Monetizing open-source projects

Open-source software has long been the bedrock of innovation and collaboration, powering some of the most transformative technologies of our time.

Generating revenue and establishing a sustainable business model for open-source projects continue to be significant challenges, as these projects have typically faced #funding difficulties. The issues faced by OpenSSL serve as a prime example. OpenSSL is an essential #security software used in various applications, including web transactions. Despite its importance, it has historically received a mere $2,000 in funding. In 2014, the Heartbleed #vulnerability brought attention to the crucial nature of #openssl , resulting in a funding increase of $11,000. However, this sum remains insufficient considering its critical role.

But there are success stories as well.

Red Hat blazed the trail in monetizing open source when they started providing support and services for #linux . They were later acquired by IBM for $34 billion. More recent successes have been Databricks , valued at $34 billion in a private valuation in 2021, and HashiCorp , valued at $14 billion at IPO.

According to Bessemer Venture Partners , companies based on open-source projects are founded approximately 3.5 years after project creation.

So what is the difference between #redhat and OpenSSL Software Foundation ? Why did one succeed and other failed in their monetization efforts?

I have published two parts of a five part guide on #monetizing open-source projects.

Part I - We discuss common monetization mistakes and frameworks like Business > Product > Technology, reasons why monetizing open-source projects is hard, and finally, different types of open-source projects.  

Part II – We discuss the #economics of open-source projects and #value -chain analysis. We’ll also talk about how to determine what value your specific open-source project delivers to your intended customers.

Part III (April 21) - we’ll cover a detailed plan on how to get feedback from customers. 

Part IV (April 28) - We will use the information that you filled in the worksheet to decide monetization scheme and actual pricing.

Part V (May 5) - We’ll cover creating long-term value and building a sustainable business.

A bonus ...

Part VI (May 12) - Finally, as a bonus, we’ll cover #artificialintelligence Intelligence and #opensource .

I'd love to talk to you if you are involved in open-source projects.