Two open source dilemmas
Neelan Choksi should have been happy yesterday.
He's been promoted to Chief Operating Officer at Interface21. The company just got $10 million from Benchmark Capital, which previously backed Red Hat, JBOSS, and mySQL (among others). It was the last day of JavaOne so he was just a few hours from his family in Austin, Texas.
But he offered two open source dilemmas to me, either one of which could send the industry crashing down like the dot-bomb.
"Generally open source today is funded by venture capitalists and large companies dabbling in it. If open source is going to be successful it has to eventually be funded by revenue."
- Will contributors continue to give back without getting paid for it? Rich Green of Sun brought this out in his JavaOne speech and the show floor was still buzzing about it three days later.
Choksi was quick to note he's not bothered about the first dilemma. Interface21 has always been self-funding. It didn't need Benchmark's money. That will merely go to accelerating growth, hiring more sales and marketing folks, guaranteeing that development benchmarks are met.
But it turns out venture capital is a lot like the magazine business. You drop a lot of money the first year, you expect break-even the third year, and the profits roll in after that. Many, many open source companies with VC funding are still in their first or second year. The case, for them, is not proven.
As to the second dilemma, Choksi said, "The community can give back in many ways. Whether it’s speaking to user groups, or paying for support contracts – it’s not just writing new code." And as to paying people, "we hired two people because they were such great forum posters.
"We had someone in Romania with 1,500 forum posts, helping users with Spring. Could you have a better candidate to join your company?"
It all comes down to a balance between what Choksi calls "consuming activities" and "sustaining activities." Open source companies need balance between the two, just as they need a balance in the financial accounts.
The expectation is they will attain such a balance. But for many, again, the case is not yet proven.