
Ask HN: Has open-sourcing every killed a company? - atarian
A common fear I hear from people who don&#x27;t want to open-source their projects is that a competitor might steal their code. I&#x27;ve personally never heard of this  happening, but I&#x27;d be interested to hear any stories about it.
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cjbprime
I don't know of any companies which failed due to competitor access to source
code. There are probably many companies that failed as businesses because
their code was open source and as a result they couldn't convince people to
fund their work, so that seems like a more pressing concern.

OpenSSL is a famous example of an open source project that is massively
depended on, including by billion dollar companies, and yet the
company/project trying to maintain it was receiving almost no funding until an
outcry a few years ago.

It might also be instructive to think about FreeBSD. It is much less popular
than it used to be. Its code was used as part of the basis for the original
Mac OS X release in 2001, but Apple's changes were made proprietary rather
than contributed back to FreeBSD, and (arguably) as a result hardly anyone
uses FreeBSD now, while millions use macOS. We can think of macOS as having
been a competitor to FreeBSD in this sense.

Linux, on the other hand, requires contributions to be given back to the main
project, and is doing much better.

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mattmanser
It wasn't an outcry, it was a bug. Heartbleed happened in OpenSSL, people then
realized that the project was massively important so pledged funding.

[https://arstechnica.com/information-
technology/2014/04/tech-...](https://arstechnica.com/information-
technology/2014/04/tech-giants-chastened-by-heartbleed-finally-agree-to-fund-
openssl/)

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bartozone
I worked for an open source company about 4 years ago. It was quite popular,
venture backed, and had all the interest in the world. We launched with a lot
of fanfare, and adoption was quite strong. We raised a series B just before
our official launch and had the backing of great investors. The problem with
open source isn't that someone else is going to come and take your code and
use it to compete against you. It's that it's nearly impossible to monetize
something that you give away for free otherwise.

We experimented with a lot of different business models, but the reality was
... no engineer was willing to pay us for something like "analytics" ... or
"hosting" ... They were just going to keep using the code.

It's also incredibly difficult to track actual usage. There was no way to
enforce the use of it on our CDN, so people were likely using our product, and
we didn't know about it at all. When you open source, you just give up a lot
of control. When you're end user are engineers, they won't pay unless it's
something they can't do themselves, or aren't already using another service.

If you look at a company like SugarCRM (open source CRM product), businesses
will pay. Granted, they aren't salesforce, but they have a legitimate business
model that works for them. So while it can work, before making a decision, I
would talk to your customers about what they would be willing to pay for, and
how much.

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guitarbill
A codebase is an assert (or a liability), one that you spend time and money
creating. If your business model/operations are such that anybody with the
code could clone it quickly, it's a bad idea to give it away.

The obvious one I can think of is where you sell (commodity) hardware + value-
add software for a premium. Mobile apps is maybe another example which already
suffers badly from cloning (without available source code), because the over-
saturation makes success more or less luck.

From a business perspective, open-sourcing some code still make sense in many
situations though. You may want to grow a community around it
(Docker/Chef/Puppet/Ansible/Salt/etc), or gain market share by making it easy
to install/try out (see previous, or PostgreSQL vs Oracle/MSSQL/IBM DB2), or
recruit. In general, "business" is always going to underestimate the value of
this and stray away, because it's taking a leap of faith (read: risk).

It gets interesting when pluses and minuses overlap. For example Arduino,
would they have gotten as popular without being open source? Probably not. Are
knock-offs cannibalizing their sales? A bit. Did that cause much loss? I don't
know, I assume ARM boards and ESP8266 had more impact. So even though they're
commodity hardware + software, the community part probably offsets the easy-
to-clone pitfall.

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slgeorge
At the widest level 'has open sourcing ever killed a company'.

Off-hand I can't think of any companies that have taken a _successful_
proprietary product (code-base) and then open sourced it. If your main code-
base and business around it are successful there's not much value to open
sourcing it. It would be hard to convince any business that they should do
something that increases risk. The "business" argument in favour of open
source would be around contributors and the marketing effect - but if the
product is already successful that's a weak argument.

In most circumstances software companies have open sourced proprietary code-
bases because they were under threat and needed some sort of radical strategy.
The canonical example is Netscape. There's really on a few examples - I don't
think there's much evidence that they failed _because of_ open sourcing. The
reality is they were under competitive pressure any way. Another big example
is Sun though that's a nuanced story far beyond open source.

Then the last group is companies that are built as open source endeavours. Do
they fail 'because' of open source more than proprietary software companies?
It's a bit of a difficult to infer what would have happened if they weren't
open source: how do you imagine Docker would be doing without being open
source, VMWare is an example from an earlier age but the user audience and
market dynamic are a bit different. My personal opinion would be that open
source helps in the initial stages if your target user is technical [0], but
that it does make it harder to commercialise and puts you under consistent
risk of substitution or disintermediation. Community building isn't really
dependant on being open source - look at GitHub, it _serves_ the developer
community who are pragmatists. The problem of commercialisation is that the
economics aren't on your side and the customers buying behaviour is orientated
on the proprietary model - users buy scarcity.

If you're interested there's quite a lot of good academic work on open source
as a business model, searching for 'innovation and open source' should turn up
some interesting papers. Like all business studies they all suffer from a
small group of examples and a complex environment aka real life.

[0] In other words, if it's a normal user audience open source makes no
difference. That's why line of business apps don't have any traction.

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dingo_bat
I think docker is going to become an example of this.

~~~
jazoom
I doubt it would have taken off to begin with if it wasn't open source,
though.

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repomies6999
Not in that sense. But one open sourcing I was witnessing revealed other
sensitive information (credentials), and resulted in a huge losses to the
company.

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rl3
Balanced, perhaps:

[http://blog.balancedpayments.com/benefits-open-company-
balan...](http://blog.balancedpayments.com/benefits-open-company-balanced/)

Whether or not that had anything to do with their demise, I couldn't yell you.
Fantastic company though.

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ada1981
I was thinking of open source projects that killed other companies -- Ie,
Wikipedia shuttering Microsoft Encarta - but then I saw your comment..

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dman
The other side of the equation is - how many projects benefit from the
additional eyes and hands that a community brings?

~~~
slgeorge
"projects" benefit. It's not that easy to declare that companies do honestly.
We can infer that most VC's and founders don't think it does because everyone
_uses_ open source, but few (any?) of the major growth start-ups from the late
90's open source their key commercial code. I'm thinking of things like
Facebook - they open source infrastructure as honey pots for engineers - but
not their key code. That's also partially because the nature of how you made
money changed - it became all about the data slurp.

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brent_noorda
Sun? Netscape?

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zaarn
Netscape was already failing when they open sourced the browser, IIRC.

Sun was bought by Oracle, which is the opposite of open-sourcing the product.

~~~
bb88
The wikipedia page on Netscape is pretty good reading.

[https://en.wikipedia.org/wiki/Netscape](https://en.wikipedia.org/wiki/Netscape)

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kls
Possibly Santa Cruz Operations, but they where in trouble before Linux really
took off IIRC.

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UFC9783
Starwood Hotels.

~~~
matt_the_bass
Can you explain this comment please?

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oweiler
RoboVM.

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ThatHNGuy
look at Hashicorp: all their products are opensource and I think it's not
disappearing in the next years.

Packer, Vagrant, Terraform...they are largely adopted and it makes Hashicorp
in a strong position

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theknarf
*ever

