The Real Reason Open Source Startups Fail

“Open source ecosystem markets behave differently and therefore require a very different playbook. There, the differentiation is not in the technology you build; it is in the process and expertise that you slowly amass over an extended period of time…

“Building an open-source company requires operational excellence and staying power, not just genius hackers with a vision of taking down VMware. Startups and VCs that run the company by the innovation playbook fail, while those that focus on expertise first — and thus the open source playbook — do well.”


Editor’s note: Alex Freedland is a co-founder and chairman of Mirantis and an OpenStack Foundation board member.

The recent news around Nebula shutting its doors has stirred speculation that OpenStack startups are struggling because of the state of the OpenStack market. There is even a piece claiming that the OpenStack dream is on “life support.”

This couldn’t be further from the truth. The reality is that winning in opensource requires a playbook that is drastically different from one that most VCs investing in technology today are used to.

In summer 2011, Mirantis was a 150-person IT services company doing consulting around open-source infrastructure technologies.

We ran across OpenStack in a few engagements, saw the community momentum behind it and decided to go all in. In the search for early business, we called Randy Bias of Cloudscaling, an OpenStack services startup that had just raised a Series A to build an…

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