Born open startup
A startup that is "Born Open" is one that rejects the traditional notion of proprietary knowledge appropriation (e.g., obtaining patents). For these companies, software patents are often viewed as an obstacle rather than an asset.
Instead, a Born Open startup views itself as part of an ecosystem. These firms typically operate autonomously but share interconnected goals, participating in a community with shared governance to prevent the exclusive appropriation of technology.
The Philosophy of Open Strategy
According to Mekki MacAulay (2010):
"Open strategy involves the collective production of a shared good in an open fashion such that the resulting product is available to all, including competitors. In the case of open entrepreneurship, 'born-open' startups are entrepreneurial ventures whose business models are designed specifically based around a collective good."
If the technology is viewed as a hub that connects a network of stakeholders, it forms a value network that nurtures the technology. This creates a self-reinforcing virtuous circle where the shared resource becomes more valuable for all players.
Business Models: How to Monetize "Free"
Open source flips the conventional IP paradigm. It operates on the philosophy that shared effort is more efficient and effective than closed systems. West and Gallagher (2006) suggest four strategies for capturing value:
- Pooled R&D: Lowering innovation costs by sharing the development burden with a community.
- Spinouts: Creating independent ventures that require less direct investment while still benefiting the parent.
- Selling Complements: Offering paid services, hardware, or premium features on top of a free core.
- Attracting Donations: Accelerating development through external contributions of code or resources.
The Concept of "Forking"
When factions in an open source community disagree about the future direction of the technology, they may create a Fork.
This occurs when a project develops a separate work stream from the main trunk. There are two primary types:
- Community Forks: Driven by users to maintain momentum (e.g., the evolution of MariaDB from MySQL).
- Commercial Forks: Used to develop a proprietary product (e.g., Red Hat Enterprise Linux) without infringing on the original stream.
Sustainability: Can Code be Immortal?
Open source philosophy argues that project artifacts should be preserved for the collective. However, sustainability requires a minimum level of attention from a critical mass of investors or developers to ensure the technology survives even if the original creators move on.
Video Overview: Open Source Economics
Academic Sources
- MacAulay, M. (2010). Growing Revenue with Open Source. The Open Source Business Resource.
- West, J., and Gallagher, S. (2006). Challenges of open innovation. R&D Management.