Recently, Trip Chowdry, a Silicon Valley pundit, predicted (as reported in Barrons): ’”‘almost every’ VC funded open-source company is struggling and will run out of funds within the next 6 months” http://blogs.barrons.com/techtraderdaily/2008/11/10/trippin-with-trip-one-mans-view-of-carnage-to-come/. I share Matt Asay’s scepticism. http://news.cnet.com/8301-13505_3-10094221-16.html.
Based on my experience with the open source startups who are my clients, Trip is simply wrong. In fact, I have been involved in two different open source venture fundings in the last thirty days. At worst, no more than 10% of the open source startups that I represent are in difficult straits. I have been working with startups for over twenty five years (and remember about half of all startups fail over time), this percentage is hardly unusual.
Bill Snyder makes some interesting points about the differentiation between open source companies and other technology companies (particularly Web 2.0 companies) http://weblog.infoworld.com/tech-bottom-line/archives/2008/11/nuclear_winter.html. I think that the open source companies will thrive in the current market because of their lower cost (critical as IT budgets shrink). However, open source is not business magic and open source companies need to manage their resources and costs carefully.
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