Surfing As a Business Model

...In the open-source world, part of the broader peer production movement, analogous situations occur. As we all know communities collaborate to create some form of "gift", which in our case is a useful piece of software. These systems are created for a variety of reasons including commercial (make money, develop a reputation), altruistic (benefit society, foster open science, help fellow developers), practical (scalable software process, ease of collaboration) and fun (community engagement, personal growth). While it's likely that participating individuals and organizations will not reap the same benefit that an IP-based corporation might, the potential secondary effects offer bountiful opportunities. Yochai Benkler, Berkman Professor of Entrepreneurial Legal Studies at Harvard, refers to this concept in his recent TED presentation on new open-source economics. Near the 16 minute mark he refers to "surfers", individuals and organizations that take advantage of the secondary effects of peer production, and cites IBM's service model and Google as two preeminent examples of surfer companies. Other individuals describe it similarly. For example, Dr. Ron Kikinis, Director of the Surgical Planning Laboratory at Harvard Medical School, and inspired visionary behind the medical imaging application Slicer, refers to open source tools as building an international highway system, over which private, commercial, educational, research and government interests collaborate to make our lives better (see this presentation).

Kitware like many open source companies has learned from these and other examples. We are a for-profit company, growing at a sustained 25-30% rate, profitable every year from founding, and we are masters of open source surfing. Our business model includes creating, coordinating, and ultimately giving open source systems worth hundreds of millions of dollars (see ohloh.net cost estimates at the bottom of the NAMIC Kit page). However, being capitalists we understand that complex software systems like this require services, and we recognize that over 2/3 of software revenues are service-based and measured in hundreds of billions of dollars -- see Yochai Benkler Coase's Penguin. With this gigantic opportunity available to us, we (and many other open source firms) have developed an enlightened business model that integrates generosity, research, education, and the practice of open science, with service opportunities including collaborative R&D, consulting, commercial solutions, support products and training.

So the next time someone asks you about open source business model, think of surfing: We make big waves by dropping open source software systems into the ocean of scientific computing, and then ride the resulting waves of opportunity. Like the generous individuals and organizations that came before us, we too hope to leave a lasting legacy upon which we and others will thrive.