At OSCON this year, I noticed a distinct increase in the number of open source startup companies that are emerging. More and more open source developers are realizing that the same mechanism that enables them to develop better software faster can also be used to lower the cost of starting a business. And Entrepreneurs who may not have been paying attention to open source as a social movement in the last few years are realizing it's a heckuva good way to get investors' attention. In the last few months, several open source startup companies have generated investor interest, primarily in new, emerging categories. This includes the likes of SugarCRM (CRM), JasperSoft (Reporting), ActiveGrid (LAMP scale-out), Al Fresco (Content Management). That's in addition to the earlier funding that went to other LAMP (Linux. Apache, MySQL / PHP / Perl / Python) companies like SpikeSource, SourceLabs. And since these companies are partners of MySQL, it helps strengthen the entire open source ecosystem. More applications leads to more adoption of open source infrastructure, which leads to more customers, which causes more companies to support open source and so on.
While there's a risk that open source is just the latest buzzword for investors it does appear that open source can both lower the cost of building a startup company and accelerate adoption of new technologies. In a typical startup, the toughest stage is getting critical mass as you try to grow revenues from Zero to around $10 million. If you can't get to $10 million you probably don't have a business that will be large enough to make it long term on a standalone basis. (And if you took Venture Capital, you're probably in some uncomfortable meetings.) So a lot of the early stage of a startup company is balancing the expenses with revenues and trying to see when things catch fire so that you have a repeatable business.
Joe Kraus, founder of Jotspot (a wiki software company), and former founder of Excite, estimates that the software and hardware costs of starting a software company today are around 1/30th of what it was just 10 years ago, largely due to open source infrastructure and the LAMP stack.
At MySQL, we've certainly benefited from open source as a way to lower our sales and marketing costs. Unlike earlier startups I've been involved with, we don't spend a lot of time explaining to people what MySQL is, trying to get them to try it out, or sending expensive consulting or SE resources on site to do week long proof-of-concept (POC) exercises. Most people who use MySQL know what a relational database is, they download it and they test it out themselves. In fact, we get over 40,000 downloads per day, which is pretty amazing momentum. So certainly in large markets that are becoming commoditized, open source can be very effective.
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