The Engineering bias

The engineering bias blinds people to this simple fact. The conventional thinking is that great products sell themselves; if you have great product, it will inevitably reach consumers. But nothing is further from the truth.”
Peter Thiel
(actually a notes essay from Peter Thiel’s CS183: Startup – Class 9 lecture).

Distribution is one of an OSS vendor’s biggest challenges with current OSS customer-base thinking. Customers are relatively few and far between. Far between changing OSS vendors that is, because it’s invariably such a large task for a customer to transition to a new product.

And since it is a market that is:

  1. Global
  2. Fragmented
  3. Relationship driven
  4. Sceptical
  5. Requires complex, custom solutions
  6. Competitive
  7. Lengthy in buying cycles (9 – 18 months)

Sales and distribution can be an incredibly expensive exercise to win relatively infrequent deals. Competition is so tough for these rare deals that some vendors are willing to go loss-leader on the initial implementation project in the knowledge that they will seek to recoup profitability on subsequent projects over the life of the relationship (often 10+ years).

This means vendors must rely heavily on highly competent sales people / teams who are willing to spend most of their year living in planes and hotels.

Thats just one more reason why l feel that the disruptive model, as discussed in “”Owning the OSS market,” is likely to be an ecosystem model that uses the network effect to reach a much larger install-base than in the current market. However, this will require some very clever, but quite unconventional, OSS distribution strategies.

Read the Passionate About OSS Blog for more or Subscribe to the Passionate About OSS Blog by Email

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.