Paul Sterne

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Top Stories by Paul Sterne

In the beginning, the 800-pound gorilla of online industry was Prodigy, Inc. This joint venture between IBM and Sears Roebuck boasted 2.5 million subscribers in 1993, the year before Netscape broke open the Internet. From the very beginning Prodigy was out-marketed by AOL. AOL boasted a number of important unique selling propositions (USPs) like personalized user IDs, chat, and a slicker graphical user interface. But most importantly, AOL put itself forward as the force of online purity, the opponent of crass commercialization, and promised to protect users from the aggravation of advertising. Prodigy tried innovation after innovation to regain its coolness. It was the first to add a browser that could surf the emerging Web. It directed its users to a weird new search engine called Yahoo!. It introduced online role-playing and parlor games. But it could never shake... (more)

SugarCRM - A Sweet Mix of Commercial and Open Source

I've always wondered where the word "oxymoron" came from. What does "oxy" have to do with "moron"? What about the words "commercial" and "open source"; do these words form an oxymoron when combined in one phrase? The open source-based CRM software maker, SugarCRM, has successfully combined these polar opposites and implemented such a "commercial open source" business model. SugarCRM has taken its business model to a new level in that they have combined an enterprise server software sales model with that of a software-as-a-service model. Of course, SugarCRM offers its software for ... (more)

Open Source Business Models Examined

At LinuxWorld Expo in San Francisco, it occurred to me that I had overlooked a very important Open Source business model, the Membership Model. Confronted by a keynote speech by Stuart Cohen, the leader of the Open Source Development Lab (OSDL) (www.osdl.org), it became clear that I had jumped into the Advertising and Conversion Models too quickly and had to back up and deal with the membership phenomenon. As a businessman, the Advertising and Conversion Models are more interesting, but from a raw power standpoint the Membership Model may be more important. So in the spirit of j... (more)

The Open Source Venture Capital Universe

A rollercoaster - as trite as that image may be - is the right analogy for venture capital investing in open source companies. And what a long, strange trip it's been. Starting in the mid '90s, a few brave pioneers like Benchmark invested in an open alternative to proprietary software and made a fortune. By the end of the decade, everyone wanted a piece of the action. A second wave of VCs rushed in at ridiculous valuations and got their clocks cleaned. In 1999 and 2000, over-capitalized, over-valued open source companies burnt through hundreds of millions of dollars. Shame on th... (more)

Open Source Conversion Model

Looking at the open source software industry from the outside, it's often difficult to tell what is really going on. To use a string of clichés, it is hard to peel back the onion, to look behind the curtain, to perceive "Das Ding an sich" (German for the "thing-in-itself"; an idea made famous by the last Enlightenment philosopher, Immanuel Kant. http://en.wikipedia.org/wiki/Immanuel_Kant). Part of this perceptual problem may be due to the good old fashioned human tendency toward denial. No one wants to exclaim at the dawn of a new era: "Here comes the new boss, just like the old... (more)