Create loads of value. Capture some, too

I was at a conference recently where one of the speakers was talking about the overall open source startup philosophy: Create a huge amount of value, and give 95% of it away for free. Capture the 5%. But create so much value with your technology that the 5% is a massive dollar amount.

This is a good philosophy, though I’m not 100% on the numbers. At any rate, I think the bottom line is do not be afraid of capturing some of that value.

I talk to a lot of open source founders / maintainers whose project started because the alternatives were too expensive. As a result, they feel perpetually shy about charging for the commercial product they end up creating. If that’s you, remember this:

• If you don’t charge enough, your project won’t be sustainable and will ultimately die. Being profitable as a company is critical to the sustainability of the FOSS you support.

• You (and your team) have just as much right to be paid to create a good product as the engineers at Microsoft or Apple. If you don’t, you have to abandon your project and your company and go get a job at some company that has no qualms about charging enough for the products it creates.

• Assuming you’re creating a product that doesn’t suck, there are people out there with budgets. They want to pay you. If you’ve positioned the product well, they won’t even be super price sensitive.

One pattern I’ve seen in working with founders and interviewing them on my podcast is that building a company is fundamentally a mind game. For open source founders, a huge part of that mind game is getting comfortable with not being the cheap option.