Open Source Company as Costco — /dev/lawyer

First, I think this is a really interesting work of parallel-drawing. On the tactical level—marketing, hiring, reputation—I suspect comparisons can be really fruitful. It’s tempting to draw a broad distinction between go-hard-go-fast and steady-slow companies. We see companies succeed on both ends of that spectrum in software, too.

However, I think the broader analogy to Costco wobbles a bit, fundamentally. Costco charges membership fees. While revenue from sales make the big numbers on its financial statements, analysis I’ve read suggests most of its profits come from the fees. As Heather pointed out, they have millions of members. As I write, membership runs $65 per year, minimum.

The only thing I’m aware non-members can get from Costco is free entry to buy alcohol in some states, due to quirks of state laws. Otherwise, you have to buy a membership to reap any of the benefits of Costco’s selection, procurement, and pricing. That cost of entry is why Costco shoppers tend to be either relatively well off or businesses buying to resell.

Companies developing open source software projects charge customers, too. Their book of business may feel a bit like a club, especially as compared to the often larger group of “community” users. But the open source work that makes those companies “open source companies” aren’t club goods, but public goods, the kind with all the cursed funding problems.

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