Neelan Choksi's presentation at EclipseCon 2011.

1. The Business of Selling Free Software EclipseCon 2011 – March 22 14:30 – 15:10 NeelanChoksi @neelan neelan.choksi@tasktop.com © 2011 Tasktop Technologies

2. Currently President & COO of Tasktop Technologies – manage business development, sales and marketing Mentor at Capital Factory, incubator in Austin, TX Previous CEO at Lexcycle – acquired by Amazon in 2009 Makers of Stanza, the most popular eBook reader for the iPhone and iPod COO at SpringSource – acquired by VMware in 2009 Company behind the popular open source Spring Framework President at SolarMetric – acquired by BEA Systems in 2005 Open sourced Kodo at Open JPA (Apache) Andersen Consulting (now Accenture), Exxon Research & Engineering, MIT Blackjack Team Who Am I?

3. Company who created and leads Eclipse Mylyn Top level Eclipse project – de facto standard for ALM IDE integration 1.2 million downloads per month (incl. in 90% of Eclipse distributions) 1 million users including majority of Global 2000, top 10 banks 2010 Eclipse Community Award Thought leadership Board member, Eclipse Foundation Helped IBM define OSLC standards for ALM Innovation and delivery partner for VMware’s Code2Cloud initiative Headquartered in Vancouver, BC with offices in: United States, Germany, UK ALM Interoperability ALM / IDE Interation 50+ integrations including RTC, HP QC, OSS, etc. Tasktop Technologies: Overview

4. 2011 - Anso Labs - ??? by Rackspace 2010 - CodeSourcery - ??? by Mentor Graphics 2010 – Sopera - ??? by Talend 2010 - The Marrionette Collective - ??? by Puppet Labs 2010 - Rabbit Technologies - ??? by VMware / SpringSource 2009 - SpringSource - $420M by VMware 2008 - MySQL - $1000M by Sun Microsystems 2008 - TrollTech - $150M by Nokia 2008 - Hyperic, Covalent - ??? by SpringSource 2007 - Zimbra - $350M by Yahoo! 2007 - XenSource - $400M by Citrix 2006 - JBoss - $350M by Red Hat 2006 - Sleepycat - ??? - by Oracle 2005 - Innobase - ??? by Oracle 2005 - Gluecode - < $100M by IBM Open Source Acquisitions … but are there any successful open source companies who are profitable other than Red Hat? Maybe SugarCRM, maybe Novell?

5. “There are two types of people, those who will spend money to save time, and those who will spend time to save money” - MårtenMickos (former CEO MySQL) “We sell knowledge” “This is a future where JBoss Group will also get its fair share of the ‘peace of mind’ market” - Marc Fleury(former CEO JBoss) Open Source Business Models

6. “We make money by: Providing world class support and services. This includes dependable 24×7 support, outstanding training and consulting services and indemnification for enterprise customers who are understandably risk-averse. Adding subscription products that deliver value to complement the Spring Portfolio. Selling subscriptions to enterprise editions of our full-stack products.” - Rod Johnson (former CEO SpringSource) Open Source Business Models

7. Hardware In this model, the software is open sourced and given away for free to help drive sales of hardware Dual licensing Common with GPL and AGPL allows customes to purchase a proprietary licenses if they don’t like the open source license Advertising Case Study: Mozilla Foundation Other Open Source Business Models

8. Discovery Challenge today is not just building a great product; it is making sure your market knows about the great product Free and open source – is a great way of being discovered Razor / Razor Blades Reduced Barriers to Adoption / Usage No registration for product evaluation Easy to get basic / installation support on forums No cost to use No involving legal / procurement in many cases Support grass roots adoption – create opportunities for beachhead Or is Open Source Just a Tactic?

9. Marketing and Evangelism Open source evangelism is not usually limited to company boundaries. Viral-nature of open source drives growth. How many marketing dollars do you need to get a million users worth? Quality Assurance and Corner Cases Community plays with products and provides feedback Support extensions to product so corner cases can be addressed by community Or is Open Source Just a Tactic?

10. No longer good enough to just commoditize Must innovate Back to basics Clear delineation between open source value adds and commercial offerings Free for up to X users or free to talk to other open source products Free for academics and non-profits (and personal use) Segment / Segment / Segment Find the product’s “Saturday Night Stay Over” The New Open Source Business Model Return to basics is critical as open source is simply viewed as just another solution in the product category. Value is the key driver.

11. Open Source has a history of strong leaders and colorful personalities Marc Fleury, JBoss Gavin King, Hibernate Rod Johnson, Spring Linus Torvalds, Linux whurley, Qlusters/BMC/Chaotic Moon The Cult of Personality in Open Source Larger than life personalities were critical to driving open source adoption but…

12. Professional leaders who are more comfortable in the board room than creating controversy Marten Mickos, formerly MySQL, now w/Eucalyptus Larry Augustin, formerly VA Software, now with SugarCRM Jim Whitehurst, Red Hat Mike Olson, formerly SleepyCat, now with Cloudera Maturation of Open Source As open source as matured, its leaders have matured as well.

13. Community Led by a community Most code is contributed by community and most individuals are not paid to work on it Community also provides governance, code, etc. Examples: Apache Tomcat Eclipse Ruby on Rails Two Types of Open Source Commercial Led by a company Most code is still contributed by company who pays employees to work on it Governance by company Community provides feedback, users, QA, marketing, revenue Examples: SpringSource JBoss Tasktop Technologies

14. Sales and Marketing Challengesin the Open Source World Open Source Faced Problems Generally Not Faced in Closed Source World Proprietary software world: Few downloads / evaluation 100% contact info for everyone who downloaded Open source software world: Massive amount of downloads No idea who downloaded your product Generally lower ASP (Average Sales Price)

15. Closed Loop Marketing Low cost sales matched lower ASPs in open source Website as main marketing vehicle Accessibility of low cost CRM tools Opportunities for Closed Loop Marketing Technologies

16. Integrated (marketing, sales, support) interactions driving contacts to leads to prospects Identify and prioritize best leads to maximize sales efforts: Score each activity done on the website, other marketing programs to provide prioritized lead list every morning to sales team Measure… tweak… measure… tweak… measure… Benefits of Closed Loop Marketing

17. The nature of open source lends itself to the principals of bootstrapping / “lean startup”: “Demo – Sell – Build” very similar to open source philosophy of “release early and often” Partner with the customer Feedback is critical Incorporate feedback and re-test Venture money early can make you rigid, tied to a particular goal Open source needs to take a life of its own allowing “inmates to run the asylum” The journey to find a compelling value proposition is critical Venture money can be a catalyst once you have that product / market fit and value proposition / adoption Venture Money Too Early Can Be Bad

18. The Business of Selling Free Software EclipseCon 2011 – March 22 14:30 – 15:10 NeelanChoksi @neelan neelan.choksi@tasktop.com © 2011 Tasktop Technologies