Product vs Services
Today a couple of friends (entrepreneurs I should say) decided to shut their agency (services) business and have taken a decision to move towards a more product based business line.
An agency business is unbelievably difficult to scale and grow and eventually exit. Meanwhile a product based business makes far more sense. Of course people need to be using your product.
Was reading this post about VC’s backing companies and investing in open and free software. And here is an excerpt:
I explained that there are a number of ways to make money with open source software. The most obvious one is the “Red Hat” model of building a services and support business on top of the open source software. Red Hat has revenues of almost $600mm per year and boasts a public market valuation of over $5bn. MySQL, which also used that approach, sold to Sun for $1bn.But the intersection of web services and open source opens up some more interesting possibilities. Look at Wordpress. The Wordpress software is available open source. But they also operate a hosted version at Wordpress.com that is a commercial effort.
Basically the post actually made me think that here is how a company can actually marry a product along with a service and make even more money (I’m thinking about something on Social Media lines btw).
The post was also about a product which I think has massive potential in a country like India, where mobiles outnumber computers massively.
Its OpenVBX (Web based open source phone system for business).
See the animation of what a service like Twilio provides.
As far as the excerpt is concerned, the entire post can be read here.
