The secret to create a successful Open Source Company

“How can I make a living if I allow others to steal my ideas?”

When I speak about getting designs available to all through Open Source, people look at me with a mixed feeling. I can see them thinking “This guy is just another hippie who wants to wreck my world!”. But they are still fascinated by the thought of having innovation accessible for free (free as in freedom, not as in beer).

Well, to get this out of the way, no idea should be owned. We all build on the work of others. It is preposterous to believe we can own an idea. Here is an extract of the documentary Everything is a remix that explains this idea far better than I would.

To get straight to the bottom of the problem, we’ll get back to the origin of the patents and copyright.

“Imagine a guy wants to invent a more efficient light bulb. The inventor’s price doesn’t have to cover only for manufacturing costs, but also for development costs. Now imagine a competitor who starts manufacturing a competing copy. The competitor doesn’t need to cover the development costs, so his version can immediately become cheaper than the inventor’s. That’s why it is hard for original creations to compete with the price of the copies.

In the United States the introduction of patents and copyright was intended to address this imbalance. Both intended to encourage the creation and proliferation of new ideas by providing a brief and limited period of exclusivity (20 years), so inventors could recover their investments and earn a profit, after which time, it would belong to the public domain where others could build upon. It started to serve the common good, but over time the fact that we hate to lose what we got led to getting very attached to intellectual property.”

Two companies that have made successful use of Public Domain inventions and protected their own work are Disney, with their inspiration in popular tales, or Steve Jobs, who prided himself in stealing the ideas of others. He was still ready to go thermonuclear war on Android because it was a “stolen product”.

Nowadays 'gods' are self-appointed.

Nowadays ‘gods’ are self-appointed.

Patents are extremely expensive, and have never guaranteed a protection from being copied. It doesn’t matter anymore if your product is patented. Someone in another country will open it up and reverse-engineer it anyway. Patents have just become the right of going to court, which is a million times more expensive, in money, time and motivation.

We have lost control of our patents and copyrights. They are now a reason for conflict, destruction and inequality rather than for creativity, prosperity and creation of opportunities.

Now let’s come back to the alternative of creating a thriving Open Source Business, now that we agree that patenting an “invention” is a bad idea.

Giving everything for free so anyone can copy the design, fabricate it, and start selling it sounds insane… but it works. More and more companies do it profitably.

Here is the Holy Trinity of every thriving Open Source Business:

1.First Mover:

In order to create a relevant business with an Open Source model, consider this as a good rule of thumb: It must be at least 10 times better than the old way (in price, speed, usability…) and be affordable.

Otherwise customers will stay with what they have.

The alternative rule of thumb is that the product fills a niche that is otherwise ignored.

Open Source Ecology builds products that are at least 10 times better than the old way, such as the house that can be built in 5 days or a tractor that can be built in one day.

Another company is Wikihouse. They share in open source plans to build affordable and modular housing, which could ease the current housing crisis.

The bright side of having a world built around patents is that Open Source alternatives are underdeveloped. So you can become the first product in almost any category. Consider what these companies do: OSVehicle has made a car that can be put together in four hours, Goodewll makes compostable tooth brushes or a Cornfield Electronics makes a Universal Remote Control.

If someone else already sells a product in a category, it is immensely hard, if not impossible to change the mind of those buying it, even if your product is superior.

It is better to create your own category. An example of this is Arduino. There will be others making Arduino, but no other company, not even copycats will ever sell as much as them. Arduino was the first to make an easy-to-use open-source electronics platform.

MakeyMakey has made a board built on top of Arduino. It uses the same base but it doesn’t compete with Arduino, since it turns everyday objects into touchpads, without any need to use programming.

In Open Source we consider imitation to be bad theft exists and transformation to be good theft. If you sell an imitation, you are doing no one any favors, you are just increasing competition. And at the end of the day you are most likely to lose, since you are less known.

If you transform it, everyone is better off. Opportunities of the original creation expand, and you make room for yourself at the same time

You can always build a business on top of and around a successful platform, but you’ll always have to add something of your own that is both substantial and differentiated.

But even if you made something brilliant, copycats may still emerge. Blueprints are out in the wild, so you need the next two conditions.

2. Community

Just because it’s Open Source doesn’t mean it’s Open Source

What does this  mean?

Well, you don’t have an Open Source project until you have members contributing to your project.

If you create an Open Source invention, you must build and nurture a community interested in what you do and actively developing on top of your project.

Your community doesn’t need to be huge.  At the core of every open source projects a handful of active members contributions have a multiplier effect.

It is important to distinguish your community from the customers of your business. Your community members are not the one’s who will buy your product, because they can already build and tinker with it.

Once they have seen it is good to go, they will very likely recommend and promote what you do through word-of-mouth.

Those who will buy from you are those who want you to build it for them because they don’t have the time, the skill or the equipment. This is most people.

Since anyone can manufacture a device, people will buy from the most efficient manufacturer with the best price.

But, what happens if some company starts producing millions of units of your inventions and sells them way cheaper than you thanks to economies of scale?

That tends to be an advantage in the Open Source world, it helps make your idea get widely distributed.

Because you’re the inventor the community of users will swarm around you. You will always hear first about cool improvements or innovative uses for your device. That knowledge becomes your most valuable asset, which you can sell to anyone.

Customers and community trust you because you allow them to open and modify your product and you share the information on your materials, how to repair it, and how to build it. You give back so anyone can do the same, not just take their money.

Having other people copy and improve what you made gives you more renown,  and inspires more interest and free publicity than a piece of proprietary hardware or software.

Excited makers will hack it and contact your  team to offer improvements. This helps you spend less in R&D and launch newer iteration faster thanks to the Open contributions, which keeps you ahead.

3. Product and Service Quality

Ok, this looks good. You are the first to address a problem, and you have a great community copying and improving what you started. Your invention stays ahead of proprietary competitors.

Now how do  you keep others from copying much cheaper what took you so hard to build?

Don’t worry about what others do and keep your focus on delivering a product that is safe and guaranteed to work and give a great service and support. There is no way around it.

Arduino noticed that copycat versions of its board made in China and Taiwan were being sold online. Surprisingly that didn’t stop sales from their store to increase dramatically.


Partly because many Asian knockoffs were poor quality, with flimsy pin connections and abundant soldering errors.

Competition created a larger market but also ensured that the original makers stayed a generation ahead of the cheap imitations.

Having a blueprint of a product is not enough for a copycat to make a quality copy. That takes skill, and the Arduino team understood its device better than just about anyone else.

Copycats are a blessing for their business by making more people aware of their product.

Besides producing great quality items that are safe and guaranteed to work, you have to deliver a great service.

Open Source businesses produce high-quality objects cheaply thanks to economies of scales, but they also offer superb shopping and support experience by creating  and managing communication channels like tutorials, forums, videos and hang-outs.

WIth that the community understands your documentation and participates to the development of your product. Sparkfun, Adafruit and OpenRov are companies doing this remarkably well.

Small businesses (and larger ones) are seeing that profits and sharing can go hand in hand, and new examples sprout everywhere.

Let’s wrap up. The 3 takeaways to build an Open Source business are:

1/ Be the first one to address a problem, or address it in a substantially better way. If somebody has already addressed your problem and is well valued, your product may be better,  but nobody will understand why they’ll have to switch.

2/ Nurture a community. Share your invention and create channels so others can participate and you can interact with them.

The world will take care of you and build tremendous new opportunities on top of your creation. If you don’t have a community it doesn’t matter that your idea is in Open Source. No one will commit to build on top of it.

3/Always deliver a great product guaranteed to work and safe, and give a great service through documentation and tutorials, videos and hangouts. Everyone must be able to quickly learn how to use it, improve it and interact with your team.

Now that it is clear Open Source businesses are legitimate , could you do me a favor?

Share this post. Not just so it’ll get us more traffic, but so other people can see that other alternatives exist to making a living from Open Sourcing your inventions. Maybe reading this will even help them do it.

After all, what is it all about? Helping others and creating more opportunities.

In the end, that’s what’s amazing about Open Source: any life can change by learning and building on top of giants’ shoulders.

Opportunities emerge, not always in a big way, but it certainly touches thousands of people and makes the lives of others better by inspiring them.

If we want to change the world through Open Source we also need to open new paths for businesses to change their models. I just wish more people thought of it as a viable career alternative. Let’s change that, shall we?

Over to you:

  1. Leave a comment below telling me what you’d be thrilled to see open sourced.
  2. If you want to get more pieces of content like this directly to your inbox, subscribe here.
  3. For those who want to know more, below are some sources to dig deeper in the subject from amazing people researching the subject. Check them out! =)

Related Articles and sources:
The truth about Open Source Hardware Business Models, by Simone Cicero
Everything is a remix Documentary, by Kirby Ferguson
Open Source Hardware Business Models, by Mathilde Berchon
How to start and run an Open Hardware Business – with SparkFun CEO Nathan Seidle, by Mathilde Berchon
Build It. Share It. Profit. Can Open Source Hardware Work?, by Clive Thompson
A business model for open source hardware, by Chris Anderson

and of course an example of how Tesla does it:

Elon Musk Clarifies That Tesla’s Patents Really Are Free; Investor Absolutely Freaks Out

Picture Sources: XKCD, What is Open Source explained in Lego

Want more free tips on how to build an open and community driven organisation delivered straight to your inbox?
Signup below. (It’s 100% free. Unsubscribe anytime.)

Jaime Arredondo
Find me on:

Leave a Comment

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