices and a few startups. As with this fortnight’s theme (i.e. Free Software for Startups), most of them seem to agree that open source is the way to go.
Apart from the usual rants about Microsoft being the big bully and the bad guys, one usually hears a lot of arguments and I will try to address some of them below. I think most of the arguments below are not 100% valid.
Let me qualify that – most of these arguments are made by people who use open source and are defending it – rather than taking a objective view of the argument from the point of view of a startup. Alternately some arguments are also made by Microsoft and the data backs up the assertion. Typically such examples stress on TCO (total cost of ownership) than bits and pieces of software for free.
I should again state that this post primarily is for startups. If you would like to read more about the Open Source debates for larger companies, there are many posts one can find like this HBR article and some others here and here and a million others.
Some of the arguments that people often make about using open source (used interchangeably with free) are -
Lower costs – Free is obviously zero cost. However in small companies it doesn’t usually happen that way. One experience I got of working in a startup is to cut down on all kinds of unnecessary maintenance costs that come associated with software. While OS is usually “Free”, the TCO (total cost of ownership) usually far outweighs the benefits one gets from the free software. There is also the added cost of support which occurs infrequently but when it does, takes its own pound of flesh.
More frequent updates – In many a argument, I have faced the issue of client software being taken to the cleaners for “frequent upgrades”. I look at it as a preventive measure – somewhat like H1N1 vaccine. Studies (by MS) do show that PCs which are frequently updade get almost no effect of virus attacks etc. The advent of browser based SaaS models take away much of the edge of this argument anyways.
Better response – Although the OS community is highly vibrant and responsive, it often suffers from credibility. However this is one factor where OS typically scores better over other proprietary software. In many cases support is also highly costly – therefore a strict no-no.
Better extensibility – Theoretically OS should have better extensibility than proprietary software. However in today’s scenario, most of the commonly used technologies are highly commoditized with specialised extensibility being very niche needs. Most startups dont have very specialised needs in most cases (they code whatver else is needed) – hence this gap is also not very wide now. Again with SaaS models, this argument loses a lot of its punch.
Free vs paid, OS vs proprietary
Again going back to our startup focussed dicsussion, the divide we are talking of is pretty much Free vs Paid. Typically OSS falls under free while proprietary software is usually paid for. However Microsoft has come up with a business initiative called BizSpark which aims at handholding startups. The uber-aim remains to tap these guys early and make them use MS products so that if they grow bigger, they still continue using the same. Towards this end, Microsoft provides them almost all software for free – provided they meet a few criteria.
a) The revenues of the startup have to be less than 1M USD
b) No free stuff if you get bought over / revs cross 1M
c) Startups pay a nominal fee if they leave after 3 months
In turn they get (pasted from MS website – details here)
- Software. Receive fast and easy access to current full-featured Microsoft development tools, platform technologies, and production licenses of server products for immediate use in developing and bringing to market innovative and interoperable solutions. There is no upfront cost to enroll.
- Support. Get connected to Network Partners around the world — incubators, investors, advisors, government agencies and hosters — that are equally involved and vested in software-fueled innovation and entrepreneurship who will provide a wide range of support resources.
- Visibility. Achieve global visibility to an audience of potential investors, clients and partners
As a Microsoft BizSpark member, you’ll be tapping into a rich, vibrant ecosystem of peers, partners and support resources around the globe, helping you grow and succeed. Microsoft BizSpark is the quickest way to get your Startup fired up.
To cut a long story short, I don’t think there is a clear winner for startups in terms of open source vs proprietary. With Microsoft coming up with initiatives like the above, with initiatives by big players like Oracle, SAP catering to needs of small businesses and startups (with a very low cost or a SaaS model), the lines blur even further. At the end I would like to believe it works out to the comfort level of working with some software and development tools – and for a selfish reason I do prefer Microsoft (and its surrounding ecosystem) in the same.
Disclosure: MS is a pluggd.in sponsor – but that relationship has no influence on any of the post.
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Microsoft has specific plans like Empower and MAPS, that brings down the TCO for Windows based application development to nearly ’0′.
MAPS provides 10 licenses of Windows and many of their other popular apps for less than $400.
If startups cannot afford this, I really wonder!
Apart from the cost factor another important factor deciding the techonogy/software used by startups – especially the early stage ones – is how confortable are the founders with particlular techonology, as the first aim of the startup is to get out in the wild as early as possible.
You don’t have a couple of months to learn a new technology before shaping your ideas.
@Anand Many younger techies are really cutting their teeth on free tools. They’re using commodity hardware to run websites and create databases. Even creating a popular web app doesn’t require signing a deal with MS. Frankly, I like building things with the best tools and for me, those tools are the free software ones. Tools like Apache, PHP, MySQL, Perl have been built by people like me for people like me.
There’s another benefit. I spend 0 of my time and money worrying about licensing, licensing servers, and if I don’t like something, I just uninstall. No contract to back out of or product that needs to be returned.
@David
I like building things with the best tools and for me, those tools are the free software ones
Thats exactly my point, the first preference is given to the tools that we are familiar with. Are they opensource or properietry is secondary, at least in early age startups.
Also, the express editions of .NET family have started gaining some traction recently which is actually good. Competition don’t hurt the end users.
Actually it’s low-cost web services built on open-source tech.
Use them, stop worrying about low-value stuff inside your walled garden, and focus on your company’s top line.
Many of the utility Web 2.0 companies are excellent at what they do. Look at 37Signals for example. Startups benefiting from the ecosystem of new companies who are usually much cheaper and equally effective at something if it’s got a Web 2.0 analogue.
Crush the big players … I say, and with them their overpriced, unfriendly, unwieldy and baroque products that only large enterprises are able to afford and dumb enough to buy. “TCO” in enterprise software is an elusive measure because you’ll never know what would have happened if you didn’t buy… so it’s just marketing propaganda in the end. I’ve bought enough of that stuff myself to know…. Read More
What matters is that it’s fast and cheap to set up, does the job well and reliably, has no learning curve, and no long-term commitments.
I would say use open source in situations where you need to customize heavily, and are prepared to participate in open-source (and give back in the form of fixes, features, and feedback). It’s hard to do but we have to try.
It’s hard for me to fathom my company valuating hugely on open-source foundations, without giving back. I used to do a … Read Morelot of open-source OS work, and that was a good enough excuse for a while… but this year I need to pull up my socks and figure out where my company can reciprocate.
This is nothing new as such this z again a part microsoft’s sucking monopolistic way ppl who l use M$ products simply come under them where’s the freedom ???? Nothing can replace Open Source not even Microsoft the but surely one day the latter will get replaced…………totally………..
Even Sun offers something similar – in.sun.com/startupessentials/
Per the website –
”
Sun Startup essentials program consists of:
Discounted servers
Discounts on storage
Open source software
Discounted partner hosting
Free technical advice and training
Co-marketing opportunities
”
The most important thing here is last point on “Co-marketing” opportunities. I cnt think of too much benefit due to disocunts on servers and storages unless the start up itself is in serious hosting business.
Rajs
http://blog.thoughtsinprogress.co.in
With risk of generalization I will say techie entrepreneurs tends to use OS while non techie moved to MS and others. Finally techies loves copy paste
I have my own problems as a entrepreneur at least in India
How many people really know about pascal, ruby on rails, php? to develop a web application.
But I can find a hand full of people who can work with asp.net, Partially trained or good programmers doesnt matter but I can find them easily when compared with other above technologies.
Obviously, if less resources then the demand is higher and eventually the pay must be higher but in the case of ASP.Net that is not an problem.
Well, Purely my assumption.. Correct me if am wrong..
V is always up for criticismmmmmm
V