New Software Model Startups

27 Jan ’05

Tim Oren has a fascinating piece (and some commentary on it here) on new software development models that are emerging under the combined pressures of open standards, open source, and offshoring, or as he puts it, dealing with the commoditization of software development.  Money quote:

How will entrepreneurs wanting to build value in software startups, and venture funders requiring both defensibility and eventual liquidity, respond to the rise of open standards, open source, and offshoring? As I’ve written before, these are all faces of the commoditization of information technology.

I think I see the shape of one response emerging from the fog. This is partially based on companies which have pitched to our team – and will remain nameless – and partially on a rather inchoate impression of chatter on blogs, tech sites, and open source sites. I’m not sure this is particularly unique or profound, but perhaps it’s an early indicator of the shape of symbiosis between community and commercial processes.

Let’s call this pattern the two-stage software startup. Unlike a two-staged rocket, the first stage is light and runs on little fuel, it’s the second stage that has the big burn, if it ignites.

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