Enabling Economic Empowerment for Open Source Companies via the Storj Network
By Ben Golub
Wed, Aug 29, 2018
When I joined Storj Labs as executive chairman and interim CEO earlier this year, it was because of the opportunity I saw in decentralization and its ability to help the world and disrupt major industries. Storj had a working platform, a passionate community, a solid team, and were solving a huge problem tied into several trends. Before joining, I had spent the last decade building two open source companies.
Storj (and decentralized infrastructure in general) shares a lot of key values with the open source world. Fundamentally, both embrace values of openness, decentralization, and broad -based individual empowerment.
These similarities create a profound opportunity. Storj and decentralization provide a unique alternative to traditional cloud storage approaches. By leveraging existing hard drives in computers and data centers around the world, we create a new economic model that is not only attractive to the network operator, but also creates great opportunities to provide sustainable revenue to open source companies.
Traditional cloud infrastructure requires massive capital investment to build data centers. The cloud companies compete on the basis of huge economies of scale and (generally) narrow gross margins. And, they drive demand through fairly expensive sales & marketing, frequently using Open Source Software as a loss leader to drive revenue through infrastructure usage.
Decentralized infrastructures offer a different approach. Storj managed to build a highly distributed, performant, secure, and economical storage network (over 150 PB, in nearly 200 territories and countries. We did not do so by massive capital investments, but instead built incrementally by compensating people who operated underutilized drives and incenting them to build up supply. The margin picture is different too, as we leverage existing equipment, and require our farmers to make little or no incremental investments in power, bandwidth, or people.
Decentralization also presents the opportunity for a different approach to building demand. Since open source basically drives all demand to the existing public cloud, why not provide a direct mechanism and incentive for open source projects and companies to drive demand to our network, compensating those projects and companies directly as they help us build demand?
Today, we brought this vision to reality and launched our Open Source Partner Program. This program enables open source projects to generate revenue every time their users store data in the cloud. Through a simple connector, Storj tracks usage on the network and returns a significant portion of the revenue earned when data from an open source project is stored on the platform. Critically, this enables open source projects to derive sustainable revenue from usage, whether by commercial customers or non-paying open source users.
In conjunction with the launch of the Storj Open Source Partner Program, we are also announcing ten new open source partners who are integrating their platforms with the Storj network: Confluent, Couchbase, FileZilla, InfluxData, MariaDB, Minio, MongoDB, Nextcloud, Pydio and Zenko. We look forward to telling you more about each of these companies in the coming months. These partners will be given early, immediate access to the V3 network private alpha, which launched today. If you’re an open source company looking to join our partner program (and we hope that many will) please visit storj.io/partners. We also hope that other decentralized infrastructure providers adopt similar programs, this will create a virtuous cycle of investment, innovation, growth, monetization, and reinvestment that should benefit us all.
Our Open Source Partner Program will help open source companies to remain open and free and invest in growth. It will also enable them to achieve more within their budgets, supporting them in becoming profitable, accelerating roadmaps or meeting other financial-related goals. And, it should do so without trying to demonize existing players or requiring unnatural acts with regard to licensing. Ultimately, open source companies - even the ones that only provide free products - require revenue to sustain themselves, and the Storj Open Source Partner Program can help.
Monetization has long been a challenge for open source companies. The beauty of our program is it generates revenue without impacting the end user, beyond them using Storj to store their data instead of a centralized cloud storage platform. And because Storj is AWS S3 compatible, it makes deployment extremely simple for companies currently using cloud storage buckets.
When you look at how far cloud computing has come in the past decade, and compare where we’re at with decentralization, it puts the massive opportunity on the horizon in perspective. The total cloud market is now worth over $200 billion dollars.(1) Over 90% of all cloud workloads run on an open source operating system (Linux) and well over ⅔ of all cloud workloads are built using multiple open source components. Meanwhile, total revenue for all of the public open source companies is merely $5 billion, or less than 3% comparatively.(2) We are proud to help lead this emerging, decentralized revolution in the cloud.
We thank you, the decentralization and blockchain community, for your continued support. We also welcome the wider open source community. Together, we can both achieve more than we could alone.
- Source: Gartner and others
- Source: Public company filings for Red Hat (RHT), MongoDB (MDB), Cloudera (CLDR) , Hortonworks (HDP) , and Mulesoft (MULE–prior to acquisition by Salesforce.)