Fred Wilson put up a great post today articulating the investment thesis behind social networks. He makes the case that investing in vanilla software companies is lame. They are not defensible. However, investing in companies with social networks is hugely defensible and immensely valuable.
These same mechanics are driving our thinking around open sourcing our software library. I will write more tomorrow about our plans. But, in our space, the network effects of being the team behind a successful open source project are much bigger than those that come from attempting to sell close proprietary software.
In any tech startup, it is well worth considering modifications you can make to your business model that leads to networks of users and inherent lock-in due to community and high-usage.
What are your thoughts on the network effects of open source software?
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