Give away the recipe, open a restaurant.

"One very instructive recent case is Digital Creations (Now the Zope Corporation), a website-design house started up in 1998 that specializes in complex database and transaction sites. Their major tool, the intellectual-property crown jewels of the company, is an object publisher that has been through several names and incarnations but is now called Zope.

When the Digital Creations people went looking for venture capital, the venture capitalist they brought in carefully evaluated their prospective market niche, their people, and their tools. The VC then recommended that Digital Creations take Zope open-source.

By traditional software industry standards, this looks like an absolutely crazy move. Conventional business school wisdom has it that core intellectual property like Zope is a company's crown jewels, never under any circumstances to be given away. But the VC had two related insights. One is that Zope's true core asset is actually the brains and skills of its people. The second is that Zope is likely to generate more value as a market-builder than as a secret tool.

To see this, compare two scenarios. In the conventional one, Zope remains Digital Creations's secret weapon. Let's stipulate that it's a very effective one. As a result, the firm will able to deliver superior quality on short schedules—but nobody knows that. It will be easy to satisfy customers, but harder to build a customer base to begin with.

The VC, instead, saw that open-sourcing Zope could be critical advertising for Digital Creations's real asset— its people. He expected that customers evaluating Zope would consider it more efficient to hire the experts than to develop in-house Zope expertise.

One of the Zope principals has since confirmed very publicly that their open-source strategy has "opened many doors we wouldn't have got in otherwise" [sic]. Potential customers do indeed respond to the logic of the situation—and Digital Creations, accordingly, is prospering.

Another up-to-the-minute example is e-smith, inc.. This company sells support contracts for turnkey Internet server software that is open-source, a customized Linux. One of the principals, describing the spread of free downloads of e-smith's software, says ``Most companies would consider that software piracy; we consider it free marketing"

Give away the recipe, open a restaurant.

~ Eric S. Raymond, The Magic Cauldron.