The marathon and the sprint

At the SDForum event last week, Larry Augustin and Tim O'Reilly compared the P&L sheets of Red Hat and Borland (following r0ml's OSCON presentation), and asked, "Are they really any different?" (Very similar to the question Larry explored at OSBC San Francisco.) r0ml's answer at OSCON was that they really weren't - Borland calls it a "license" and Red Hat calls it a "subscription," but the two are functionally equivalent. The SDForum panel seemed content with this.

The problem is, they're not equivalent. One constitutes a sprint, and the other a marathon, as I pointed out.

Some believe that open source offers them a quick path to riches. Just open up the code, sit back, watch the downloads kick in, and the cash register start ringing! For any who have actually done it, however, the truth is somewhat different. It requires as much - if not more - effort to make an open source business model work than it does a proprietary one.

And a lot more patience. Open source businesses increasingly use a subscription model, which requires a monthly (or daily) recognition of revenues, contrary to the license sale, which allows upfront recognition.

So, in open source, you book revenues today but must wait to reinvest them in the business (adding employees, upgrading equipment, etc.). In the "Catholic" world of the upfront, proprietary license, on the other hand, gratification is immediate.

Hence, open source is the marathon and closed source is the sprint.

A sprint is nice if you want to get the run over with quickly. Sell to one customer, and move on to the next. If you're the customer, of course, this model stinks, but who cares about customers?

Open source companies have to. Their model requires it. At Alfresco I get paid a little each day by Informa, Boise Cascade, and our other customers. I have to earn that by providing super attentive service, a superior and evolving product, etc. At no point can a I (or Sugar, or MySQL, or Red Hat, etc.) rest on my laurels, celebrate the sale, and forget my customer. (Someone at the SDForum event suggested that Red Hat only has a 50% renewal rate, which I had heard before. If this is true, I think it doesn't necessarily speak ill of the model but rather points to an area that Red Hat can continue to improve upon. Their explosive revenue growth suggests that they're doing just fine in that department.)

So, it's a marathon. Not always pleasant (as I learned running my first marathon a few weeks back - my right knee still won't forgive me), but better for customers and better for vendors, too, once they're on track and on pace. It forces us to think about the long haul. And, not to take the analogy too far, but whereas in a sprint you can dope up (take shortcuts) to boost performance, there really is no way to improve one's marathon ability...except by putting in a lot of miles. There's no shortcut in a 26.2-mile race.