Positioning and the Red Hat Model
How do you position your company when you don’t actually have a product?
If you’re building a company around an open source project and have decided to adopt the Red Hat business model, ie you are offering support for an open source project but don’t have any commercial project at all, the first step to effective positioning is understanding that you are ultimately building a services company. But your success will depend on adoption of the ‘free product,’ in other words the open source project.
This means you need to market two things. The open source project and your support services. That means you need to position two things: The OSS and the support services. You also need to pay special attention to how the two relate to each other and what type of buyer (or contributor) is best for each one.
One of the mistakes companies make with this model is assuming that their service subscription customers — in other words, the entire source of their revenue — will be a subset of the open source project’s community. There will likely be overlap, but the competitive alternatives to using an open source project without support are often not the same as using an open source project with full support. The types of users who would even consider each option will have overlap but ultimately will be different.
So what you you do?
First of all, position the pure open source project and the open source project with support seperately. I mean you should do the positioning exercise twice and position the two things completed independently of each other.
Once that’s done, the next step is to position the two offerings — the free open source project and the paid support services — relative to each other. You want to understand:
Where is the overlap between use cases and ideal users for both the open source project and the support services?
How do your ideal customers think about the difference between the two products (supported vs unsupported)?
Are the two products part of the same funnel or are the two markets different enough that they need two different marketing funnels?
Once you’ve answered those questions you’ll be better able to design a sales and marketing strategy that will both expand the community of users and contributors in the open source community as well as the number of paying customers who want support. But it’s a mistake to focus solely on one or the other — pay attention to how each one is positioned and how the two offerings relate to each other in the customers’ minds.