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How Open Source Drives Down Startup Costs
prostoalex writes "Reuters Plugged In article (usually syndicated to your local paper's Technology section) talks about the real impact of open source in the technology world -- cutting down startup costs for other developers. New ventures are coming out, where the startup costs range in five-digit numbers, not seven-digit figures, where venture capital financing would be required. The article talks about Project for Open Source Media, Blogger.com, Odeo and Asterisk telephone system."
of course it does. Free = lower cost than money >.>
Show this to your friends and family that don't know what a real hacker is
I have been involved in several early-stage ventures since the bust and completely agree with the article. With open source software and equipment from ebay, $50k goes a very long way.
Actually making money with your product is still as hard as ever, but the financial risk associated with technology ventures has been greatly reduced.
Is that open-source usually works well with cheap commodity machines, like the ubiquitous PC.
True story: I once did an interview with a very interesting start-up, who designed custom chips for high-speed routers.
During that interview, one of the founders of the company mentioned they were moving all their engineers from Sun machines to 4 CPUs Intel machines running Linux.
He said Linux was already good enough to do 90% of the job, for less than 10% of the cost of a Sun machine. The move, of course, saved '000s of dollars for the company.
The right to offend is far more important than the right not to be offended. (Rowan Atkinson)
Except of course, the opportunity cost of your time. I am working on two different business plans at this moment that have NO startup costs because of open source software. Granted, they are both development projects, however they are both quite viable businesses, and all they require is the spare time of a few dedicated developers after they get home from their "Real" jobs.
Now that a useful machine is less than a thousand dollars, it seems much harder to get training, conferences or other ancillary spending approved.
1) Programmer willing to work for percentage.
2) Midrange server on Ebay - $2000.
3) Apache/PHP/PostgreSQL - free
4) Electricity - Damn cheap...
5) Promotion expenses - $XX,000
Yep. I'd agree that startups now can be mighty cheap!
I have no problem with your religion until you decide it's reason to deprive others of the truth.
Just as long as your business isn't based upon "IP".
Yes, best to stick with TCP and UDP.
It is extremely rare that another protocol at that level proves to be successful in the long run.
When information is power, privacy is freedom.
If you can get a company going for five figures, you have my respect. I am trying to get a startup going and after doing alot of analysis, the cheapest I think I can do it is for just over 7. Each business if different but getting one running for 90K is just about impossible. That won't even cover two people for six months. I guess you would need a product already written and a customer already signed up to even think about this. But FOSS does make running a software business alot cheaper. If you have five developers, it would save probably 5K a year at least and that is assuming you don't need anything special that can be replaced with a FOSS alternative. Good luck.
"Those that start by burning books, will end by burning men."
One thing I've learned over the years is that when you start any type of business you can't just go out and get desks, chairs and other equipment you'll never use if you aren't profitable.
It's almost always a good idea to start a business on a shoestring. Most businesses who fail before they start do so because they spent all of their capital on things you don't need or things you can rent or borrow.
Open source makes sense in this repect. Instead of starting with MS SQL server for example, start with PostgreSQL or your preferred free alternative. Migrate if you must later; but why spend top dollar on something that may never get paid for?
Get your Unix fortune now!
If you think of Google, their infrastructure runs on top of Linux on cheap commodity hardware. How much would it cost them to do what they do if they were forced to run on proprietary hardware and software? For example Sun on HP in 80s or early 90s? Not to mention how much Windows server licenses they would have needed if they went that route.
Another instance is Yahoo. They use a hodge podge of languages and databases for various parts of their online empire. There seems to be a trend towards open source solutions laterly, for example PHP and MySQL.
Yes, open source does save a lot. Not only now, but ever since the GNU C compiler system came out.
2bits.com, Inc: Drupal, WordPress, and LAMP performance tuning.
The tools need to be the best you can get for the price. Sometimes that may mean foregoing open source software, at others it means using it. What I'd like to see is a survey which compares the effectiveness of well-designed open source and closed source IT systems in business use. Take the top 5% of them that can be found and then see which is the most reliable, how much they cost and what is involved in keeping them working.
Click here or a puppy gets stomped!
One thing you need to watch out for is that you really own your own IP when you are working with GPL code. GPL is great, but it can make any code you create on top of it open source if you are not careful. If you are a CEO of a software startup that is looking to sell to a larger company and make your millions, then the IP issues around the GPL can literally be the difference between taking home millions and having a company with zero defensible IP. GPL code use can be the king of all deal killers if you are not VERY careful about how you use it. The GPL does a great job of what is designed to do, making sure that everyone who extends GPL code gives everyone else access to their code too. Just make sure that this is really what you want to do when you start.
The startup costs are one thing; but time-to-market is another huge factor. And what the article missed was the time-to-market factor.
I've done a number of successful embedded projects, and you just can't beat the time-to-market involved with Open Source. I can beat any closed source project hands down if you're talking about new hardware.
What I commonly see is that something unforeseen will arise. With commercial closed-source solutions, I'd be stuck waiting on the Vendor to provide a solution. Often that same solution either already exists, or is easy to implement, in an Open Source implementation.
Recently I saw this on a new motherboard. The ROM BIOS guys (at the mobo company, and at the well-known ROM BIOS company) had lots of problems when we were bringing up new hardware. So we just grabbed LinuxBIOS, and we could diagnose the problem quicker than they could. But I've seen this theme time and time again.
When someone tries to recruit me, I write them off now if they are using something like VxWorks. I really view it as a red flag that they don't know what they are doing.
The bottom line is that I need solutions, not problems. And Open Source either solves it immediately, or allows me to solve it faster than Closed Source. That's why Open Source products are now becoming prevalent.
Closed source software tends to get the "crown jewel" treatment. It starts of with a high value - often being a company's strategic advantage. But, because it is isolated and cost a lot to originally develop it tends to stagnate. Pretty soon your cutting-edge best-in-the-world software falls behind and the company hurts.
Open source software, on the other hand, tends to stay fresher. Because more people are involved, the boundaries are being pushed a lot harder instead of being hampered by internal corporate politics.
Engineering is the art of compromise.
It's more than just price, it's also the functionality you get. Open source fuels new businesses.
That's our life, the big wheel of shit. - The Fat Man, Blue Tango Salvage
> Surely there are many companies that are using
> the open source code out there, putting it
> into their systems and then not releasing
> the fixes/changes back into the open domain.
> (I know of several companies doing that). So
> yeah, you can make money that way.. but it's
> not exactly following the GPL.
you only have to release your changes IF you re-distribute the GPL code in any way. if you only use it internally on your own machines, there is no requirement to release your changes.
that *IS* following the GPL. exactly.
obviously, if your product is software then you will have to release your changes and distribute full source code under the GPL along with the binaries....but if the software is just infrastructure used by your business, then there is no conflict, and no problem - the GPL software that you use is just a cheaper, more flexible tool that you can freely adapt to your own needs. you can optionally choose to contribute your changes "upstream" but you don't have to (it is often wise to do so, though - it avoids re-implementation costs when there is a new version of the upstream code, plus you might get the benefit of some improvements made by other people who use your changes. it's also a good way of steering the upstream project away from directions that are incompatible with your changes, or at least making sure that your needs/changes are taken into account).
- Linux over Windows will greatly reduce your startup costs, not just for your PCs but for your development kits as well. [...]
But if you're a software technology shop, it's not easy to base your company on a foundation that may be ripped out from under you and developed by a competitor who takes your source and repackages it under their brand.
What does this have to do with Linux versus Windows? You can write a closed-source app that runs on Linux, and it doesn't violate the GPL.Or did you mean open-source versus closed-source? But if you want your app to be closed-source, then of course you wouldn't use GPL'd libraries -- you'd use closed-source ones, or open-source ones that were released under LGPL or BSD. Otherwise you'd be the one ripping something out from under someone else.
And this is all assuming that a piece of software is the product you want to sell. Maybe you want to run an online retail store, or an online matchmaking service. Maybe you're just creating a business that happens to use computers.
Find free books.
My understanding of the lofty side of the Open Source Movement is a little more esoteric. I may be missing the point. Is the real upside to 'free software' all about the money? I thought the point was the transparency of the information handling method. The obvious benefit is the access to other designers conceptual products. This allows for integration from various sources to facilitate the optimization of each system component. It is the basis of the 'standing on the shoulders' and the ever popular 'don't reinvent the wheel' philosophies. Even more important is the publics access to the code. In an open information society it is fundamental to be able to determine the source, path, and handling methods for data delivery. It's the only way to keep the rascals honest. I love my computer, but I don't want to just take its word that some Bush descendent has once again pulled out a squeaker in Florida. I've developed a sneaky suspicion that it harbors a Republican kernel. I've always thought of Open Source sort of as 'The Great Equalizer' which would finally break through the bullshit barrier of the powers that be. So am I giving the OS evangelists too much credit? Maybe most of them DO just like free stuff.
billy - say it ain't so Linus
While the cost of hardware and software are coming down, people are becoming more important than ever. Great people set one company apart from another. If a business is too cheap on people they will get what they pay for.
The GPL is not evil, it is just something else to watch for. However if you are careful you can manage the GPL just fine. Just make sure you can send out the source code when someone asks. (Which doesn't happen often, most customers won't care) Then make sure that you keep GPL stuff separate from your stuff. We ship a GPL pdf2txt program where I work, not a problem, we just call it as an external program and read the result.
In some cases we will even release source code. pdf is not our core ability, so if we find a bug in pdf2txt we are likely to send it in so everyone can use our fix. We won't let you see the parts where we have added value, but those parts are carefully not GPL, and they are what you pay for. (Though admitidly you could do everything we do yourself given a year)
The above assumes that you are a developer trying to sell a product. In many cases you are selling your services to setup GPL software to someone else. In that case you don't care about IP and GPL because anything you write is paid for already by the customer.
As I've been researching opening my own small business, the cost of implementing a Linux solution is significantly lower than implementing a Windows solution. First, no CAL's to deal with, I can perform multiple installs of the OS, and the Opensource versions of the applications I need off all the functionality and reliablity to accomplish my mission. In laymens terms, it was a "no-brainer"
They came for the Communists, and I didn't object - For I wasn't a Communist; They came for the Socialists, and I didn'
right now and open source has saved us untold thousands. We needed a real phone system so that we would have voice mail and "sound" bigger than we were: Asterisk to the rescue. For a couple of $39 cards and an old pc we've got a pbx. Instead of using Oracle or Sql Server we're going with mysql and php. We need to print bar codes. $800 active X library? Nope, a php library I found on the web for zero.
However, I think it really depends on the kind of company you're going to start. In our case, we're developing software for our own use. I can't imagine trying to bundle some of these pieces and sell them. Surely it would work with some things but, imho, no the majority of OSS projects. I don't say this to belittle the efforts of those who have done so much for me. The reason I say it is because the mindset of the vast majority of users runs completely counter to that necessary to effectively utilize much of the open source software available.
Take Asterisk for example. I had to reboot my phone 4 times on Friday to fix various problems. I'm not crying, just pointing out that the first time you tell a user to reboot his/her phone, they are going to look at you like you have 2 heads.
I would theorize that lower startup costs mean more jobs, which is so straightforward it is almost not worth pointing out. Except for those who say the open source destroy jobs.
Except for ending slavery, the Nazis, communism, & securing American independence, war has never solved anything.
Me and a bunch of friends started up an ISP on nothing more than a few Slackware Linux 100MHz Linux boxes and about 16 14.4K modems. Our starting budget was about a few grand. Talk about shoe-string. We had no employees, completely run by the owners, doing work mostly for free on a promise of getting a big pay-off in the future. Later, after about 4 years and around 1000 customers, we sold the whole operation to a larger ISP. Although, we didn't get that much for our efforts... live and learn.
Meh.
Your "IP" is not threatened. If you use GPL code in your program and then sell it without releasing the source, you are guilty of copyright violation. There is no precedence for somebody being guilty of copyright violation having to give up the rights to their own work.
What will happen is you will be required to cease distribution and pay a monetary fine, if anybody catches you and sues you. If you wish to redistribute the work you will have to remove the GPL portions and replace them with other code that you do have a license to redistribute.
It is true that many people are happy if you release your source code, and that could be used to avoid a lawsuit. But there is no requirement to do that, and it does not even get you out of being liable for the copyright violation (otherwise you could just release the source code after it is worthless due to age).
Furthermore, there is very little money-making opportunities on Linux that require you to use GPL code, in fact it is difficult to figure out something that could make money but requires GPL code, perhaps heavily modified kernels that can't be done with loadable modules?. Linux allows any program to run on it, and the vast majority of the libraries needed to make a working program are LGPL or BSD or similar (due to the fact that the library writers want their stuff used as much as possible).
ClarisWorks was developed with a four-figure startup cost, starting in 1989, and became a top-selling product with millions of users. It's true that that success was not achieved until the program was sold to Claris, and additional development resources were added.
But from the point of view of the original developers - myself and Scott Holdaway - our startup costs were very small. We bought two computers, rented a house together, and hacked. Details here:
http://www.swiss.ai.mit.edu/~bob/clarisworks.php
I should add that from my personal point of view, the open source meme has made it much harder to figure out how to make a buck selling software. In the old days it was simple. OK, call me clueless. I gave up and went back to school.
The internet is based on OSS. All of the core is open. 10-20 years ago, you could get AOL, MSN, and others at $20/month. It offered just a fraction of what it does today. Now, it is at 20/month for modem and ~40 for highspeed ( in capitalistic america and 5 in most other countries). So you ask where is your OSS broadband? All around you.
I prefer the "u" in honour as it seems to be missing these days.
Mostly irrelevant. Whether your sell widgets or software, you can use FOSS software to do stuff like have a website, track bugs and feedback, etc for free (more or less) - instead of spending money on Win2k3 Server, MS SQL, VS.Net 2k3, etc. Using GPL'd software wont encumber your product.
The Doormat
If you're not outraged, then you're not paying attention.
That's absolutely true. Look at the makers of CherryPC... it's so easy to take code from open source projects like PearPC, bundle it up as your own and not even remotely give credit to the PearPC team... Heck, you could make thousands before people notice...
"Love is like pi - natural, irrational, and very important." (Lisa Hoffman)
Nobody has gained more from open source than startups in India, China, and Brazil. With less available venture capital than in the US, they needed more than just low wages to launch a new venture, since M$ Windows and Office cost a *lot* there. Their software expenses used to compose a very big part of a startup's overhead, probably to the extent of prohibiting a lot of ventures from getting off the ground.
Open source to the rescue. Now with zero cost for software, overseas startups do not have to match US expenses in labor OR overhead. Expect the impact to be profound as soon as VCs realize how far their dollars can go there.
Want to form a high tech startup? Great. Go East young man.
Randy
Someone once said OSS was more about "code sharing" than "free software" But this obviously focuses on the secondary aspect of Open Source.
Also, this shows the maturity of a lot of Open Source projects. I wonder if any of the projects end up contributing back.
That's what I think every time I see a post about "OSS as a business or used in business."
But I get flamed for saying so...
Is Capitalism Good for the Poor?
Researchers have recently released a study demonsrating that free ingredients make baking cakes cheaper.
Conflicting studies from think tanks sponsored by flour industry leaders MakesitSoft are disputing the conclusions, but are not really taken seriously.
-1 Uncomfortable Truth
Exactly the same with closed software. You can buy compilers that have, deep in the 5th layer of the EULA, a clause that states you don't own the software you produce, or can't distribute it, or have to pay patent licensing fees or something.
I guarentee you that extending GPL code is no different than extending microsoft's code. You have to contact the copyright holder (e.g. trolltech in the case of QT, Microsoft in the case of whatever they make) and they decide if they want to sell you a license or not.