Positioning and Open Source Business Models

Startups that are built around open source projects have unique positioning challenges, but the exact positioning challenges and strategies depend on what type of open source business strategy they are following. The primary open source business strategies I can think of are:

• Support, otherwise known as the Red Hat model

• Open core

• Running a SaaS version of the open source project

These are common strategies for companies that are very close to the open source project. There’s a fourth option, which I actually think is most common in the cloud native space. The company maintains an open source project, but it’s name and brand are different from the company’s (unlike in most open core situations) and the open source project is in a different market category. I can’t think of an easy shorthand for this strategy, but I think it’s the most common one I see. In this last strategy, the open source project is not quite as close to the commercial product — the branding is different, among other things. But as long as the company is investing in the open source project, it needs to pay attention to how it is positioned.

Each of these open source business strategies presents a slightly different positioning challenge. What they have in common, though, is that startups building both a commercial offering of some kind as well as an open source project need to position two products, and the company needs to pay attention not only to the individual positioning of the commercial product and open source project, but also how the two products’ positioning relates to each other.

Over the next couple days I’ll talk about positioning strategies for each of these four open source business strategies. If you have a startup built around an open source project and you’re having trouble explaining how the two relate to each other or figuring out who would benefit most from your commercial offering, feel free to reach out.