Danny Rimer: How open source helped create the modern startup
When many people hear "open source," they think of it as a counter-balance to the forces of capitalism and for-profit businesses. We think of guys like Aaron Swartz helping to form Creative Commons. Or Sam Muirhead knitting his own boxer shorts and swearing off proprietary goods for a year.
But the roots of open source lie in more than just a desire to fight the power. The trend took hold in part out of a necessity to pare down the corporate infrastructures that had become too big for companies' own good at the turn of the millennium. And by allowing companies to build products cheaper and more quickly, it helped create many of the modern startups and trends we talk about today.
Few people understand the birth of open source better than Danny Rimer of Index Ventures. Rimer was one of the first to embrace the movement, investing in mySQL, a relational database management system that made its source code available to the public. But the choice to make mySQL open was not wholly unselfish.
"I'll never forget meeting (former mySQL CEO) Mårten Mickos," Danny Rimer says. "He said, 'The relational database market is a $9 billion a year market. I want to shrink it to $3 billion and take a third of the market.'” Mickos' prediction turned out to be eerily prescient; mySQL sold to Sun Microsystems in 2008 for $1 billion.
Today, we see echoes of open source pop up across the technology spectrum, from the sharing economy to cloud computing to public APIs. Rimer admits these trends would likely have occurred anyway -- The Internet, with or without the influence of open source, has an inherent tendency to disrupt established industries. But what open source did do is allow so many disruptive startups to be built on the cheap. "So much of what we’ve seen in the last five years has been the dramatic decrease in how much it costs to start these companies." There's also the "freemium" model we see in startups like Spotify and Evernote. That too has its roots in open source.
Of course, investing in open source is not without its challenges. "Folks behind open source projects constantly have existential crises as in whether they’re doing the right thing for humanity." Another big problem is that successful open source companies often get bought early. "These companies tend to get acquired before they can prove if they can become the next Oracle or VMware."
But the work it takes to solve these challenges is also having an impact on how modern startup infrastructures are built. With open source, "You've got phenomenal people in Ukraine talking to folks in South Korea," Rimer says. "It's one of the most complex organizations to manage, and probably a very good indication of how companies will be created going forward."
For Rimer, it's just another trend he was ahead of the curve on.