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My Views on OSS ESM (Part 2)

By John | August 1, 2007

Are Venture Capitalists the Root of all OSS Evil?

In my last blog article I talked about analyst groups and my thoughts thereof. Venture Capitals (VC’s) are a great follow-on in a vendor to analyst group (AG) food chain. As I described in the aforementioned blog article I noted that vendors tell analyst groups what they want to hear. Well, analyst groups basically tell VC’s what they want to hear. It is a vicious food chain where the analysts and VC’s eat their young (not really I just thought it sounded cool). VC’s are also customers of analyst groups as well as vendors. Although, I think this is another conflict of interest for analyst groups there is no concept of conflict of interest in the VC world. In fact most times you can’t tell a VC or an AG apart. Actually the only way is by their net worth. Again is anyone doing any serious research on what VC’s are brining to the OSS table good or bad. Do VC’s really just make an OSS vendor another feature driven software company?

In the ESM OSS space you can use Groundwork again as a template (sorry Dave, however I know you agree with me). Groundwork is a sales and feature driven organization and probably lost its organics the day the VC’s appointed the CEO. Then comes CFO, then the EVP of sales and last but not least an EVP of marketing. Think about it, in a truly organic OSS project why would you have marketing? The beauty of OSS is that the community grows the project not the EVP of marketing. In most of the software companies I have worked for marketing requirements drive development projects and marketing requirements come from customer’s needs. Which customers? The ones the sales guys are screaming about the most.

The thing is that the VC’s haven’t figured out how this OSS thing works yet and when they get 20 million plus into a company they run the show regardless. What do VC’s do best? Go with what has worked for them in the past. You see a VC can fail 17 out of 20 times but those three hits make up for another 20 and then some. Therefore they are never wrong… never … You can’t argue with a billionaire. I have tried trust me. Sorry to keep picking on Groundwork but they have their chin out the farthest. Everyone in that company knows they should do a pure services play but the CEO is in denial. In fact he told me personally that there is no way the VC’s will let them talk services. IMO, VC’s were looking for traditional exit strategies with OSS ESM plays and were hoping to time the OSS bubble for Big 4 buyouts. Time is running out. Don’t forget a lot of the Big Four companies are a vast consolidation of VC funded startups (Tivoli, Marimba, MicroMuse, Novadign, the list could go on for days).

I am sure someone can site tons of examples of VC and OSS working and of course ventures like JBOSS had huge payoffs. The one thing I know is that the days of 10x to 15x are numbered and until the VC’s take their heads out of the sand and realize that the software industry is changing and it is all about knowledge IP and services (see my Reusable IP blog ) VC’s will continue to convolute OSS vendors.

Other articles in this series…

My Views on OSS ESM (Part 1)

My Views on OSS ESM (Part 3)

My Views on OSS ESM (Part 4)

Topics: 451, OSS, bmc, caos, gartner, groundwork, groundworkopensource, gwmanup, hp, hyperic, ibm, nagios, opennms, opensource, tivoli, vcfightclub, zabbix, zenoss | 3 Comments »

3 Responses to “My Views on OSS ESM (Part 2)”

  1. My Views on OSS ESM (Part 3) | John M Willis - ESM BLOG Says:
    August 16th, 2007 at 5:16 am

    [...] My Views on OSS ESM (Part 2)  [...]

  2. My Views on OSS ESM (Part 4) | John M Willis - ESM BLOG Says:
    August 21st, 2007 at 4:47 pm

    [...] My Views on OSS ESM (Part 2)  [...]

  3. Acquia Provides Commercial Support for Drupal | John M Willis ESM Blog Says:
    March 3rd, 2008 at 12:20 pm

    [...] has recently posted a really good article about the possible future of Acquia. I am telling you VC’s are the root of evil of everthing that is good about open source.  I hope the VC’s don’t screw up a good [...]