It's completely feasible, but you're playing on hard mode when you keep the software open source. If you've got good business sense and are willing to hustle you'll find a way to succeed. If your only strong suit is software, however, you're setting yourself up for failure.
Would you rather make $300k a year writing and selling proprietary software or fail/make $20k a year providing value-added services for an open-source project? This isn't a tough choice for me, but for some people the ideal of open source trumps all.
It's much easier to write software that fits a simple business model, than to figure out how to shoehorn a business model onto an open source project. You can tell which route is the pragmatic one: start from scratch, optimize for easy monetization.
That said, don't let any of this discourage you. It's absolutely possible to create a cool lifestyle business based on an open source project (or anything really). The only way to know if you can do this is to seriously commit to it. If you don't have to support a family it's probably a risk you can take.
Thank you for your input, it's sobering, yet encouraging :).
> It's much easier to write software that fits a simple business model
Everyone talks about this, but how do I find this business model? Is there some methodical way to uncover needed software?
I mean, everyone talks about having industry expertise, but I actually do have industry expertise in a non-software-related industry (I only returned to software development after a 10+ year hiatus). But my industry expertise is worthless for this particular task, since this industry is absolutely flooded with software, mostly low quality but also some high quality stuff. The last thing people in the industry need is another software package (and they even say this).
So how do I find these vaunted "business models" for paid software?
A business model isn't a unicorn. Your business model doesn't need to be unique or even different. To the contrary: just do what's known to work!
90% of software companies have the following business model:
* create proprietary software
* charge money for licences
* charge extra for support
* charge extra for updates
* pay through the nose for enterprise options
90% of saas companies work like this:
* create proprietary software
* offer a free trial
* charge money for it every month
* (optional) pay through the nose for enterprise options
It's just that simple. No need to overthink it.
Having industry expertise just makes it easier to get to product-market fit. It's by no means a requirement. You may be undervaluing your industry experience. Unless your market knowledge is really generic (e.g. webshops), you've probably got some valuable insights.
(edit: most programmers get paid well, therefore, if you become a programmer you're likely to get paid well. If there are a lot of companies making money in a market, then you're likely to make a lot of money if you enter that market. Inversely, if everybody in a market is struggling [indie games] then you're likely to struggle too.)
In the case of the SaaS business models, is the first step even needed? I'm still trying to not be blinded by my idealism but is there really any value in making source proprietary if it's a SaaS business? Would GitHub's popularity be affected appreciably if it were closed? Google's?
I remain hopeful that the standard SaaS business model dovetails nicely with free and open source software.
Google's certainly would be. Microsoft has dumped millions into trying to get Bing to a point where it can even begin to compete with Google—if Google open sourced their code, tons of competitors would crop up trying to take market share.
GitHub would probably have less of a problem with open sourcing their code because their primary value prop isn't that they've built some brilliant software but that they take the bother out of managing your source hosting.
> GitHub would probably have less of a problem with open sourcing their code because their primary value prop isn't that they've built some brilliant software but that they take the bother out of managing your source hosting.
GitHub is making money by selling their proprietary pack to other corporations so they could implement it on their own server. If they release it for free, they wouldn't be able to support free code hosting services and remain profitable.
They're also selling premium plans for the regular users, but I don't think that this gives them enough profit to remain profitable.
The facts point squarely in one direction, as far as I can tell. Profitable SaaS companies are proprietary. Where are the billion dollar open source SaaS companies? I don't see them. Maybe the big companies occasionally release a component on github to get some goodwill, but nothing big.
It's only when you go all the way down to the "lifestyle" sized companies that I see real dedication to the open source ideals. They're willing to put their entire product on github. Props to those founders, but it's pretty insignificant because those businesses are so small.
Most people don't have the skills to run their own servers, and nor can we expect them to. Service based products are the future, but I hope that interoperability gets to the point where customers can switch painlessly between different providers. That would put a lot of leverage back in the hands of the end user. If I had to name one problem it would be lock-in, not proprietary code.
No, I maintain that for SaaS, that first step is not needed. There can be tremendous value in finding an OSS project and basing a SaaS business on it. The most important thing is still the value it offers to your customers.
> Is there some methodical way to uncover needed software?
I think this is a common thread here - software developers looking for a problem to solve. A lot of people invent a solution without really knowing whether it is a problem - or is the main problem for whatever industry it's serving.
I personally feel like you'll always do better if you at least have a passing interesting in whatever business you are planning to "disrupt". If you don't work in the industry itself, then it's probably a good idea to have a partner who does and can bring to the table the deep understanding of the industry and whatever pain it may have.
Finding that is not incredibly difficult - there are thousands of people who have an idea for an application and are looking for somebody to bring it to life. If you don't personally have any inspiration for an idea, then you can always find somebody who has the idea and industry experience and create a great team.
Another reason for having such a person is that, even if you write an amazing app, you'll quickly find that each industry can be a small world, and the vendors you are competing against are already having lunch and playing golf with the major buyers in that market. If you have no connections at all, it can be extremely difficult to get your foot in the door. "Build it and they will come" is not something that is usually true.
> Everyone talks about this, but how do I find this business model? Is there some methodical way to uncover needed software?
I like traction's bulls-eye-framework approach here.
> since this industry is absolutely flooded with software, mostly low quality but also some high quality stuff. The last thing people in the industry need is another software package (and they even say this).
I don't know about industry, but perhaps, there's a lot of software with bad User Mental model/User Experience??. In any case, it sounds like the industry could use some disruption based on clear feature reduction, support and UX improvements(your experience should point to which it is).
You need to find a few things: an area that has need of better software, preferably one which isn't overrun by competition, and then take a different approach than everyone else.
I've always thought that open source or freemium was an equalizer to get found by potential users on the net. If you lack the capital and/or marketing chops it's a valid alternative.
It hasn't been said but I suspect it wouldn't work nearly as well for a consumer product than it would for something targeting businesses.
Would you rather make $300k a year writing and selling proprietary software or fail/make $20k a year providing value-added services for an open-source project? This isn't a tough choice for me, but for some people the ideal of open source trumps all.
It's much easier to write software that fits a simple business model, than to figure out how to shoehorn a business model onto an open source project. You can tell which route is the pragmatic one: start from scratch, optimize for easy monetization.
That said, don't let any of this discourage you. It's absolutely possible to create a cool lifestyle business based on an open source project (or anything really). The only way to know if you can do this is to seriously commit to it. If you don't have to support a family it's probably a risk you can take.