Who says you can't make money in open source?

(Credit: Matt Asay)

There's a thought out there that you can't make money with open-source software. This evening on the way to a gathering of open-source CEOs I witnessed something that just might contradict this.

Now, I'm not going to say whose car this is, but let's just say he hasn't cashed out yet, so this either represents a whole lot of debt...or a great revenue stream...or both. :-)

Actually, one thing that I got from my conversation with him and others at the dinner is just how amazingly efficient open source can be a business model. If I'm Oracle or Microsoft holding onto an existing cash cow, it's not the best strategy. But if I'm looking to disrupt a market and want to close half of the deals (or better) that I get pulled into...?

That's open source.

It's a pull model, at least initially. Company X downloads your open-source product, tries it out, decides to buy it, and then it calls or emails to consummate the deal. No airfare involved much of the time. No over-priced salesperson parking in the lot of the prospect, chewing up cash and the prospect's patience.

Just software that works, for which a significant percentage will pay. It's a fantastic model, one that is not without its flaws, but for a new company breaking into a market, I'm convinced the upside (many customers at a low acquisition cost) outweighs the downside (many people using the software for free).