Open Source and Business

When I told friends I was starting a company that was building an open source commerce platform, they asked me how I would make money giving away software for free. Then, when we were fundraising, a Venture Capitalist said, “In my mind, open source equals free, so you really have to prove your monetization model.” There’s this notion that open source is akin to nonprofits, where there’s a similar misunderstanding. Most people don’t realize that major profitable organizations are set up as nonprofits or built on open source projects.

On the surface, open source and business may seem incompatible. Open source software has a history of being non-commercial, and therefore, it’s thought of as being not profitable.

But this kind of understanding of the open source model doesn’t take in the bigger picture and its potential. I believe that if you track the point at which business and open source meet, you’ll find a powerful partnership in the making with the ability to reach farther, faster, than either would independently. And that’s why I believe that open source isn’t just good for business; it’s the future of business.

Here’s why.

Businesses that consider their intellectual property as closely-guarded secrets aren’t as flexible or reliable. Their code base can’t be modified as easily or developed and fixed as readily as open source is. Additionally, proprietary trade secrets are expensive to create, maintain and protect, and they run the risk of facing extinction like dinosaurs instead of mutating into thriving new species with longevity for the new age. Customers who purchase commercial software don’t have the same control over their business as they do with open source software. Instead of having the freedom to contract for the best service, support and price, they’re locked into a relationship with a company that only evolves as a result of its sales and licensing fees. Their upgrades and bug fixes are on their timetable, not yours, and they’re typically late and over budget.

Open source is community-driven innovation, and it’s arguably the best kind of innovation available. I’ve written before about Joy’s Law, which states, “No matter who you are, most of the smartest people work for someone else.” By being open source, we are able to work with a massive global and diverse community. We wouldn’t have been able to access these bright minds and ideas if we were closed. Our community makes our software and our business stronger. Considering the friction and division that exists in our world, I'm wholeheartedly behind open and community-focused solutions as being a vital way to build a company.

Reaction Commerce is in a really interesting position, because we are building a business on top of our open source projects. Our business model is derived from our managed platform where, for a monthly recurring cost, we're offering a turnkey containerized "hosting" solution for Reaction shops (that's also open source!). There's nothing that prevents someone from deploying Reaction Commerce on their own, but we're confident, and we're already seeing that many will want to use our managed platform. Down the line, similar to other open source businesses, we'll also offer premium Reaction apps and services that will complement and add value to Reaction Commerce as a whole. Our main purpose is to build solutions that benefit our global community and, thus, our partners and clients, and then our business. Neither one survives unless the other exists, and so their fates are irrevocably bound.

Sure, there may come a time when our business needs and our open source projects are in a state of conflict, but we doubt it. Our desire and objective is to keep them in continuous alignment. That’s not easy, but it’s also not easy at companies regardless of whether they use open source or closed source technologies. Alignment takes effort and communication. It requires constant nurturing and guiding. Doing that out in the open forces a level of honesty and constructive debate that is healthy. Moderating and translating the needs of everyone, when done effectively, is where the magic of open source lives because it’s out in the open for everyone to see.

When we want to work on something to benefit the open source community, we can. There should be no complaints because this work, in turn, benefits our business. When we want to work on something that benefits the business, we can, because this effort comes back to the open source project and helps the community in turn. It’s a win, win.

We’re building an open source business, and we're going to reach our greatest heights because of it.

Header photo from Mike Petrucci. Thanks!