Truth better than fiction (Open source in the SME market)
I talked with a great new open source startup today, LucidEra, founded by a few former execs from Salesforce.com, BEA, Siebel, and Oracle, and funded by Bob Lisbonne at Matrix (about time he did an open source deal - he's got more open source blood in him than most VCs, having been the one running Netscape's browser division when they pushed to open source it) and Mark Kremer from Benchmark. Bryce and I were so impressed I immediately gave them one of our most prized slots at OSBC: the CIO pitch panel.
In talking with Ken, he mentioned a fable that I think he believed, and would have no reason to disbelieve: that open source applications are still SME-bound. As I explained to him, however, my experience with Alfresco and SugarCRM (on whose advisory board I sit) has taught me that while the SME market does tend to pick up open source, if his product is any good it will quickly migrate up to the enterprise. Salesforce.com experienced this, too.
As it turns out, the enterprise is really sick of Big Enterprise License Sales, and quickly take to those who can provide a quality product with a smaller upfront investment.
So, by all means, tell the VCs that you're focused on the SME market. Just don't be surprised when the enterprise market proves to the short-term target buyer. It's a very good "problem" to have. :-)
2 comments:
Just got on to your site... really like your content!
I think it's interesting you consider LucidEra an "open source" startup. From what I understand they're a hosted analytics solution; whether they use open source or proprietary software makes no difference, yes? At that point, Google should be considered an "open source" company then since they "use" open source (and contribute some back) to provide their service.
Google and LucidEra are open source success stories perhaps, but are they really open source companies? :) Nothing against either of those companies... they may be brilliant for the customer, and exceptional value.
Kind Regards,
Nick
Nick - I'd say significant open source contributions by developers who're on the payroll of a company (eg. LucidEra team is a significant contributor to The Eigenbase Project) would certainly qualify the company as being in the open source development camp. That however would not preclude such a company from developing a business model composed of some proprietary components in it - product components, packaging, branding, delivery processes (eg. hosting), business processes, etc. Its exactly what RedHat does as well.
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