javivazquez at Zentyal

It (the business model) works

March 20, 2011 · No Comments

Last Tuesday, I attended to a gathering of public administrations using or interested in open source software: “III Intercambio Experiencias Foro de Administraciones Públicas”, funded by CENATIC. The goal of the event is to make easier for Spanish public organizations sharing experiences about their open source projects.

During the whole day, the word Zentyal was present, 3 of the talks commented about their experiences with Zentyal Server. Actually, the Council which kindly hosted us for the gathering (Marchena) was managing its network and internet access with Zentyal :-)

In the afternoon, I got a call from our R&D certification advisor about the amounts in 2010, and he told me Zentyal had appeared in an Spanish on-line publication about innovation (Madrid I+D). Moreover, through Facebook, some of my friends let me know that a generic magazine, “Muy interesante”, also published a reference to Zentyal Server as the alternative to Windows Small Business Server.

Zentyal was everywhere in Spain on Tuesday, our popularity keeps growing. However, converting popularity in cash is not an easy task, that’s what I want to talk about in this post.

The hardest issue for an open source start-up is not to gain popularity (tough enough though), but to make users pay for a free product.  It’s “the penny gap“, a concept created by the the venture capitalist Josh Kopelman:

The truth is, scaling from $5 to $50 million is not the toughest part of a new venture – it’s getting your users to pay you anything at all. The biggest gap in any venture is that between a service that is free and one that costs a penny.

Zentyal Server is open source GPL and free (as free beer). Our business model is based on subscriptions, add-ons and technical support; which are sold mainly through certified VARs and on-line.

The last six months we have been selling subscriptions on-line, growing consistently quarter to quarter and so proving ourselves that our subscriptions are considered a compelling reason to buy by Zentyal users.  Our business model is supported by the numbers, it works.

Now it’s time to invest in sales and grow.

Categories: misc

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