How Pivotal cracked the one-billion-dollar code

Open Source Business Models

I think the idea that Red Hat is the only billion dollar open source company is misleading. The problem is that open source is not a business model--its a development methodology. Of course the freemium component of a company's business model needs to be used tactically to achieve a certain goal.

Many companies have a "freemium" aspect of their product. For example, you can download the Pandora app and listen to music without paying anything. Likewise, many games are free and us in-app-purchases to generate money.

I'm not even sure that I believe the author's premise that Red Hat is the only billion dollar open source software company. How about Acquia, the company behind Drupal? Or Automatic, the company behind Wordpress? Public companies are not the only firms that command billion dollar price tags. Even companies like Jive Software and Docker have valuations of half a billion, so it won't be too long before they grow past the billion mark.

Actually the example that the author uses: Pivotal... is not that relevant for most software. If you count all the companies that offer a hosting service based on open source software, why not include Amazon or Rackspace? They are making tons of money offering customers linux servers. Or even a company like Hostgator?

Even big companies like Facebook, Cisco, Ebay, and Google publish lots of open source software. So how exactly is the author defining "open source company"...

So not a lot of companies uses open source as the headline for their business model. But so what?

If you are an open source company, that's not enough. You have to solve business problems. And open source is one of the tools you have in your bag to solve these problems. Stop trying to make open source something that its not...

- Mike Schwartz

So lets look behind the spin?

Pivotal was spun out from VMware with all complete product portfolio in place. In addition GE then invested $105m. With all this and the arm twisting capabilities of the EMC sales force - Pivotal report $40m in the pipeline.

Sorry not impressed.