Is Open Source a business model

Engineering Model vs. Business Model

In this video Stephen Walli opened up the debate with the assertion that “open source is not a business model” and instead said it was an engineering model. Walli emphasized that open source practices contribute immense value to the engineering side of software, but that translating that into business practice calls for more strategy and design. He referenced Paul Cormier’s famous quote that “Red Hat is not an open source company,it’s an enterprise software company that understands open source engineering.” It was interesting how he distinguished between the open source project as the technical foundation and the product (what customers buy), and warning not to confuse the two.

Open Source as Business Enabler

Jeff Borek provided a counter idea, saying that open source could actually function as a business model. He argues that open source licensing and collaboration frameworks have historically evolved to support new kinds of businesses, from Red Hat and SUSE to modern cloud-native companies like MongoDB and Elastic. While Borek agrees that open source alone doesn’t guarantee revenue, he insisted that it is a defining feature of alot of successful business strategies. He challenged the idea that open source is simply just a distribution method and stressed its role in shaping how value is delivered and monetized.

Something that Stood out: Mikko’s Law

Something that stuck with me from the video was the part of the discussion that revolved around community versus customers. Walli talked about Mikko’s Law which is “Your community has time and no money; your customers have money and no time.” This idea was used to debunk the idea that there’s a predictable conversion rate from open source users to paying customers.

Borek and Walli highlighted that companies have to tailor their strategy to engage with these two different groups separately. Community engagement builds user base and innovation, while direct customer engagement requires a separate, focused strategy around support, and relationship building.