Workleaf

Start-up costs are tumbling down these days (Yes… it has almost become a cliche these days!). Some of the reasons are – Open Source, Offshoring, Online Marketing, Cheap Hardware.

All that is fine, but how does a person actually get to these resources and see what is the most cost-effective way of ploughing ahead with her/his ideas? My recent discovery as an answer to this question is the “now famous” tech blog – http://www.techcrunch.com/

Apparently, there are so many start-ups out there providing services that could, in turn, help other start-ups cut down their initial expenditure significantly. Recently reported start-ups were – Amberjack and Weebly. Amberjack helps you build a “site tour” for first time visitors pretty easily. Weebly helps you in creating Web 2.0 ready sites.  I will personally give these sites a try and see if it helps in my attempt moving forward with Alef’s product development. Till then, I strongly recommend subscribing to TechCrunch’s feeds. You never know what start-ups are out there that are providing exactly what you need to get moving!

Ok… so this is becoming a personal bookmark of all those blogs that I think will be useful for me later. Of course, all these entries carry a common thread – Startup, open source, entrepreneurship, business process management.

Here is another classic from Matt.

The interesting part of what he said was -

How do you prevent leakage and make open source more “sales-efficient” in the short-term? I’ve discovered a few means, and would love to hear yours, as well:

1. “Proprietary” Incentive. You must have a hook that convinces would-be customers to buy, and not merely use. Free downloads invite use, but only some proprietary (pardon the word) hook effectively closes sales. For MySQL (which, I believe, derives a massive percentage of its revenues from OEM/embedded sales), this means that it offers a clean way out of the GPL. For SugarCRM, it’s the additional functionality that is commercially licensed. For Red Hat (and Alfresco now, too), it’s the testing, packaging, third-party application certification, etc. that only comes with the Enterprise product.If you lack a hook, you may well get many users, but it will be extraordinarily difficult to beg and cajole users into becoming buyers. You don’t want that fight. You want an appreciable difference between your “community” product and your “professional” product, whether that difference is in functionality, stability, or whatever.
2. Source of Code. You must have control over the code. I don’t mean copyright here, but rather developers. Source of code rather than source code. Customers buy from those that write the software.
3. Partner Alignment. You must have your partners aligned with your vision. Systems integrators and others who make their money on professional services – in the proprietary and open worlds – always have an incentive to drive the cost of software to zero to make their services more appealing/less expensive. This is normal and natural. It’s not, however, good for the creators of the software. Software startups don’t need a huge swath of partners – they need a few hyper-committed partners with expertise and the shared vision of driving software sales (as well as their professional services engagements). The two need not be mutually exclusive. Despite #2 above, having partners support your free product erodes your ability to charge for it.
4. References. Customers talk to each other. They want to know who is paying for what. Convince one financial institution to pay and odds are that others will follow. This is not new advice – it’s very much what Geoffrey Moore has been teaching for years. But it’s critical in a different way in open source: you don’t just want marquee buyers using your product – you want them buying your product. There’s a huge difference between the two.

Hmm…. food for thought.

This blog is getting to become a collection of “Open Source Startup for Dummies” blog entries on the web. Another one from Matt Asay on Infoworld (an older one though) on open source sales cycles. He says -

“So, if you’re getting into open source and your deal size is expected to be north of, say, $15,000, you need to learn patience in the sales cycle. A download doesn’t mean immediate intent to buy. And even when it does, the intent will generally be well out in front of the action to do so.I frankly am still experimenting with the best way to qualify interest post-download, and would love to hear others’ experience on the matter.”

I will Matt… I will….

Since the time I started toying with the idea of going open source, I’ve been asked a thousand times (ok… maybe thats an exageration) – how do we make money if we go that path. So where do I turn to for tips? Blogsphere… of course! And my latest favourite on this subject is Matt Asay on InfoWorld. I came across a brilliant piece on constructing open source revenue models and found it extremely insightful (especially for a new entrant like me).

So I thought of posting a trackback on my own Blite! Find it here. Thank you Matt. You’ve have a new fan.