

Ask HN: How do Riak, Canonical, and other "deep-down" companies make money? - crasshopper

When I look at developer profiles on eg twitter, I could partition their advertised day jobs into "surface" and "deep" companies. By "surface" I mean consumer-facing companies like LinkedIn, Codecademy, Path -- something where the money flow is pretty obvious: like either a consumer pays to upgrade to premium or ads are sold or somehow they're asking for money from regular Jane.<p>Then I see the developers who seem to work on "back end" stuff like Riak, Neo4j, RevolutionR, ... companies where if I click through to the company site I see a lot of technical stuff which is clearly aimed at IT intelligentsia, but not at the web-surfing public.<p>I've never worked in the IT field and usually just come to HN to read about business models in this space. So I don't understand the IT ecosystem. How is it that these "deep" or "back end" companies make money? Do they sell data? (if so, who buys it and what do they use it for?) Provide support services to large businesses? From an economic perspective, what's going on?
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mechanical_fish
Draz is right; let's flesh it out a bit.

One answer is: Value-added features. The open-source product does X, but the
product from a vendor does X + Y. This is a tempting business model for
vendors because you can build feature Y once, then sell it over and over with
relatively little additional cost per sale.

The other answer is: Trained talent, continuously on tap.

If you're a company and you use an open-source product internally, there will
be times when you want the advice of an expert. Something has broken and you
need help finding the problem. You want to improve performance and you want
advice on how. New features have come out in the open-source product and you
need someone to explain what they are and how they might benefit your company.

What do you do? You can look for free advice online in forums or IRC. But the
best advisors don't work for free very often. And those who _do_ work for free
won't prioritize your request for help over all the others that flood these
kinds of forums. Your company may have tens of thousands of dollars riding on
this. You would happily spend many extra dollars to get a definitive answer
now. You need a well-connected matchmaker to help you connect your big check
with the appropriate talent.

You could look for a well-regarded consultant. But identifying the good ones
and testing them takes a lot of preparation. Even if your address book has
been primed with the contact info of the best consultants, they have backlogs.
Just getting them on the phone may be difficult. Worse, what if trouble
strikes and you call the consultants and find that they're all booked up, or
retired, or they've switched to consulting on iOS development and abandoned
your platform?

You could find or train a brilliant expert in your open-source tech and then
_hire_ them full time to sit around waiting for the need to act. But that's
awfully inefficient. And then the expert gets bored playing Tetris all day and
gets hired away or goes off to found a startup, and you're back on square one.

Enter the support firm. They'll sell you "support contracts" (pay
advisors/troubleshooters by the hour, with a minimum number of hours per
month) or "professional services" (pay the developers by the day, week, or
project for larger-scale projects than are given to "support". Either way, you
get folks who meet a minimum standard set by the support firm, and who often
have the ability to escalate questions directly to the experts who built the
tool in the first place.

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draz
consulting work: plain vanilla implementation (installation), special plug-
ins, support, etc. How does RedHat make money?

