The Real Reason for Failrure of Open Source Startups

The recent news around Nebula shutting its doors has stirred speculation that OpenStack startups are struggling because of the state of the OpenStack market. There is even a piece claiming that the OpenStack dream is on “life support.”

This couldn’t be further from the truth. The reality is that winning in open source requires a playbook that is drastically different from one that most VCs investing in technology today are used to.

In summer 2011, Mirantis was a 150-person IT services company doing consulting around open-source infrastructure technologies.

We ran across OpenStack in a few engagements, saw the community momentum behind it and decided to go all in. In the search for early business, we called Randy Bias of Cloudscaling, an OpenStack services startup that had just raised a Series A to build an OpenStack distribution.

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