Topic: [2016-09-05] Do Crypto-Token Sales Make Sense for Open-Source Projects? (Read 228 times)

Nick Tomaino is an early stage investor at Runa Capital and a former business development specialist at blockchain startup Coinbase.

In this op-ed, Tomaino highlights how open-source developers have been incentivized historically and how this colors the ongoing discussion about applying blockchain-based 'crypto-tokens' to this use case.

Spurred by Union Square Ventures partner Albert Wenger's recent blog post, there's been lots of discussion about crypto-tokens in recent week.

This has led to excitement and skepticism about their ability to incentivize open-source developers to create and maintain protocols.

However, as Runa Capital has funded a number of developers who have created and maintained thriving open-source protocols, I wanted to shine some light on this approach in the context of how open-source developers have been incentivized historically.

This article focuses on both why a crypto-token issuance may make sense for some, and why it might not make sense for others who are served well by existing business models.

Nginx

Nginx is open-source server software used by more than 30% of websites on the Internet, and we were the first money into NGINX Software, Inc – the company that commercialized that project. But when we invested, Nginx creator Igor Sysoev was a brilliant developer that didn’t have any experience running a business.

We helped Igor and team put together a business strategy, hire a sales and operations team, and grow the business.

Now, Nginx is a thriving company with millions of dollars in revenue and a growing suite of products. The company monetizes by providing professional services, as well as premium products including a load-balancer that has been widely adopted by many of its open-source users.

MySQL

MySQL is open-source database software widely used by enterprises and developers globally. We were also early investors in MySQL creator Michael "Monty" Widenius and the team that founded MariaDB Inc – a company that provides professional services and products that enhance the MySQL experience for customers. MariaDB also sells an enterprise license, which many of their large customers prefer to use over the open-source version.

Similar to Nginx, they’ve had lots of success with their business model and are now generating millions in revenue from hundreds of customers around the world.

Both these projects have succeeded by raising venture funding and monetizing by charging for value-added services around the protocol. There have been many other open-source projects that have worked similarly at even bigger scale.

RedHat, Hortonworks, and MongoDB immediately come to mind.

More: http://www.coindesk.com/crypto-token-sales-make-sense-open-source-projects/