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Paul Sterne

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The open source movement is something completely new. It doesn't fit neatly into any accepted economic or business theory. For that reason a lot of traditional thinkers, e.g., economists, business people, and investors, are struggling to figure out what it means. Is it the beginning of a new economic order or is it a flash in the pan? The idea that 400,000 software programmers around the world contribute their knowledge and energy for free doesn't make sense to people schooled in Milton Friedman and Karl Marx. Traditional thinkers keep coming back to the same question: "How do these people expect to make a living?" It's a very legitimate question, one that all of us have pondered at one time or another. Is the open source movement a quaint romantic notion that will fade as it grows old? Is it the high-tech version of the Summer of Love? Are the SuSe Linuxs of the wo... (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)

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)

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)