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The Only Guy Making Money Off Free Software

There are now scores of venture-backed startups pushing open-source software. Some, like Cloudera, MongoDB and Docker, claim to be worth $1 billion or more. Each has a slightly different spin on the same question: How do you make money off free code?

They’ve got a range of different answers, like selling tools on top of an “open core” of free code. But the proof of profits has yet to come. There’s only one firm that’s proven it can consistently make money off open-source software, and that’s Red Hat, the North Carolina firm best known for selling a business-class version of the free Linux operating system. Linux has become the standard for web servers, so chances are that if you’ve done anything on the internet in the past decade, the data was flowing from a Linux machine.

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“Bluntly, I’d argue one of the reasons why is that no one has figured out a business model that makes money off Linux desktop. And because we don’t make money off the Linux desktop, we don’t have anyone assigned to go to Apple and say, ‘Apple, we really need you to port iTunes to Linux.’ And without iTunes on Linux, you lose a big chunk of the world. It’s this doom loop. Without that, it becomes this nichey, fringey thing,” Mr. Whitehurst said.

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Joe Lonsdale
Joe Lonsdale
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Ruchi Sanghvi
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“People seem to take the free stuff and work around the paid stuff. You have to recognize that the early adopters are the people who really want free. They’re working hard to work around you."