Free Software, Paid Support

There is a thread on that asks the question "Why do programmers write applications and then make them free?" The top answer right now is:

Because I don't want to feel obligated to provide technical support or offer refunds.

I have always found the free software approach to be instructive. There are many forms of creative expression out there and most of them involve a paid model. But there is a very vibrant community of software developers that build things and then make them available to anyone who want to use them for free. The key is that they don't offer any ongoing support or maintenance.

If you dissect the model, you'll see that the one time effort of building something is something many software creators are willing to do for free. But the ongoing time and effort of supporting and maintaining the software is not something that can be done for free.

This is, of course, the insight that provided the open source business model. Build software, give it to the community to maintain, and charge for ongoing support. There have been a number of successful businesses built using this model including Red Hat, MySQL, and hopefully, our portfolio company 10gen.

Having worked with software driven startups for many years now, I recognize the cost model all too well. The initial founding team can often build the product in three months. That team is often two or three developers. But once the software becomes popular, it requires dozens of developers to maintain and enhance the code base. It takes a team of tech ops people to keep the software available if it is a web service. It requires a team of people doing support via email. The cost of building software pales in comparison to the cost of maintaining, enhancing, and supporting it.

This approach can be mimicked by anything that is made of bits not atoms. It can be applied to writing. It can be applied to music. It can be applied to film. It can be applied to photography, anime, cartoons, etc, etc.

This does not mean that the paid model of writing and selling software is a bad one. It works and will continue to work. This does not mean that the paid model of recording and selling music is a bad one. It will work for some. This does not mean that the paid model of writing is a bad one. It will work for some.

But it does mean that the free model is very powerful and should be considered by anyone who like to create things but does not like to deal with hard work of maintaining and supporting the work. It is the model behind this blog in fact. You get the content for free. Anything else, you have to pay for with equity in your company.

#Music#VC & Technology#Web/Tech#Weblogs

Comments (Archived):

  1. J.R. Sedivy

    This makes perfect sense. I have often found that the front-end innovators are of a different personality and skill set than the maintainers and operations professionals. The front-end creatives tend to bore easily and want to move on after overcoming the challenge while the maintainers are more incremental developers. I believe that Geoffrey Moore may have written about this briefly in Crossing The Chasm as well.

  2. Antonio Tedesco

    That might be the top reason for open source software projects but the important consequence is it allows other smart people to contribute to the software. It’s the Open vs Close Innovation discussion in Chesbrough’s book Open Innovation. We need to work with smart people outside our company vs all the smart people work for us.Only two comments so far? Are there that many Steelers/Packers fans in the AVC Community?

    1. fredwilson

      sunday mornings are slow

    2. ShanaC

      I’m trying to decide if I will watch at all (I know nothing about football…)

      1. falicon

        But the super bowl is a cultural event as much as it’s a ‘football’ game)…the commercials are often even entertaining…and if nothing else, it’s *the thing* everyone will be referencing and talking about tomorrow…you def. don’t *have* to watch it, but the conversations over the next day or two will make a lot more sense if you do 😉

        1. ShanaC

          Not many conversations today, and I have still yet to watch the superbowl.

          1. falicon

            If the Altanta Falcons were in the super bowl (and won it)…then it’s all the world would be talking about…well OK, it’s all *I* would be talking about =D

  3. awaldstein

    Really interesting post and it surfaces a number of analogs.Light games to an upgrade. Free trials. Pay if you need the resource more than x times a month. Even free serialized books.All of these are ways to experience value before the transaction.They change the selling paradigm and redefine sales in some ways. More gentle, more social and more personal to interact and know before you buy than to push advertise a value or a brand.This approach, from free to how you describe the value of your blog, have subercharged the value of networking and shifted ideas of selling and brand building.

    1. fredwilson


      1. Prokofy

        I don’t like this new green thing Discus is doing. They were democratic until they started putting in this FIC stuff for super users or power players or whatever the hell.

        1. fredwilson

          this is something i inserted not disqus. you can style up disqus threads. i wanted my replies to stand out. i copied techcrunch which came up with the green thing.

          1. Prokofy

            Somehow from the comments on TechCrunch, I got the impression that green is something the company added in order to signal something about “power users” or “those with lots of likes’.

          2. fredwilson

            not true

        2. jptucker

          I actually prefer the author’s comments to stand out – much like I prefer to read his blogs over others, I also prefer to read his comments over others 🙂

  4. jz

    There is no such thing as free software. You pay nothing now, you pay a lot more later. Customers are not stupid. This model of “free software and paid support” will simply give incentives to developers to push out buggy beta program and hoping to make money later. Would you get a free car now and pay for repairs later? it may kill you before you even get to the garage!

    1. fredwilson

      that has not been my experience at all

      1. jz

        Speaking for my own experience, i’d prefer everything just works from the start. A frustrated user is not a happy user and he or she is unlikely to be a repeat customer. Every time I talked to a “tech support”, my blood pressure went up. I’d rather make user experience the number one priority of any software development. but that’s just my preference.

    2. awaldstein

      I was involved in building the trixbox telephony open source community a while back and this was not my experience. In this case at least, the community itself functioned effectively as the support and development infrastructure.Of course, paid support and certification and training sprung up, but the software was truly free (and with a great deal of value to the users).

    3. William Pietri

      It’s not my experience either. Linux, for example, is a very reliable and resource-efficient operating system for servers.It’s important to note that the paid software model also has business model problems. For example, if upgrades are a major revenue stream, then publishers have an incentive to keep adding stuff that sounds appealing, but is flawed enough that people will in short order want another upgrade.

    4. falicon

      No…I think it’s more like, would you take a free printer now and pay for ink cartridges later? But even this analogy isn’t great because I don’t think *most* open source people build stuff with the intention of making money on the backend via support or upgrades/add-ons (I think most do it for much more selfish reasons — that is to solve a problem for themselves or learn something new and interesting).I would also say that I think It’s the VERY rare (and not long-for-the-business) developer that would ever intentionally put out buggy software.We build stuff for free to solve our own problems or work on something that interests us…often times there’s no downside (or very little downside) to making it available to other people and so we do (with – as Fred noted – the stipulation that “it does what I needed, anything more is up to you”).When we have to start ‘fixing’ things to fit others needs, or training others on how to take advantage of it’s features for their own uses…that’s when we start to charge.Basically when I’m doing it for me, I do it for free…when I’m doing it for you, get out the checkbook…

      1. jz

        wrong. when i pay for ink cartridge, I insert the carttridges and it just works, no support needed. when my excel spreadsheet crashes, i can’t buy something to get my work and time back.

        1. falicon

          what about paper jams? what about when the cable isn’t plugged in properly or the power goes out?My point is *shit* happens…it’s the reality of life. Especially in the world of software where the environment is not closed but in fact shared (excel has no way of knowing what else you have your computer running/doing…and if something is using the resources it needs, only one is going to win the battle – and it’s not always excel).If I go to a movie, and I wait in line for ten minutes only to have the last ticket available sold to the person in line in front of me…whose fault is that? The ‘system’ did what it was supposed to…I ‘lost’ and I won’t get my time back…and it’s fair for me to be upset, but it’s also just how it works and I learn what to try different next time. =D

      2. ShanaC

        Interestingly, that is basically the model for printers and game systems.

        1. falicon

          and razors 😉

  5. Suezanne

    “Anything else, you have to pay for with equity in your company.” What else is there to a blog?

    1. fredwilson

      i am talking about ongoing direct face to face interaction

  6. Eran Galperin

    It’s somewhat analogous to the freemium model very popular now in web services – basic account is free, and for support and upgrades you need to upgrade to the premium package.I liked though one of the bolded statements in the second answer “selling is hard” – this I think plays a much bigger role than people are aware of. Software programmers in general are weak in sales and marketing – and even further, they have innate disdain towards those activities (I’m generalizing here, obviously there are outliers).[shamelss plug follows] For this reason I recently started a marketplace venture for source-code which lifts the burden of selling *and* support liability from the developers, giving them better incentive to publish and sell code they own. See – (hope this wasn’t too shameless, I thought it was relevant)

  7. adamwexler

    if you’re building a super-simple product, this might be the direction to take it all along. make them pay for your expertise…not your software. if you want to deter competition once the popularity ensues, you’ll have to put it out there for free or else the me-too market will try to undercut you.

  8. Jon Smirl

    I’ve worked at Microsoft and now I work on open source. The question is not ‘free’ or ‘paid’. Both open and closed source software cost money in one form or another. The question is one of being captured. You can capture customers with closed source to the point where they can’t escape even when they strongly want to escape. This capture process lets the software company extract large amounts of money and deliver very little in return. What you are willing to pay has shifted from being ‘what is the software worth’ to ‘how much ransom will I pay to keep my business functioning’.Once you are captured you lose control of that aspect of your business. You need new features or a bug fixed in the software? Good luck getting that out of Microsoft. Ballmer has been quoted saying that we make our software just good enough that people won’t return it en masse. And another favorite – ‘managed innovation’. That means that Microsoft dribbles out just enough improvements to get you to upgrade and they withhold the rest. And don’t get me started on changing the file formats in each release so that the previous version can’t read them, thus forcing you into upgrading all copies.Having been burnt over and over by this capture effect, I won’t buy anything closed source now unless it is a throw away item (game, consumer electronics, gps). I have gone totally open source (Ubuntu and many server apps) with no downside.

    1. Gregg Dourgarian

      Oddly Jon I disagree with everything you say here.Microsoft unlike almost every other competitor has provided workable upgrade paths over the decades. Sure they have a ‘capture’ mindset …it’s called long-term revenue stream…why else would they do it?We’ve been upgrading along with them since the 1970s…from assembler, COBOL, SQL and now WPF and Silverlight.

      1. Pete Griffiths

        GreggI’m probably missing something here but it doesn’t sound as if you do disagree with Jon. The fact that MSFT provides workable upgrade paths does not mean that the customer is not locked in, it just means that the recognize the fact that needs continue to evolve and selling upgrades to existing locked in customers is a lucrative business with a relatively low cost of sale which is indeed a ‘long-term revenue stream.’ Gregg was however pointing out that being locked in in this way has downsides and is difficult to escape even if you have very good reasons for doing so.

      2. Jon Smirl

        You are allowing your business to be molded onto the path that they are providing. That’s ok if you don’t mind them being in control of your destiny. Microsoft missed the Internet for the first ten years, that’s when I abandoned them.

        1. CJ

          “You are allowing your business to be molded onto the path that they are providing” That’s not true Jon. If you need a product that MS doesn’t make then you buy it elsewhere. Going MS doesn’t mean that you only buy MS.

      3. Jon Smirl

        How are you going to get off Silverlight when they abandon it next year? They’ve already slipped up and said that publicly.

        1. Gregg Dourgarian

          ah yes…this is the kind of FUD we expect on a VC bbs…i suppose you’re baiting me here but being from Minnesota ok i’ll biteSoftware providers like us will need to follow both an HTML5 and Silverlight path…the devices are changing too fast to do anything else which in essence was the point of the Microsoft quote that you are twisting.

          1. Jon Smirl

            We have recently switched to Google App Engine and Google Web Tools. Their tools are not completely open source but they are working on it, big parts have been released. Part of the reason is that they are still under heavy development.GWT is a neat technology. You write your browser code in restricted Java and compile it into Javascript that works on all of the browsers. One source code produces about six different browser packages. Third parties make it compile into Flash support too. It has an excellent set of widgets and everything runs on AJAX.GAE is integrated into GWT so that you can debug right from the server up into the client using Eclipse. Single step right across the net boundary. You also get access to the vast storage capabilities of google’s web farms. Everything scales because they have restricted you such that you can’t write apps that don’t scale.GAE comes with some pretty substantial free minimums. So far we’ve only had to pay when we get extreme traffic spikes.

    2. CJ

      Open Source works well for people with tech knowledge, works well in a small environment and works well when you can build a system from the ground up to be open source. However, speaking from a perspective of a company that recently undertook a complete systems audit where a complete top to bottom open source solution was on the table, it’s just not practical beyond a certain amount of users and complexity. A hybrid model certainly is, you can use Ubuntu on the desktop and Cisco IP phones with Exchange for example but getting all of that functionality out of just open source with adequate 24×7 support is just impossible.

      1. Jon Smirl

        I agree that it is easier to abandon closed source in some areas that others. But give your software dollars to a place like Redhat (or local support company) and long run you’ll get more for your money. If we all started doing this open source would be in far better shape than closed source.The key difference here – pay for the support, don’t pay for the software. The cost is about the same, but you get more in the support model. If the vendor doesn’t take care of you cut them off.

        1. CJ

          Well I argue that paying for Microsoft software I get the support for free because the world runs Microsoft. That means I can google almost any error or situation and chances are someone else has had it and fixed it before me. But what I also gain by going MS is compatibility with almost everyone else on the market, a huge wealth of experienced talent to pull from and ease of use as almost everyone has seen and used Windows in some form or another before.I think Open Source is a tactical solution at best in the enterprise market, not a strategy, at least not yet. The reason is that no one person or group stands to profit immensely from it. You can’t take Linux and adapt it into Windows-ix and dominate the world as they have to push the source back out to the public and then anyone can use it free of charge. Sure you can sell support but if it’s easy to use most people won’t pay for support. And there you have the problem. To be widespread it has to be easy, if it’s too easy you can’t sell support, if it’s too hard you can’t get the market penetration. It’s certainly an uphill battle.

          1. Jon Smirl

            You are describing network effects which is one of the pillars that created the Microsoft monopoly.…Other parts are lock-in and switching costs. Then go read about their manipulation of distributors via volume pricing and rebates.I suspect less than a penny out of each dollar given to Microsoft actually goes into code writing.

          2. Manish Sinha

            “”You can’t take Linux and adapt it into Windows-ix and dominate the world as they have to push the source back out to the public and then anyone can use it free of charge.””Depends upon the license of the open source software. You need to release the code back in public only for those modules which are released under a copyleft license (example GPL).Modules under permissive license like MIT, Apache, BSD etc don’t have this compulsion.

    3. Prokofy

      Oh, but you’re being terribly prejudiced. You can sure as hell be captured by open source too! Ever use a Drupal CMS system?! Good lord you will be paying high-priced tekkies out the wazoo FOREVER. “Free” has a balloon payment attached to it that is deadly: the endless consulting fees of the geek. And they admit this openly and admit it’s a lucrative source of business.Geeks on the Internet are the new garage mechanics of our time.

      1. Jon Smirl

        You aren’t captured against your will in Drupal. All of your data is sitting there in plain text in the MySql database.You might want to get a new set of consultants. The idea of open source is that you pay for the support. If the bill vs value becomes a bad deal get a new support company or bring it in house.You get these same consulting fees on MS, plus the lock-in and the bill for the application and upgrades.BTW, Drupal is probably the best CMS out there. We use it.

        1. Prokofy

          No, not at all. You aren’t thinking from a manager and user perspective, but just pumping the coder propaganda once again.A manager who buys into the Drupal shill unloads a boatload of money on consultants, has staff training, has customizations, and now he is stuck with that awful investment like a used car lemon that he can’t sell. He can’t spend his now non-existent IT budget on a new system.THAT is what I mean by captured, not some silly literalization of having your text in MySqyl or not, geez. That is of no use, really, because while you can send some of the stuff to a new CMS, you have quirks and problems and retraining and hassles and bills again.I’ve never seen those consulting fees on proprietary companies making systems that they customize, and I’ve been in the purchasing position for these services in many a job. The application bill simply pales by contrast to the terribly steep consulting bills. All software has annoying upgrades.You should be the proud wearer of the WORKS ON MY MACHINE badge. Just because you as a coder like it for your site doesn’t mean it is good or “the best”.I must say that nothing beats Typepad for me, for work or individual use. I should make a list of all the annoyances Drupal has by contrast.I work for a bunch of difffent companies and they all have their fascinations and obsessions and types of CMS systems and IT guys with big and zealous opinions, sometimes directly opposed to each other. So I do have the experience to compare.The attitude that comes with open source is the worst thing about it. I’m with Jaron Lanier who asks that software engineers remove their religion from their product.

          1. Dries Buytaert

            Is Open Source more expensive than proprietary systems? It depends. You can’t generalize.Open Source implementations can be more expensive if you try to bend the software too much. However, you don’t have to be a genius to understand that because there are no licensing costs, Open Source has the potential to be much cheaper than proprietary solutions, and that Open Source solutions come with freedom and flexibility not found in proprietary products. Implementation cost is an important factor, but it is in providing freedom and flexibility that Open Source wins and commercial vendors lose.I’ve seen many large organizations that pay 6 or 7 figure license fees for a proprietary CMS switch to Drupal; they save a ton of money, even when working with some of the most expensive Drupal consultants.

  9. Alex Prushynskyy

    “Anything else, you have to pay for with equity in your company” – LOVE IT! Great line!

    1. William Pietri

      Absolutely! Although it makes me wonder how many shares it would cost me to get a couple of custom articles. Fred, do you want to pioneer micro-advising?

      1. fredwilson

        nope. that was sort of joke, sort of a throw away line, sort of larger point. the reality is i can only work on so many projects and i have a full compliment of them via my USV work

  10. Eric Leebow

    Free is definitely the best. I just don’t like it when they make it free knowing that you must call in for support to actually understand it properly. I think a few software companies do that in the enterprise space. Probably 99% call in to get support.

  11. Deyan Vitanov

    Great post as always Fred, thanks! I want to second the point you make that the free approach can be mimicked by anything made of bits – I am currently exploring a few ideas in higher education that rely on the same insight.

    1. fredwilson

      this model has HUGE implications for education as I am trying to showwith MBA Mondays

      1. ShanaC

        This post would be so much more interesting if that is the case if we saw some finacial models of two similar products, one free, one paid, and how they make money and their projected growth…

        1. CJ

          on MBA MONDAY! 🙂

        2. Prokofy

          I’m beginning to think you are finally learning something in college.

          1. ShanaC


      2. Prokofy

        Yeah this worries me. More hacker culture being unleashed on our tender young minds. A couple of controlling geeks making up the content and spewing it everywhere because it is “free”. Ugh. Like the TED cult. Ugh.

        1. fredwilson

          this blog is a front for hacker cultureand proudly so

  12. kidmercury

    i think there is a bit of a difference between free and open source. i.e. free like free beer vs free like free speech. and i think there are some business model differences.1. free like free content is a marketing cost. like a banner ad. 2. free like free speech (open source, APIs, CC content) is about getting a community of developers or content creators to produce stuff for you, thus reducing product development cost.

    1. awaldstein

      This blog (and others) is a hybrid of sorts.Free content but not push like a banner ad. The community adds value and gets value from the process.Maybe this is a 3rd model.

      1. kidmercury

        yes there is often a overlap, as CC-content is required to be freelydistributed. so it could be like fredland is a marketing cost (i.e.banner ad) for USV, but this “banner ad” is an open community, andthus the cost of this banner ad is crowdsourced. best of both worlds!

    2. candice

      A lot of open-source projects fail by assuming someone else will do the hard work, like case 2 you have there. This goes double for assuming the community will write the documentation and provide support.Anyone else that wants to contribute a patch to you is a bonus. Expecting that they will do so is perilous.I might consider APIs in a slightly different category-by definition it’s an exposed interface and has no need to show the source code to the outside world in order to work – how many closed source webservices provide an api?

      1. kidmercury

        most ventures in general, close source or open source, fail. forbetter or worse, the world is skewed towards embarrassment.

    3. andyidsinga

      i would add:3. free like ‘heres a little gift to the world’. do whatever you want with it.i often consider open source that uses the mit license part of #3.

    4. ShanaC

      even free beer costs something

      1. falicon

        yea…if not now…than at least the morning after! =D

      1. kidmercury

        Thanks for this comment, prokofy. When gold hits 1650 later this year i willrespond to this comment to tell you i told you so.

        1. Prokofy

          You will look back on this moment and weep by this time next year.

  13. Aa Bb

    That’s why paid software is usually better, but free software is more attractive

  14. Paul Lopez

    I’ve seen large corporations opt for free or open source software for enterprise solutions. They often underestimate the cost of ongoing support or maintenance. Some choose to hire in-house developers to maintain the software but then they become a software house. What is a good rule of thumb to estimate paid support in terms of manpower? 4x the number of developers or higher?

  15. jz

    This post got me thinking about another question I have never got a good answer for. When we buy a car, we expect it be defect free, if there is something wrong, we expect the manufacturer recall it or provide free repair services. Otherwise we sue the manufacturer. Yet, in software business, we tolerate bugs, security flaws, and crashes, the programmers get aways with all these. Why? shouldn’t consumers of softwares demand something better?

    1. Jon Smirl

      You can have that if you’ll pay $30,000 a copy for the program. Cars have thousands of dollars loaded into the price to pay for the warranty. How much money is there for warranty work in a $20 app?

      1. jz

        but my toaster only costs $50, i still expect it just works and not burn my house down. but my excel spreadsheets crashes all the time and whom do i have to sue to have a better experience?

        1. Jon Smirl

          All you can do is return the toaster, no one repairs them anymore. I had several that have failed and I have returned. You can return software for a refund too. I have done it several times. Of course it is much harder to get a refund form the software vendor.The problem is that you have given your money to an unresponsive vendor. Why don’t you try Open Office? It is free and the source code is available. If it crashes make a bug report, they almost always get fixed for free. In the case where it doesn’t get fixed you can get almost anything fixed in open source for $1,000 to one of the developers. That’s a lot cheaper than a lawsuit.

          1. jz

            Maybe only huge payout for pain, suffering and loss of time can force the software vendors to do a better job? no? just thinking out loud. what’s the incentive for developers to develop software with great user experience if the developer’s income depends on users’ complaining and seeking help?

          2. Jon Smirl

            It doesn’t work like you think it does. Software companies don’t want the complaints. In general what you are observing is an artifact of the closed source model. With closed source the bulk of your revenue comes from release points. This causes management to ignore user complaints and instead focus internal development on writing yet more code to be sold at the next release point. They think it is more important to add marketing bullet points than to increase product quality. Product quality is difficult to assess in the sales cycle and bullet points aren’t.A paid support model where releases are free doesn’t have this problem. This model can be closed or open source – some databases are sold this way.You are part of the problem. Change the way you spend your software dollars and send a different message.

  16. Dave W Baldwin

    Good post. Off subject- saw the intro to new Twitter… kinda goes with the television show I mentioned, so now that makes sense. Good job.The free software/paid support is really what its all about. Funny how it can be hard to get some on the lower level Angel side of things to understand that, yet it makes total sense moving past singular programming. Develop a product that is able to do a multitude of services for both business/leisure and you start free with the introduction to the paid. Then your marketing options expand and lead to something truly bold.

  17. William Mougayar

    Isn’t free software usually one of the building blocks for other robust and paid apps? So, it’s part of the standard evolution of software, tied to its value chain I think. We depend on it.

  18. RichardF

    “Anything else, you have to pay for with equity in your company” …lol….funny and smart punchline.

  19. Tony Jessup

    The 3 month timeline is dead on as is the thrill of creating software vs the lack of thrill in supporting it. Supporting software you create is expensive but 4x the amount of devs to support seems excessive. We postulated that profit was not going to come from selling software or support but from cost savings in using our own product with clients. So far so good, plus it really motivates us (and the ee cms community) to innovate and release often.

  20. David Semeria

    I remember reading somewhere that the conversion rate for MySQL was less than 0.1%.It’s still a mystery to me why Sun forked out $1bn for a business with such rates.

    1. CJ

      .1% of a huge amount is still a lot. MySQL runs the internet, that’s why it garnered that price.

      1. David Semeria

        0.1% of something would have to be weally, weally big to be worth 1$bn over time.

  21. neotorama

    i love to release free software for the lulz.

  22. Adrian Scott

    ooh… well, there’s a big difference between ‘free software’ and the subset of possible business models to use for it which are ‘pay for support’… i wouldn’t invest in a startup following that business model, there are plenty of better business models out there for free services, imho — c.f. information rules by shapiro and varian.

  23. Tom Labus

    I’m very curious to see how the Khan Academy evolves. Let’s hope that his original spirit and intent remain as he gets cash from MSFT ad GOOG. How does he get other voices to be tutors in their fields?I love it that here is now History and Finance. Also as a home for MBA Mondays in the lesson section which. I believe, is not all video.

  24. ShanaC

    question: why is this approach not as enticing to those who sell virtual goods (ie, music)

    1. falicon

      DMB actually implements a version of this model very well…they more or less funnel all their stuff into getting people to experience the ‘live’ show (and the fans seem to love the experience)…they hustle like crazy and put on an amazing amount of live shows every year…and as such, they are killing it in revenues as far as bands go…But so far they are more the exception than the rule…I think it’s just hard for an entire industry, with a long established revenue stream, to wholeheartedly change from one model to another…

      1. CJ

        Indeed. but the leading edge will profit immensely from it.

      2. ShanaC

        That’s true, yet I still think it is an interesting thought experiment to see how the model would work for other kinds of digital goods like music

    2. CJ

      When the content just works there is less money in supporting it on the backside. Music just works, movies just work, blogs just work, what you’d pay for on the backside with these things is expertise. Getting the band to play a gig costs real $$$, getting an actor to make a movie or public appearance = $$$, getting an author to write or consult with you within their expertise outside of any published writing = $$$. Same concept it just works a bit differently and is a bit scarcer (IMHO) so costs more.

      1. ShanaC

        yes, but how would it be different than giving away the singles, and making people pay for performances, or some sort of other good associated with the content. I’m less worried about support of the backend than the support of the model

  25. CJ

    “You get the content for free. Anything else, you have to pay for with equity in your company.” – LOL Nice.

  26. longhorn

    Absolutely correct. When I was doing my PhD, I was always underwhelmed by the ambitions of projects in large companies. Now, that I work in one, I can see why most of the resources are spent in getting things to work as opposed to any great technical wizardry. And rightly so!

  27. Jed Sundwall

    Related: James Murphy shuts down LCD Soundsytem w/ this awesome quote:”It’s all just gotten bigger than I planned or wanted. Not that I’m against it but I don’t want to get bigger. What’s the goal now — get fucking huge? I don’t want to be a famous person. We’re not gonna do another record.”Reinforcing your point that this phenomenon can apply to music and other things. It’s another way one can become a victim of their own success.via:

    1. CJ

      That just sounds weird to me. I write because I love it, not because people read it – that part is just a great side-effect. I’d never stop writing because I got too many readers, though I can imagine the pressure changes somewhat until you adjust to it.

      1. Jed Sundwall

        Yeah, I think the issue is probably fame. I imagine it gets to a point where you feel owned by the thing you’ve created when it was much more fun the other way around.

        1. fredwilson

          “I’ve need a crowd of people but I can’t face them day to day”Neil YoungOn The Beach

    2. fredwilson

      such a great examplei talked a bit about that in this post…”But an unintended consequence of this writing hobby is that I’ve developed an audience and a public persona. I didn’t set out to do that. But it happened. And now I’ve got a responsibility to serve the audience and manage the public persona. At least I feel that responsibility.”

  28. sigmaalgebra

    There is a lot of variety in how both software and the support are provided and a lot of variety in getting both for free.I have some free software that is just terrific. Two examples:(1) My main scripting language is ObectRexx. Yes, some years ago I got the book on Rexx by M. Cowlishaw, the author of the parent language Rexx. The book was very well written and helped me learn the language. So, maybe I ‘paid’ some for the software by buying the book. I’ve been ‘self-sufficient’ in the software for years and had no need for any technical support.The real purpose of the language was running IBM: For some years they had about 3600 mainframes around the world that did essentially all the ‘personal productivity’ computing with word processing, e-mail, fora, directories of people and organizations, repositories of software to download, etc. It all looked very much like the Internet today, but for the digital communications the ‘routing’ of the packets was done in the mainframes instead of separate routers. Essentially all the software, other than the operating system itself, was written in Rexx. It’s a nice language and no toy. ObjectRexx is an object-oriented extension to Rexx and sometimes better.Uh, I use ObjectRexx for essentially any one-shot calculations instead of spreadsheet which I use only for drawing graphs, and I intend to get graphs by other means soon. Uh, I have no problems with ObjectRexx ‘crashing’!IBM has ObjectRexx for Windows available for free, complete with some good PDF documentation and extensions for TCP/IP, some Windows calls, and more. For years my e-mail was just in Rexx using the TCP/IP calls — since I hate Outlook, I may slightly upgrade my old e-mail in Rexx and use it instead of Outlook.Apparently IBM used ObjectRexx in some of their turnkey work, concluded that they couldn’t sell the language, so for publicity or whatever made it available for free. So, one reason to give away software is publicity.It happens that I use the language for what is now by far my most heavily used program, a silly little program, very short, almost trivial: An icon in the UL corner of my screen runs the program which arranges all the relevant, visible open windows on my screen in a way I like! So, when the screen is a mess, one click and the screen is all nice and tidy again. Then I can see at least some of each window, bring windows to the top of the Z-order in any order, and still see at least some of each window. In most serious work, I have roughly a dozen windows open, and the icon is terrific, especially to tidy up the screen as I open and close windows.(2) In essentially all the more mathematical fields, now the unchallenged world standard for word whacking is D. Knuth’s TeX (and its extension LaTeX). TeX is my standard for any high quality word whacking, with math or not. I bought Knuth’s book on TeX years ago, and that’s the only money I’ve ever paid for TeX. I got plenty good enough with TeX and need no technical support. I believe I requested technical support only once, for a really tricky, fine detail, and I got a good answer for free.So, why did Knuth write TeX? For one, he got revenue from selling his book on TeX. Actually, he has a stack of books with exemplary documentation of TeX internals and sells those, too. He wanted TeX for his own writing and book publishing and now has it. And he seemed pleased that he revolutionized word whacking for all the more mathematical subjects.One reason a programmer can write software and give it away is to get publicity and status among other programmers for low cost. So, why is the cost low? A huge fraction of the total cost of writing software is the fixed cost of cutting through all the often bad documentation of other software to be used. Once that fixed cost is paid, the variable cost for one more program can be small, so small the publicity is worth the effort to knock out the program.Actually, Microsoft gives away enormous quantities of software, documentation, and even technical support. SQL Server Express 2008 R2 with Advanced Services is powerful and free. Yes, the free ‘express’ editions have limitations but are intended to be enough for much of development and to attract initial usage. Then when in production usage the limitations are reached, have to buy a more capable version. But the old development remains solid or nearly so. So, maybe call it a ‘Freemium’ model.For more, .NET is enormous, one of the largest efforts in software ever, and for free in each of its now several versions. The documentation of .NET is enormous and in addition to the documentation for the versions of Windows, SQL Server, Exchange, Kerberos, etc.; the Internet versions of the documentation are all or nearly all for free. If ask a good question, then commonly can get someone at Microsoft to give a good answer for free. Once I got such an answer explaining why I was using ‘late binding’ without knowing it — the answer explained why my program was running about 150 times slower than I had estimated.Yes, have to pay for Microsoft’s Visual Studio ‘integrated development environment’ (IDE) intended for software development. Gee, I hate IDEs and might pay just not to use one! Well, the relevant compilers are all available for free! The compiler I am mostly using is just Visual Basic .NET, and it is in each version of .NET, which is free. So, I type Visual Basic software into my favorite text editor (I use for essentially all my typing), and run the Visual Basic compiler via a little ObjectRexx script. Works great! Actually, the Visual Basic compiler is fast, generates very small code, and seems rock solid.Microsoft has for free PowerShell as a new, powerful scripting language which I might convert to in place of most uses of ObjectRexx. PowerShell likely has much better access to .NET, etc. in Windows than ObjectRexx has unless I make tricky efforts to extend ObjectRexx (which is doable).Currently Microsoft Research is giving awaySho: the .NET Playground for DataSo, it’s written in Microsoft’s IronPython, their .NET version of Python, and intended for working rapidly with data in the context of science and engineering. That may be where I get my graphing done instead of in Excel.There’s a lot of free software out there, and often experienced programmers can make good use of it with little or no support and with no paid support.For free support, there are many fora. Such a forum can be a ‘community’ with people providing answers in order to build their status within the community. So, e.g., there is Stack Overflow.

    1. Sebastian Wain

      I remember Rexx from the Commodore Amiga, you could connect different applications (spreadsheets, wordprocessors, etc) like Microsoft does with COM.

      1. sigmaalgebra

        Maybe here we can outline some more progress with ‘social graphs, media, search’ and free software and connect with entrepreneurship:Rexx on Windows, OS/2, IBM mainframes, and likely AIX runs programs basically just by assembling a command line as a character string and giving that to the operating system for execution. That is traditional ‘scripting’.Command lines have some advantages because they are easy for the programmer to read and parse, for a user to type, and to drive with a script. Also command lines are explicit, that is, it is easy to see, record, and repeat just what was done. So, command lines have lasted, especially among programmers. In comparison, usually GUIs are harder to program and script and are less ‘explicit’.Rexx can use much more in Windows if are willing to see how to write a ‘Dynamic Link Library’ (DLL) with the right interface. E.g., should be able to use the old COM facilities. Such DLLs are how Rexx gets to TCP/IP, various file system functions, some elementary screen functions, floating point math functions, and more.Even a little such scripting functionality can be quite useful: My little one click icon to make my screen tidy is an example — really simple program and functionality but a lot of utility. The lesson is: It is useful to be able to program things, even just simple, little things, and not be stuck just with manual manipulation.But I also use Rexx for some simple, one-shot, ‘exploratory’ calculations and like it better for such than Excel, old Lotus, etc. It is cute and sometimes useful that Rexx supports 50 digit decimal arithmetic. For people who struggle with Excel, I’d advise trying Rexx; that Rexx is elegant helps here.Also typically Rexx is much faster than Excel: Once I did a ‘viral growth’ model and drew some corresponding graphs. The Excel file was over 1 MB and very slow. So, I wrote the same calculations in a few lines of Rexx and put the output in a simply formatted file Excel could read and plot, and that combination was much better. So I used Excel just for the graphs. When I decide on some better graphing tools, Excel will be gone!I get a lot of utility out of Rexx.Early in the Web, Rexx was used to write Web servers. The good, small point is that it worked; the bad, big point is that it worked at best poorly for a significant Web site and, thus, implicitly, grossly underestimated the importance of the Web.Yes, supposedly it is possible use Windows Scripting Host or some such to permit embedding Rexx in HTML, although I’ve never seen that and have no intention of trying it!A lot about Rexx and ObjectRexx are elegant and still advanced enough to be ‘up to date’. But the access to .NET, etc., is at best clumsy. E.g., there is nothing commonly available for sending SQL statements to a relational data base engine.So, net, Rexx will slowly fade away in favor of other efforts, e.g., PowerShell, IronPython, etc.For the future, big themes will be making it easier to build fancy GUIs, debug code, do system management and administration, work with many threads, cores, and servers, interact with data bases, do communications, manipulate XML and HTML, manipulate images, audio, and video, make use of software libraries for the huge range of functionality they offer, be ‘reflective’ and maybe ‘self-modifying’ (the LISP people will say “I told you so 50 years ago”), and keep up or lead with what coding should be for the next 50 years.I want to see the languages get away from some slavish imitations of C and C++, have ‘types’ but not go overboard on ‘strong typing’ (strong typing only helps avoid some problems, brings some challenges in documenting ‘type conversions’, and does not guarantee ‘strong’ code), have some ‘static nested name scoping’ with ‘dynamic descendancy’, and, if you will, ‘closure’ (a few times I did some cute things with ‘closure’ in PL/I), have some features to help make sense out of larger programs, and, my old favorite, have some source code manipulations that have some useful, guaranteed properties!Actually, for now, for anyone on Windows, .NET and the ‘Common Language Runtime’ (CLR), ‘Common Intermediate Language’ (CIL), ‘Dynamic Language Runtime’ (DLR) (e.g., for Python and Ruby) are nice, and can get at those well enough with any of several languages. Also, .NET, etc. are plenty ‘open’ enough that anyone can write their own ‘ultimate’ language on top of .NET, etc.Likely Microsoft has a lot of work to do upgrading .NET, etc. for many threads and cores, fancier GUIs, better system management, etc. So, for now on Windows a language designer should just build on .NET as Microsoft completes that ‘wheel’ and not try to reinvent it.This thread is about free software and support, and my point is that, at least for programmers, from beginning to expert, there’s a lot of both available. Also, when do have to pay, the model might be a case of Fred’s ‘Freemeium’.In some recent threads here on the main concern was a person’s ‘social graph’ especially via an e-mail ‘contact list’ or ‘address book’. So, for a solution I proposed just publishing an XML schema of such a ‘contact list’ and then hoping that each relevant ‘cloud’ site would be willing to let a user up/download their data in that format. Then, with the schema, the data could be readily ‘ported’, ‘collated’, ‘curated’, ‘synchronized’, manipulated, exploited, etc. across various applications and ‘platforms’. I.e., just draw a picture of a fence and let others build and paint it!Could extend this to e-mail: Just publish a schema for the data for, say, just simple, standard, old client side POP3 e-mail. So the schema might be just in terms of files and directories in a hierarchical file system or as SQL statements for a relational data base. Then with the data in such a schema, it would be easy, and hopefully common, to have lots of ‘aps’ to do various operations, e.g., ‘synchronizations’, extraction of the implicit social graph, GUI interface, search.So, with this idea, back to .NET etc.: First cut, the main challenge in handling e-mail is just doing something good with each of the file data types that commonly appear in the ‘Multipurpose Internet Mail Extensions’ (MIME), now especially HTML, JPG, PNG, and MP3. But I have to believe that there are plenty of functions in .NET for handling these file types. So, with a schema, an interpretive language, and the functions, I would be GO for getting some decent e-mail software. Then challenges would be handling authentication, encryption, certification, getting some automatic processing to help with problems that caused Fred to declare ‘e-mail bankruptcy’, etc. And I especially want for each e-mail sent or received a ‘handle’, much like a URL, I can use elsewhere in my notes and records to point to that e-mail and, then, simple operations to extract and maybe display relevant parts or all of the message. After that the schema would admit some useful, even ad hoc, manipulations. Such manipulations, then, could connect with more, say, a ‘social graph’ from more than just e-mail, say, from phone calls, letters, business cards, Facebook, Twitter, blog posts, bought from, sold to, met via Foursquare, read about in TechCruch, etc.So, for entrepreneurship, I don’t see ones social graph or e-mail as significant opportunities.But, people will long be ‘reticent’ about having all their private communications on cloud servers, especially Web 2.0 efforts on cloud servers run by other Web 2.0 companies. So, each person will mostly want their own data on their own computer, all nicely safe somewhere, locked up, encrypted, backed up, etc.But social graphs, media, and search, etc. might be significant opportunities: Then a bottleneck is getting the data. Then a way to help make the data available is to publish open schemata as outlined here. Then there might be enough data to provide some opportunities for processing it.So, a lot can be done using and/or building on free software, schemata, etc.For me? I’m not going to do such things soon! Instead, my plate is full! I’m writing the rest of the Visual Basic .NET code I need for my project!

        1. Sebastian Wain

          Wow! such a great reply!On the schema for data, contacts there were some innitiatives like FOAF and related schemas:…In my experience it’s not so easy to sync between different systems. Synchronization is really hard. This is a link from Jun 10, 2009:

  29. davidgeller

    Fred – Eyejot’s “freemium” model is working well. When Daryn (yes, that Daryn) and I started Eyejot we initially deployed the platform for free. Realizing it was strategically better to focus on the SMB market, we create two “pro” classes – one for $30/year and one for $100/year. Both of those have been quite popular, with the PRO Plus ($100/year) being more popular due to its richer set of features. But, since Eyejot still has a free version it allows anyone to quickly get a sense for the platform and discover if (1) video mail is something they would like to use and (2) that all their equipment is compatible. Once they try it out they’re allowed to keep using the free version indefinitely – but it lacks some functionality that we deliver through the paid service.While we don’t specifically segment our support services, we do feel less obligated to provide the same level of service to our free users, and I think they generally understand that as well.Your audience here at AVC is welcome to try Eyejot at And, if they’re an AVC comment contributor and email me @ davidg @ eyejot I’ll gift them the PRO Plus level.

    1. JLM

      I like your style. Masterfully played!

  30. Gregory Magarshak

    There is a great talk by the RSA about what drives us:… … until recently, it was not clear from an economics point of view why there would be so much innovation and work done entirely for free. But smart people are driven by purpose and making a difference in the world, and as soon as they have enough money to take care of their needs (rent, food, etc.) with a large safety net (2x-3x) they will focus on contributing to make a difference, and will create a lot of value without needing any more money “right now”. I think this might be very important in the area of funding entrepreneurs.I realize it’s controversial, but I did want to throw it out there that ever since digital copying has become essentially free, our ideas about copyright need to be re-examined. To illustrate why, I wrote a post on hacker news showing how one can make a legal pyramid scheme by relying on copyright:…Copyright and patent protection are essentially monopolies enforced by the government — no one except the inventor or copyright holder may take an action without first clearing it with them. Currently, that is the way it is, but the systems were created in times long ago, when making a copy of a book was much more expensive. Today, when making a copy of an e-book or song in digital format is “essentially” free, I think it’s important for us as a society to revisit the issue of intellectual property and see how much of it was done to protect the distributors (publishers, customer support, the cost of actually making copies etc.) and how much of it was to incentivize innovation.I wonder, too, if the patent system for software is a smart idea, considering the pace at which software evolves — every time I ever read about a patent suit in the news, it seems really harmful to the actual innovation in the industry, and I have to wonder how many landmines a typical startup is actually infringing on, if every patent holder followed a policy of diligently suing all infringing startups out of existence. It’s scary — and as an entrepreneur, I would appreciate any advice on how to deal with that threat 😛

    1. Prokofy

      Please give us a precise and actual and real example of how a patent on software “harmed innovation”. This is one of those lefty memes I simply don’t buy. It’s like the way Creative Commons freaks claim that Disney’s pursuit of its IP rights somehow “harms” creativity. What, they wanted Minnie Mouse on their blog?!

      1. fredwilson

        i give you a third of our portfolio as proof. each of those companies has been hit by a baseless patent suit that has cost on average $500k to defend. this is a tax on innovation, plan and simple, and it must stop

        1. Prokofy

          I wouldn’t call that a “tax on innovation”. I’d call that “the cost of doing business” in a space rife with copycat widgets and gadgets. Everybody has a “share”. Everybody has a “checkin”. Everybody has a “status update”.I have no idea whether these lawsuits are “baseless” — I’ll take your word for it for now — but if they *are* baseless, you should be able to get the damages back of the cost of the lawsuit, no?Patents secure innovation by tying content to commerce. You commies are always trying to decouple content and commerce so you can harvest it for free and make money off the back of it in other ways. That’s why you proudly promote the California biz model and the hacker culture, Fred, but at least you’re honest about it.

          1. Gregory Magarshak

            Prokofy, when the “cost of doing business” becomes too high for a startup, it becomes more expensive for startups to enter the market. Say what you want, but a lot of innovation comes from startups, and intellectual monopolies that last 17 years in a fast-moving field like software hurt startups more than large corporations that have money to throw around. It is in the interest of large corporations to use whatever means they have at their disposal to eliminate their competition or buy it — including large patent portfolios.Why do you automatically have to resort to name-calling? There is nothing particularly “left-wing” or “commie” about questioning whether government should grant monopolies that favor large corporations over startups which often barely have enough money to get their product to market. In fact, I would argue that if you are so ardently for capitalism and free markets, as you seem to be, then you should be against government-enforced monopolies yourself. If you want to make a point, there is no need for ad hominems.

          2. Prokofy

            Oh, stop being such a net nanny. There’s nothing “ad hominem” in calling people espousing technocommunist views “commies”. Indeed, you only supply *more* reason to call you by such names when you advocate suppressing polemical speech in the name of ceasing “ad hominem attacks” — by your judgement.You also MISREPRESENT the issue by pretending to hoist from the own petard with this notion that patents are somehow “a government monopoly”. Good God, you people have *lost touch with reality*.This is like the Beth Noveck dreck about patents.Presumably if Fred’s own ventures want patents, gosh, they get to get patents, eh? Or does he believe in removing the patent system altogether?! That’s what so OLIGARCHIC about all this — patents for me and not for thee, and anything that challenges my business is ipso facto “a patent troll” and nothing else.In order to properly have this discussion, we’d have to have some transparency on just what these patent suits are. As I said, in this particular space of social media, my God, they’re all alike and it’s very easy for them to sue each other (look at the Facebook lawsuit or the bunny maker suing the horsey maker in Second Life).I fail to see why people who have innovated 17 years ago have to somehow be “expropriated” of their intellectual property down the line by the revolutionary junta “expropriating from the expropriators”. It makes no ideological sense to me. That is not capitalism; it’s highway robbery.Of course it’s leftwing when you constantly challenge property, and imply that just because a corporation is large, that it can’t have property rights. Says who? Again, the CPSU Central Committee?!What, everybody is supposed to be a campesino in Guatemala selling trinkets by the roadside with an AMEX swiper for tourists? Everybody is supposed to go on Etsy? Everybody is supposed to run some little app and widget mom and pop shop on the iphone or Internet? Please. The “liquidity events” that gentlemen like Fred await all come from big IT.Every time I see this fake “crisis of patents” invoked I ask for real examples. Real facts. Where’s that patent hog blocking progress? Give me some cases. Tell me about those poor start-ups yearning to be free fighting patent trolls. I don’t mean patents attempted — we all know there are people who keep trying to patent Pay-per-View interfaces and things like that speculatively. I mean something that is really already patented.Look at your lovely innovative start-ups TechCrunch and Huffington Post, eh? Lovely little guys with progressive thinking and innovation, right? And AOL bought them out — and everybody’s happy. At the end of the day, “innovation” doesn’t matter; money to pay for it does. You are fetishizing the startups terribly.As I noted on Fred’s previous post about Start-Up America, which I ruthlessly criticized as a big IT pop front and a fake thing, in a way, there is no such thing as the “start-up”. The start-up is a kind of fiction.What happens is more like the old medieval apprentice system and the guilds (yes, just like that). Some young guys who want to practice a trade hack around and make something and try to get the older more experienced guys to accept them into their guild and buy them materials/give them money. Ultimately, as they perfect their craft, they are then put into the large guild. They don’t remain as the little business (so that’s why calling Start-Up America a small-business boon is fake); they get eaten by bigger companies.If 4-Square is still here 10 years from now as a New York company not eaten by something else or changed, still providing innovation and jobs in my neighbourhood, I’ll eat my eat.

  31. Sergey Chernyshev

    At some point, I decided that everything in my startups that doesn’t constitute know how or core of the business just have to be open source – there is no reason not to, it’s only about missing the opportunity of promotion, of testing and use cases outside of your immediate reach and of course outside contribution (which is not as high on priority list as many people think).That’s why I open sourced all registration, authentication, user management and lean analytics back-end for my projects so I don’t have to write it again and everyone else can benefit from it with their own business.It doesn’t stop me from benefiting my SaaS businesses, on the contrary – they all benefit from this open source.Same goes for many other open source tools that I contribute.But in some cases, core software should also be open sourced – one example is when running a software takes enough effort to pay for hosted solution instead (think WordPress).

  32. Mark Essel

    Caught the same question via Hacker News and there were a number of great comments there as well. You hit on the crux of the issue, exploratory code writing is enjoyable, light and often times free. Supporting, growing, and extending that software is a function of it’s user base and performance needs.There’s plenty of great software that is sold as well. Games and utilities that are one off apps that run locally and are applied as handy tools are great for selling through a web portal and/or several app markets.

  33. Marc Gayle

    Interesting insight Fred. Conversely though, the argument can be made that this applies to freemium based products too.Often times support resources are provisioned mainly for paid customers – and the free customers are not supported as well as paid are. For good reason of course, there is only a limited number of resources in a startup environment and if the free product is popular the support could dwarf the resources.But the issue becomes a Chicken and the Egg situation. Where free customers that receive bad support, might be hesitant to become paid customers – assuming that the support they receive will be of the same quality. Some times it is, but some times it’s not.I wrote a blog post about this exact issue, after I encountered a similar situation with Heroku – http://compversions.postero

    1. fredwilson

      great point and great post

  34. paramendra

    The last line is the best, ha ha!Reporting to the AVC community from the Apple Store on 14th Street as I wait to go into Comix nearby for a Super Bowl Watch party. I don’t even know who is playing who, but I always end up really liking the commercials. I have already started rooting for Brazil for 2014.

  35. calabs

    Enjoyable post, but I think there are two problems.First, the initial effort of creation is often non-negligible. I notice that you did not include ‘movies’ in your list of ‘things made of bits not atoms’. LOTR took many years and hundreds of millions of dollars. Should that be given away?Second, in what sense does a book, movie, or album have to be maintained? Where is the opportunity there?That said, I completely agree that software development is a form of creative expression, and it is closest to either writing (less a novel and more a collection of connected short stories and essays, mostly ‘fan fiction’ set in the ‘universe’ of someone else’s software framework!)Finally, I’d be very curious to know how you would characterize your own work as a VC. Is it creative in some sense, even the most oblique?

    1. fredwilson

      yes, i think VC work is creative.i agree about films, at least full length feature films. they cost a lot to make and that is why netflix and others will build excellent subscription businesses online

  36. Mark Gannon

    Interesting discussion. But I think one important point about the Free/Open Source (FOSS) stuff is that it is almost always a copy of an existing closed source product. So the coders aren’t usually experimenting with new functionality that might require advanced abilities to interact with the market that a professional product marketing person might provide. For example, I don’t believe VMware type virtualization could have been created first by an open source team. But once it was successful, FOSS teams could make a non-infringing copy (e.g Xen) with what amounts to a very lean team.While I can think of contrary examples (e.g. NMAP), but they are clearly the minority of successful FOSS projects.

    1. fredwilson

      mongoDB is an entirely new datastore not a copy of anything elseand it is open source

  37. needcaffeine

    a good example of this is Red Hat. Linux is free, but if you want a tried & tested OS (that’s supported by other softwares) there’s few other choices. It’s not cheap, but worthwhile in corporate environments.Plus RH is one of the few companies without debt.

  38. Prokofy

    And this sums up the unaccountability and even criminality of the open source software movement, and why I vigorously criticize it night and day.There is no sense of responsibility to the user, and nothing but juvenile self-indulgence in the coder’s whims.Give me proprietary software any day that has people who come to work on time, work a set number of hours, answer the phone, give help, get paid normally, and then go home. That’s more normal for business than these freaks in the commuuuuuunity as they love to call themselves “helping” by in fact only hob-nobbing with each other.”Give it to the community to maintain” is of course a cop-out. They might show up; they might not. OS is all about the “tyranny of who shows up” as I call it, and as the script kiddies call it, “the do-ocracy” — except so often they don’t feel like doing a damn thing.I have a lot of insights about all this from living in the greatest real-time participatory online open source software project in the universe, Second Life. I’m not kidding. You should see the Public JIRA (software bug tracker). Naturally, after years of battle, I’m banned from the JIRA, for which I’m proud. However, if you look at Version 1.23 of SL, you will see “Brought to you by…[lots of Linden names]…[lots of geek names]…and Prokofy Neva”. Why? Because I found useful bugs that harmed commerce and reproduced them, and also made useful feature requests that saved money.But there’s a limit to how much civilians can participant in these horribly thuggish tribal lairs…My first order of business on this thing was to get the little furries to stop closing everybody’s JIRA entries. So WEB-200 was all about making it not possible to close anybody else’s proposal without their consent (except the Lindens). I fought and ENORMOUS battle for this — including against Lindens who kept trying to shut me up. Finally, I prevailed. But of course, not for long, as “can’t do” or “not a priority” or some other gambit became the new “closed”. but at least the principle that should be sacred for all user-generated content on these platforms began to take hold: you cannot shut another person’s content down just because you don’t like it. Don’t vote for it, move on, leave it alone, but stop trying to close it, especially yunder the guise of “neatening up” or “removing clutter” (hilarious claims to make on a system where you find things not by serial reading but by search).Someday, if I ever get the time and money, I’d start an alternative outside JIRA that would be outside the censorial hammerlock of the extreme OS coders and all their nerdy friends, because of course, more transparency is needed for this.I tell this story because Second Life is predictive social media, it predicts the future of other media and how we will live online. It had Twitter before Twitter, etc.So the problem with your theory, Fred, is that they don’t really do this. Take Drupal. “Free”. And with the “commuuuunity”. Except pay a huge arm and leg FOREVER to high-priced geeks to keep it going with all its wonky and buggy flawed nature…

    1. fredwilson

      wordpress is also open sourcemaybe you should try that instead of drupal

      1. Prokofy

        I don’t have a choice unfortunately on Drupal if companies that I work for have (reluctantly) chosen Drupal and now have so much IT consulting time invested in it that they can’t leave it.I don’t care for WordPress either. I’m happy with Typepad which is now owned by SAY Media. I pay for it; it’s proprietary; they have a helpdesk. They earn money; I get real help; we’re both happy.

  39. Laura Yecies

    I agree that the freemium model can be applied to many areas not previously thought – a good example of this is in legalWilson Sonsini has a free “term sheet generator” on their website – clearly the idea is to give away the mechanical stuff to get the high end business, I think it’s a great idea.

  40. monsur

    I love GitHub for this reason. Over the years I’ve tried many small projects, but haven’t found the time to maintain these projects into maturity. GitHub is aligned around people, and allows me to throw programming ideas out there into the ether. If a project just so happens to be useful to others, they are free to modify it, or fork it for their own if I don’t have time to maintain it. The analogy I like to use is GitHub is to programmers what a blog is to writers, and each project is like a blog post written in code.



  42. Stan

    Hi Fred,What you’re saying only applies to simplistic software like Twitter, Foursquare, URL shorteners, etc, which take 2 to 3 months to develop initially, and then require more hands to scale. This l is emphatically NOT the case for real software — operating systems, word processors, video game rendering engines, etc. — which take a lot of time up front, upwards of 2 to 3 years. The limited area of software you dabble in with your investments is a special case, and so I wouldn’t extrapolate too much.

    1. fredwilson

      linux is an OS

  43. Michael Yap

    I read thru most of the comments and there are a few misconceptions here that I feel compelled to point out:1. Open Source doesn’t always equate altruism. Make no mistakes about this, if its a business, they’re in it to make money. Some organizations use the open source model purely as a marketing gimmick. Some use it with the genuine belief that the model will drive faster product evolution. Whatever the reasons, you can bet your ass that they’re just as concerned about the bottom line as everyone else.2. Open Sources means I can/cannot/must not/shall not/cannot ethically/etc. You cannot generalize what is legally correct and what isn’t across the board to *all* open sourced projects. There are a gazillion open sourced licenses (GPL, LPGL, Berkeley, Apache, etc) out there and what you can or cannot do depends on the license adopted by that product. End of the day, the only thing that is required to be OS is that there must be source code availability and source code distributability. Everything else is details in the license.3. Paid software is better than Open Source or vice versa. I hate dealing with absolutes. There’s always exceptions to the rule out there and I find that speaking or thinking in absolutes closes your mind to possibilities. At the end of the day, you are evaluating software products/solutions and the manner in which you evaluate them depends on your priorities (feature depth, stability, scalability, usability, maturity, etc). If a piece of software is crap, its going to be crap regardless of if its closed or open sourced.4. Open software is not meant for commercial use. Read point #1 please. There are a bunch of very successful open sourced companies out there and its very hard to see how they can possibly become commercial successes if their service offering weren’t commerce driven.Disclaimer: Yes I’m running an open sourced company, yes there will be an instinctive swing to be biased in that direction and we can certainly argue the merits of the open sourced movement. However, I think there’s been a lack of general understanding of what open sourced is, and what it is certainly not.

  44. schof

    I am a long time consumer and contributor to open source. I’m the creator an open source e-commerce framework (Spree.) It started out as a way to solve a common problem along with others facing the same problem. It has since been a means for me to start my own highly profitable company by providing custom development around the product.I also find that we can attract really top notch talent because many of these developers prefer the quality of open source code to that produced by a marketing driven organization.@Fred: Do you have any suggestions on how to pivot from a consulting based business to one that relies more on scalable products?

    1. fredwilson

      create two organizations. one that does the consulting. and one that doesnew product development. fund the dev firm with the profits from theconsulting firm

      1. schof

        That’s essentially what we’re doing now. Its still legally one single company but we’re using the consulting profits to fund the dev. The problem is that we can only grow so fast under this model and the VC’s that we’re talking to say we should abandon the consulting since it won’t scale.Do you think its possible to split into two companies and get VC funding for the dev side (since they profess to not be interested in consulting profits?) Ideally I could use the strength of the consulting company revenues to demonstrate the viability of a product driven strategy.

        1. fredwilson

          yes, if you can split the management toothat is what Joel Spolsky did with Fog Creek and Stack when we funded Stack

          1. schof

            Thanks for the helpful feedback. I’m giving the idea serious consideration.

  45. Sebastian Wain

    One of the best sources about it is following 451 Group CAOS Theory:… on OSS models, etcAnd read the JBoss case study: http://www.forentrepreneurs…To be brief, in my small personal experience offering both types of software I see that for our Fortune 500 customers what matters is the support and the product price is marginal (because they don’t acquire too many licenses). In the case of small companies they want some kind of support but it’s expensive to contract a full package of consulting (advanced support).With free open source software used mainly by end users it’s difficult to charge for something, so it’s a bit “depressing” when your software is downloaded a thousand of times per day without seeing a penny. Obviously developing software can be a real passion but there is a huge unbalance between the popularity and $$$ of free software developers. This must change with new ways to fund small projects (like kickstarter?)It’s important to remember that: Well-Funded Businesses Are Driving Linux Forward:…The case of 10gen is interesting, because MongoDB is AGPL and close the loophole seen in SaaS and where MongoDB is excelent. If it were GPL or BSD like license the history would be different. Also MongoDB offers something different and close a gap even with hundreds of NoSQL competing. So the product is differentiated and interesting in itself. If company came up with another commoditized SQL or NoSQL variant being successful would be different. In the same way is differentiating itself with a DB oriented to analytics.

  46. Dries Buytaert

    What I like about the “Free Software, Paid support” model is that when done successfully, it allows entrepreneurs to “do well and to do good”. The model is working really well for us at Acquia.

  47. Brett Galvin

    Free and open can certainly lengthen the revenue model for some – I’ve noticed ISI (creator of motor racing simulations) thrives on new content delivered by enthusiasts pouring hours and hours into development of new add-ons and tracks.It keeps the sales rolling in and the community around it lively. It has three products whose life now extend over many many years, GTL, GTR2 and rFactor. These products will lead to its latest/eventual new release rFactor 2 exploiting all the convertible content from these legacy software titles. The community also supports all ‘noobs’ independently of ISI.In the race simulation community – rFactor 2 is even more anticipated than GT5 – the top selling gaming software title in 2010. All this has/will happened because of the sandpits designed into the prior titles.


    Fred,This post surprises me because you don’t strike me as a VC who invests in software developed by people who “like to create things but do not like to deal with the hard work of maintaining and supporting the work.” To the contrary, it appears that the creators, whom you invest in, take pride in fulfilling the promise of their creation.The significant challenge for these creators and you as an investor is the balancing act of maintaining consumer trust when serving a second party (advertisers) to achieve financial sustainability.My “equity”, for what it is worth, is being a traditional media/advertising veteran who is surprised new media chose to mimic the ad business model and its inherent tragic flaw of trying to serve two customers.Maybe I’m crazy to have not jumped on the bandwagon or maybe I am just lucky to have not needed to jump and maintained the clarity of experience and independence (no chip played in this game). But aren’t we nearing a point when the unknown costs implied by lengthy and ever changing terms of use and privacy policies make a price for access with no conditions seem fair? And aren’t marketers still willing to pay a lot more to associate themselves with a media brand with proven integrity?K—

  49. CJ

    See the problem with the Open Source movement IN BUSINESS is the idealism. Changing the world by giving away stuff for free hardly ever builds a sustainable business. There has to be some kind of business model that looks after the shareholders first and the world second in order for it to attract serious investment. Otherwise you’re just pushing politics.

  50. calabs

    I completely agree that creating value for customers is the key pinnacle for any business. Everything else, including the divying up into shares, etc is just a fancy way to package up that value. However I think you need to think through the relationship between OSS and value a little more.

  51. Prokofy

    Oh, stop it. The GPL license is not the be-all and end-all. And there’s nothing wrong with patenting software because it is people’s intellectual property and they should get paid for their work. And we should expect service and that needs payment too.Speeds time to market?! Oh, baloney. Awful projects like OpenID that are total failures when Facebook comes along to do FB authentication — projects that were messy, cluttery, didn’t work, and terribly thin-skinned about criticism. Ditto Drupal.The biggest lie that the technocommunists of opensource tell you is that they are “really about capitalism” after they tell you “even this blog is running on open source yuck yuck”. Oh, stop it. You are about communist collectivism and Stakhanovite extraction of sweat equity, and then you are all eaten up by big IT oligarchs. You are not what you claim. Free does not succeed in the marketplace; it hobbles project and then gets eaten without compensation.

  52. CJ

    Serving the world in an idealistic way and not a commerce way is a bigger business failure than putting shareholders first and that’s precisely what I hear from most Open Source advocates.It’s obvious what your politics are but you’re making the mistakes of trying to fit the real world inside of those politics. Artificial scarcity, if you can pull it off, is a great business model. Do you really think that Apple can’t build enough iPhone’s for launch day? Or that Nintendo can’t build enough Wii’s? It’s hype and hype is good for business.As far as Washington and insider dealing(both of which I’m against), the mere mention of these things just further backs up my claim that it’s often about the politics and not about the profit. And while admirable, it doesn’t often end with a great business, but rather a preachy founder who can’t figure out why he can’t beat MS at their own game.And all of your going on about the GPL just isn’t true. Sure your software can’t be stolen or patented, that’s because everyone has a right to it! You can’t steal something that’s free and you, the creator, can’t leverage it via patent to make profit because you’ve now given it away. That’s a huge logical fallacy you’re pushing there. I’m not against Open Source, I’m just saying I doubt we’ll ever see a company the size of Google or MS or Apple built around it and I think that’s by design.

  53. vruz

    You’re extrapolating too much about politics.People who give stuff away for free are not instant commies.It would be useful for you to review the concept of “loss leader” instead.

  54. Prokofy

    I’m glad there are still some people with common sense around Fred’s blog.

  55. Prokofy

    No, they’re commies, TMOT.

  56. CJ

    I agree, I’m saying that politics is often the motivation for those who can’t figure out why giving away their free software with no other business practices in place isn’t making them the next Bill Gates.

  57. Prokofy

    Nope, no fair. No fair taking a product made as a loss leader by a gigantic oligarchic monopolist like Google that has gadzillion dollars.Try a real model that pits one project against another for one sort of widget that doesn’t have something like Google flushing it with money first.

  58. ShanaC

    Well, true. But that still doesn’t get into the nitty gritty of the math of these sorts of models. Which is the interesting part

  59. Manish Sinha

    Microsoft also sells many things at less to strengthen it’s hold. Their server division was at loss, ditto XBOX division. These does not matter to MS since it helps spread their wings far and wide and have a universal presence.Their *real* profitable division is Windows and Office.Same with Google. It gives away most softwares and services for free in hope that people would be online and clicking on ads. Chrome OS is an attempt to make sure that when people use computers, they straightway open Chrome browser and go online.This is why Android has so deep integration with Google products. Both Microsoft and Google wants everyone to use their products. Both have many loss making divisions, but at the end they make huge profits

  60. fredwilson

    google’s plan for android is based on making money

  61. kidmercury

    oh snap…..miahfrost totally put prokofy in her place….brutal…..damn

  62. Prokofy

    No, it’s clear *you* don’t. Transparency isn’t necessarily a capitalist boon. Fred, for example, isn’t transparent about all his great ideas and investment finds — and that’s a *good* thing. Transparency doesn’t necessarily help “the market”; it only helps *your version of what you think the market should be, which is one controlled in the interests of coders*.Again, you’re oblivious to *my* critique of capitalism, which is that it takes the communism of opensource and buys it out, exploiting workers as a free R&D sweat equity source — without the equity, except for the warm fuzzies they get for “helping the commuuuuunity”. I’ve read lots of books, and more important, lived through the communist era in ways you clearly haven’t. These silly propagandistic notions that the free software cultists make up in defense of their collectivism are always humorous to watch, however.

  63. vruz

    Bill Gates used loss leader approaches for a long time as well. (andthe whole Shareware scene that preceded both, commercial-commercialand commercial-open-source software)But in the case of “commercial” software it’s just a tactic, not astrategy.A full blown business model should contemplate many other aspects.The actual difference is that in Open Source, the gratis and/orfreedom bit is pre-determined for you by the creators of the work.So if you want to profit from it, you have no choice but to figure outhow to build a business model around it, still honouring the rights ofthe original authors.Additionaly many propose that free/open source software is not onlycheaper, but also better and more reliable because -given sufficientin-house knowledge- you can leverage an existing project and tailor itinto perfection, keeping it mantained for as long as your companyneeds it.Too many facets to compare in a few paragraphs.

  64. Mark Gannon

    I agree that isn’t true that “all” of open source is a copy of something else. I meant to say most, not all.While it is very difficult to measure FOSS uptake and use, one measure is popularity on the site Where the list of most popular software list is:1.Apache2.gcc3.Linux4.cdrtools5.PostgreSQL6.MPlayer7.MySQL8.Clam AntiVirus9.DokuWiki10.VLC media playerI’ve used some of these everyday for more than 10 years, and I know that each one had a commercial predecessor prior to the inception of the FOSS project.I’d also add, they are universally better (more stable, more features) than the closed source alternatives.

  65. Prokofy

    Er, no, miafrost is a shrill propagagndist of the left who thinks that the way you attack moderates is to somehow accuse them of lack of fidelity to their own values like capitalism. It’s an ancient and thread-bare trick and flushed out immediately by merely asking why people can’t all charge for software. If the GPL was really a device to enable people to charge for software, that would be its every use. But no, she invokes that selectively and then blesses the rest of the share-bears as being part of a market effort *snort*.

  66. Prokofy

    call me when they do

  67. fredwilson

    i guess i should have called you about 10 years ago

  68. Mark Gannon

    Yes, I completely agree that IIS is a copy of successful FOSS programs.You may be correct about Apache being the first successful web server and that it contradicts my assertion that the above list is completely proceeded by commercial implementations.. According to wikipedia (… the first http server was from CERN and developed by Sir Tim Berners-Lee. The Apache project is an offshoot from the NCSA server took off in combination with the Mosiac browser. Before I went looking, I had it in my mind that Sun had an http server prior to the Apache project.Next time I post, I’ll think about it more carefully.Thanks!