Some key advice Eero pointed out in the article was the importance of partners and channels:

‘’Another surprise is partner networking, or actually the lack of it. Maybe this is result of open source companies’ natural tendency to focus on services and, for the most part, on a direct sales model. Open source companies have created tight-knit partner communities, which are excellent vehicles for the self-promoting (every self-respecting open source company seems to be partner with at least 10 other open source companies), while at the same time there has been very limited success in creating truly significant partner networks (system integrators, VARs) to push open source solutions to the end users….’’

‘’ Focus on partners, partners that sell for you. Strategic partners are great to increase credibility, but won’t pay your bills. Peer partners are great to increase overall visibility, but won’t pay your bills. Partners who will deliver your solution to the paying customer are a godsend - they pay your bills. Understand what motivates partners, and keep them happy and productive!’’

I am 100% behind that piece of advice, but while agreeing that is the way to go, the big question for me (and I suppose for many entrepreneurs) is how? How to execute the sound strategy and identify and actually get those key partners critical for your business success or even survival?

Continuent has gone through couple of phases 1) under the name Emic Networks with more traditional proprietary approach and 2) under the current name Continuent changing the approach to Open Source.

Q1. How has your company’s partnering strategy changed while moving from a proprietary to open source model? Have you had to dismiss some earlier partners’ as they did not fit the new approach?

A1. Over the course of the years there have been natural ‘churn rate’ among channel partners for number of reasons, but we did not have to make major overhaul of the partner network. As a part of the change from completely proprietary solution to the commercial open source we have kept the licensing, pricing and partner discounts very attractive.

There was more significant change in our channel-strategy when we expanded database support from MySQL-only solution (which was the case with our proprietary solution) to also cover PostgreSQL and EnterpriseDB. MySQL’s adoption rate is clearly larger than any other open source databases, but interestingly enough due MySQL’s own quite aggressive direct sales approach and primary focus in embedded market, MySQL has not developed extensive network of resellers or systems integrators.

There is no one single company behind PostgreSQL. That has created more opportunities for local system integrators and there seems to be more partner opportunities for value-add providers such Continuent.

Q2. Any special challenges in building the business out of Finland?

A2. When Continuent was established in Finland, our mindset was from the day one to be ‘born-global’. It naturally did help us that my primary residence has been US for the past 14 years and I have been involved with cross-Atlantic software business this whole time. Finland has definitely significant good-will value and healthy respect within open source community with number of visible open source visionaries and leaders, for example Linus and Mårten, coming out of Finland. This creates a good ground to build successful open source companies.

The key challenge with Finland, and almost any European based companies, is the lack of the understanding in customers actual needs (largest open source customers are in USA, and their needs are not always same as smaller European based customers) and effectively getting solutions to the market.

There always is very good and solid technical foundation, but there seems to be disconnection what actual customer needs are and how to take those into account in the process creating solutions out of these core technologies.

As valuable the open source community is giving feedback, unfortunately you can’t solely trust the judgment of the masses. The key decisions need to be done internally, and those need to be based on solid market intelligence and true understanding of the customer needs.

Q3.Please outline a short description as to how to do it e.g. 3 do’s and 3 don’ts

A3. The three DO’s for the aspiring open source entrepreneurs from Finland, or from Europe in general:

ii) Follow Steve Job’s lead and build ‘insanely great’ solutions. ‘Me too’ just doesn’t cut it. ‘Good enough’ won’t create excitement.

iii) Think hard who can be the best partners to take your solution to the market. The larger partner the better, but early on you need to settle smaller partners until you have increase your credibility.

And Don’ts:

i) Don’t forget to define your ideal customers (note: first customers may not be ideal on the long run, thus you really need to define the ideal customer). You need to address a real need of this ideal customer. You also need to offer a complete solution. Don’t assume that all customers are alike. USA customers tend to build larger systems catering larger markets, thus they typically require more (quality, functionality, supportability), but this will also help your smaller customers.

ii) Don’t forget your community: as you give to your community, it is fair to expect real value (contribution, testing, support) back. Community will be your best marketing vehicle and also excellent source to recruit new talent.

iii) Don’t forget that your solution and market takes time to mature. Make sure you have adequate funding to ride the tough times, which there will be plenty. You can safely assume that you are in the business for a long haul, minimum 5-7 years, before you can see any significant success. For example MySQL has been around almost 15 years (taking account Monty’s early years) and it took first 7 years (10 if you count the early years) to reach 5 Million euro revenue.