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.

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