Born open startup
What is a Born Open Startup? Definition & Strategy
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.
[Image of diagram comparing closed innovation vs open innovation funnel]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 (sharing development costs) and effective (better combinations of resources) than closed systems.
West and Gallagher (2006) suggest four strategies that organizations can employ as part of their open source strategy:
- Pooled R&D: Benefiting from the economics of shared product development, significantly lowering the cost of innovation.
- Spinouts: Creating independent ventures that benefit the parent firm but remain self-sufficient, requiring less direct investment.
- Selling Complements: Offering paid services, hardware, or premium features that sit on top of the free core technology.
- Attracting Donations: accepting contributions (code or resources) from external developers to accelerate development for the whole community.
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, and its proponents go their own way.
- Community Forks: To survive, a fork must have a community develop around it to maintain momentum (e.g., the evolution of Java).
- Commercial Forks: A fork can be used to develop a proprietary commercial product (e.g., Red Hat Linux) which generally does not infringe on the original stream.
From an evolutionary perspective, each fork is a variant of the original that develops "new genes" and finds "new hosts."
Sustainability: Can Code be Immortal?
Natural competitive forces often destroy innovations when firms hoard them. Open source philosophy argues that project artifacts (code) should be preserved for the collective.
However, for a project to be sustained, it requires a minimum level of attention. There must be a critical mass of investors, entrepreneurs, or managers willing to provide resources to keep a foothold in the technology, ensuring it 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, June 2010, 13-17.
- West, J., and Gallagher, S. (2006). Challenges of open innovation: the paradox of firm investment in open‐source software. R&D Management, 36(3), 319-331.
