A typical IP-based playbook goes like this

  1. A product wizard creates a differentiated technology;
  2. The founders and the sales team sell a handful of deals to show proof points;
  3. The company is sold for several hundred million to someone with existing distribution channels; or
  4. A number of major growth rounds are raised to build out distribution channels in order to IPO

works for innovation markets. The VCs are buying into partial ownership of the differentiated technology and monetize on the leverage when the technology is in demand.

opensource based playbook

All of the successful companies (Red Hat, Cloudera or Hortonworks, etc) have followed the same playbook:

  • Start selling services engagements around the ecosystem and build customer intelligence;
  • Invest heavily to build influence in the respective upstream communities by contributing directly to the code base you're betting your business on (In OpenStack, it's easy to see who is and who is not contributing on Stackalytics.);
  • Start offering training and certifications;
  • Add commercial packaging of the technology;
  • Optional: Build value-added components above and around the technology.

focus on expertise first, and then follow the open source playbook

How to be an open-source-developer internet millionaire, in five steps:

  1. Write a framework
  2. Convince developers your framework is great, teach them the easy problems your framework solves
  3. Developers convince corporations to use your framework
  4. Corporation hires you as a consultant to solve the hard problems your framework creates
  5. Profit

three-stage model for software market maturity

Jared Spool created a three-stage model for software market maturity that is useful for browsers as well. (1997 article .)

  1. Technology focus stage: Users will put up with any number of UX glitches or missing features because your product performs a task that no other software performs.
  2. Feature focus stage: Users decide which of several competing products to use based on features. Your product will be a winner if you can determine which features users really need and why.
  3. Experience focus stage: Users can use pretty much any competing product, since they all have the same features. It's here that the user experience becomes paramount: if your product makes it easier for your chosen audience to do their job, they'll buy it. You can even leave out features now, as long as the functioning of your product matches what users think it should be doing and how.

milestones

  1. Concept (I have an idea I can peddle)
  2. Salutes (grizzled industry veterans are wowed and vouch for you)
  3. Buzz (word is getting out you have a hot idea)
  4. Site (you have a Web presence)
  5. Team (you attract an A-team of founders)
  6. Prototype (you've got a demonstratable model of you product
  7. Plan (you've got a prospectus completed and are hunting investors)
  8. Seed (you successfully raise early money from credible people)
  9. Beta (your product or service is being tested in the real world)
  10. Dogs eating the dog food (customers like you product and pay for early versions)
  11. Plan (you are shopping prospectus 2.0 to professional investors)
  12. Paths (you have dealers or other paths to getting your product to your customers)
  13. Sales! (They are paying what you said they'd pay)

The more such milestones you put together the more real it gets for investors, people you want to hire, people you want as customers, even yourself!