Open source software lets Genuitec forgo venture capital

One business that relies heavily on open source software is Genuitec, the company that produces the proprietary subscription-based MyEclipse interactive development environment. Low-cost MyEclipse adds functionality to Eclipse, an open source application development software framework. Genuitec co-founder and Vice President of Technology Todd Williams says his company is able to keep prices affordable because it avoided using venture capital money, and because Genuitec itself is built completely on open source.

“Our infrastructure for the Web site, internal development, and download servers is 100% open source,” Williams says. “It’s basically a LAMP stack, with PHP and a PostNuke content management system. We also use CVS for version control, Bugzilla for issue tracking, and OpenOffice.org for communication and presentations.”

Williams says Genuitec relies so heavily on PostNuke that at first it was hard to find consultants who could make it do everything the company needed. “The biggest issue was having people with the expertise to be able to set up our payment system and district Web site infrastructure,” he says. “I remember early on we looked for people who consulted in the PHP realm around PostNuke and couldn’t find anyone. We ended up basically doing a lot of learning on our own.”

He says the reason Genuitec was willing to forgo some of the conveniences of off-the-shelf commercial software was “security, and the reliability, and initially the cost. We didn’t want to run our business on something that could be easily compromised, and the open source community seems to do quite a bit as far as patches and exploit detection. Given the size of our business, there’s not a day that goes by that someone doesn’t try to exploit us.”

Williams says that from its inception in 1997 to today, Genuitec has been completely self-funded. “There were no VCs that funded the company, and none still. It’s working great for us. One of the things that happens with venture capital is you lose control, and we always wanted to have a high degree of control. We started selling a $30 product that any VC would have told you ‘the price is too low.’ We would have been pressured to raise the cost to make a fast buck. But we were looking down the road to more of a global presence.”

Williams says entrepreneurs should consider using open source to build their businesses. “Look past the fact that the software can be acquired for free,” he says. “That’s not the biggest differentiator. It’s the scalability; the security; the reliability. Look for the right skill sets inside the organization and what’s available to augment that externally. You’ve got to have staff that’s comfortable with the infrastructure you put in place and who can maintain it. It’s a TCO equation.”