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Open source is a distribution strategy, not a business model

Updated: Nov 25, 2023


Hi, I'm Khushi, and I lead the growth and marketing efforts at Streamline. Streamline is an icon and illustration library with a generous free tier.


In fact, our free tier is even more generous than the paid tiers of some of our competitors!



 


The story of Streamline


Streamline's founder released an open-source UI icon set consisting of over a thousand icons. This set achieved tremendous success and eventually led him to achieve financial independence.




 


Lots of backlinks


According to SEMRush, Streamline has nearly 100k backlinks, and Ahrefs rates our domain with a score of 76. Open-source products typically ask users to provide a backlink when they use the product.




 


Open-source strategy


For any successful business, two key elements are necessary: an audience and a revenue strategy. By creating a (good!) open-source product, you can effectively address the first part of the equation. It's important to note that "free" and "open-source" are different concepts. Freemium models offer some free features but place restrictions, while open-source provides everything possible and more.



 


Solving revenue


Generating revenue becomes more challenging when users' needs are already met with a free product. Moreover, Streamline is not the only open-source product available in the market. Companies like Google and IBM are also competing for the same market share.



 


The history and the future


We observe an increasing number of companies developing a defensible strategy based on open-source. If the paid product focuses on managed services while the free product is self-hosted, an open-source offering effectively discourages newcomers from entering the market.



Examples:

  1. Red Hat: For a long time, Red Hat sold services for open-source software and scaled it with human resources.

  2. Hadoop: The paid tier had more intellectual property than the open-source product, but scalability was challenging due to imperfect user experience. between the two products.

  3. Streamline: Streamline represents a third-generation open-source software. It builds differentiated intellectual property around the open-source core and offers differentiated open-core software as a service. (I use "open-core" because that's the most commonly used term to refer to Streamline). People pay for more than just support, as they gain access to the Figma plugin, Lucid plugin, a desktop app, and ten times more icons than the free tier provides.



 


Distribution-first, not product-first


Although this viewpoint may be controversial, I believe more founders should consider a distribution-first strategy rather than a product-first strategy. At the very least, this approach ensures that your company won't fizzle out in the early stages. Take Netflix as an example—its biggest growth driver is the fact that it comes pre-installed in set-top boxes. By solving the distribution aspect, you can buy time and gather more user feedback, which is essential for success!



Thank you for reading!


Btw, I'm trying to better understand who my audience is. If you've got ten minutes, I would love to do a user research call: toption.org/10-minute


Disclaimer: Opinions, insights and everything is pretty much mine. So, take it with a grain of salt!

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