It’s no secret that open-source technology — once the province of radicals, hippies and granola eaters — has gone mainstream. According to industry estimates, more than 180 young companies that give away their software raised roughly $3.2 billion in financing from 2011 to 2014. Even major enterprise-IT vendors are relying on open-source for critical business functions today. It’s a big turnaround from the days when former Microsoft CEO Steve Ballmer famously called the open-source Linux operating system “a cancer” (and obviously a threat to Windows). Despite the growing popularity of open-source software, though, many open-source companies are not financially healthy. Just like eyeballs didn’t translate into actual online purchases during the first dot-com era in the late 1990s, millions of free-software downloads do not always lead to sustainable revenue streams. Make no mistake, open-source software is a brilliant delivery model to drive user adoption, and it’s poised to drive increasing market value in the coming years. But it’s not a business model on its own. Just how challenging is it to build a big, profitable open-source business? Consider this: Besides the ongoing success of
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