Open Source: The First Product-led Growth Business Model?!

Our success was possible because we made the product the key driver of customer acquisition and growth. This provided our venture with a product-led growth business model, with open source acting as the catalyst of the entire process. 

Open Source Software is where the source code is freely available for possible modification and distribution. Today, most digital services use some kind of open source software. Back in the day, Linux, MySQL and the other open source innovators were just beginning to redefine the software industry. Our product, eZ Publish, was a pioneering open source application with our content management system, first released in November 2000.

At this time, the term ‘product-led growth’ wasn’t defined. However, we did know that if we created a product that both developers and users love and, at the same time, allowed them to access the source code for modification and redistribution, we would have the foundations for virality. Even as a start-up, we understood that this would help us gain a global distribution of our product while challenging the larger, more established players with their traditional business models.

After we released our first version of eZ Publish, we watched the gradual adoption of the product into the market. It was slow at first, but accelerated once more and more people started using the product. Such use provided valuable feedback and contributions, which we used for further development. Ultimately, helping us make an even better product, our users loved. And, as we gave away our product for free, we sold the services needed to fund our business. 

Rather quickly, we learned that it was not just the core source code that mattered for the successful adoption of our software, but the product as a whole. Documentation, demo material, user guides, licensing, and user interfaces all became key to drive growth. We even launched our own magazine for content marketing, driving organic traffic before the term ‘content marketing’ was ever defined. 

The year 2000 may not seem too far in the past, but it was still the time before SaaS (Software-as-a-Service) existed, leaving the modern subscription-based business model format in its infancy. Thus, as mainstream players adopted our product, we had to invent our SaaS model, something no one else had done before. But this is another story for another time, as it was a very complex and challenging transition.

From the early days of our product-led growth ventures, we have found a few pieces of wisdom which we use to build the exponential software companies of tomorrow. These include: 

• Craftsmanship is key. It is hard (nearly impossible) to grow exponentially if the users do not love your product. 
• The product is more than the technology; the attributes of the whole product matter more for long-term successful adoption. 
• Make sure your product can deliver value before you monetize. Doing so removes friction and ensures a higher retention rate as customers experience the value of their purchase. 
• Understand your revenue model; what are the value drivers, and what are your customers willing to pay?
• Test and develop your revenue model from day one (not later on as we painfully experienced).
• Never stop investing in your product, and gradually build out your growth and customer functions as you scale. 

Have you had a great idea? Led a start-up to scale up? Have a success story related to investment or growth to share? What about a failure that provided our own valuable pieces of wisdom? Let us know at hello@newnormalgroup.com.