In this first edition of what I intend to be a quarterly newsletter, I want to talk about a topic that I think about every day, as someone who helps run a profitable company based on open source software.
That topic is how LINBIT® attracts and retains customers when its software is open source and free. LINBIT has been in the open source software business for over two decades now and some business lessons have been learned in that time. In this newsletter that I’ll be releasing periodically, I hope to share some of these lessons and insights from my experience here.
People Pay You For Free Software?
One of the early dilemmas you might face when trying to implement a business plan around open source software is: How to attract paying customers when the software itself is free?
A complete answer is nuanced, but I’ll try to keep it simple and just say that at LINBIT, we focus on educating our users on how to use our software successfully. Several business sectors and companies, such as those working in or with governments, require a support purchase for software, if it’s available. This is why we try to be the source of education for our software. In educating the users about how to configure and use our software, we can also let them know that there are paid support offerings.
Additionally, even if the prospect doesn’t end up buying a support subscription today, they might tomorrow, or at a very minimum we have one more user of our software out in the wild. More users means more testing, a greater variety of real-world deployments, more issue reporting, and more potential for new features to be discovered. We are continually developing and improving our software so these things are important to us.
Keeping Customers by Keeping Customers Happy
Attracting paying customers is only part of the business cycle for an open source software company. You also have to retain customers to keep the business going.
This part is actually pretty simple to explain, although implementing it requires constant attention, commitment, and work.
At LINBIT, we really focus on being the company that we’d want to work with as an end customer. It’s important to me that we keep the human and neighborly element in our business. It’s hard to find a company that actually cares for every customer the same, no matter the contract size. We strive to be that company, the kind you don’t find very often anymore in this day and age.
Adaptable Efforts For Different Types of Customers
It’s important to mention that there are different types of open source customers and so a company might need to adapt its retention efforts to suit the customer type.
In my experience, open source software consumers might fit into these categories:
- Free users out of necessity. They simply can’t afford additional costs.
This type of user is not paying LINBIT so we don’t directly focus efforts here, but we don’t dismiss this type of user either. Times can change situations and perhaps they might one day have a budget to afford to pay. Free users might also be a source of word-of-mouth marketing, for example, in forum messages or social media posts. For this type of user, what LINBIT can do is what we do anyway: continue to develop and improve the software to keep it relevant, useful, and running well. - Large companies that consume open source software but never contribute back or pay for it. Their justification is to keep costs down – despite that the cost of support for open source software is generally a very small line item compared to the tens if not hundreds of thousands of dollars for proprietary solutions or supporting open source software in-house.
- Customers that want to contribute something back, for example testing, submitting bug reports, development, or other in-kind contributions that help the open source project. This type mostly ends up as download-only or lower-level support customers.
- Customers that need to buy support due to requirements. This type is generally government customers.
- Customers that need installation and support due to the complexity of all the moving pieces when deploying SDS or HA clusters. In this case, we are experts operating a business in this field for over 20 years. The LINBIT team can definitely help this type of customer.
- Large companies that don’t want to hire the expertise in-house, because they realize that the cost to support open source software in-house will usually cost more in money and time.In our business of software storage solutions, LINBIT customers of this type tend to be cloud providers or data centers.
In a future newsletter, I could further explore these types of customer with more detail and describe how we at LINBIT adapt strategies to try to keep each type happy and retained. For now, I’m just sharing this list as an observation for context and say again that retention efforts sometimes need to adapt to the type of customer.
Running an Open Source Company Is Not Without Stress
Open source software and running a company around it can feel as if you are on the virtuous, “good” side of things in the world. However, it is not without stress. It’s certainly not a world filled with unicorns and rainbows, at least not all the time. And it can put extra pressure on customer retention efforts that wouldn’t be there for a proprietary licensed software company. One source of stress can be the huge companies that ride on the backs of open source without contributing back. Another stress, at least for LINBIT, is due to the nature of our software being developed around storage. The sales cycle is on average 6 to 18 months at best. Companies don’t rip out and replace infrastructure overnight. This is because we are dealing with production and mission-critical environments. Rightfully, companies will generally take a while to fully test something new, before replacing anything running in production. There is a lot of time investment upfront to close the deal. However, once we get a customer we generally retain them. On the contract side of it, we occasionally lose a support customer because the system is stable and works, so why continue paying for support?
Final Thoughts
Attracting and retaining customers for open source software can be challenging and needs to be met with committed effort. Adapting your efforts to different open source software customer types needs to be a part of your business plan. Being an expert authority in our field and an educational source for our software, while retaining the human element of care for our customers, is the path the LINBIT team takes.
If there are topics that you might want to read about related to the business side of open source software, get in touch. I’m always happy to hear from other people operating in the open source world. Open source is a challenging and never dull landscape to operate in and that’s what I love.
Thanks for reading.
