Mind your cost and your consultants

Philip Greenspun sharing his own open source venture experience:

At the same time, the customer will always have a few differences from your main source code and to the extent that those features aren't rolled back into the main release, they're always going to be orphans. They're always going to have this stuff on the side that they're going to have to own and maintain, which they really don't want to do. Their business isn't software development. They don't want to have ownership. They'd much rather pay you, the software developer of that code, to make the changes and put those features that are not core to their features into the main distribution of the software so that if they ever want to upgrade to a new version, they won't have to undertake the project of recustomizing that for their special needs. So, basically, if you are in control of a piece of software, you really have the ability to charge a lot more than an ordinary IT services business to make modifications. You have the power to roll that into the next release. So that's one thing that is good about open source.

The thing that's bad about open source is its very unforgiving if your costs and your time goes up. For example, in the early days of ArsDigita, we did a lot of things sort of MIT grad school style. We took fairly young people who wanted to build their careers and professional reputations and we'd have two of them to a project. So two programmers were totally responsible for the project and they met directly with the customer to find out what was needed. They wrote the specs. They wrote the docs. They wrote the code. They tested it with the customer. They made the enhancements as requested. They showed the profit when it was done.

He is  right on money here. This will probably explain why JBoss and MySQL are so successful in making efficient money via customization and support services. Their baggage is low and light. 

Note to all open source services startups - DON'T THINK LIKE THOSE BIG SERVICES COMPANIES. Its better if you model your company assuming  every employee is a geek and a hands-on engineer who can ALSO do solution engineering, clean customer interaction, and generally keeps things agile. Any extra structure is a cost. And any extra cost is a negative for the open source value proposition.