When we started eZ more than 10 years ago, there did not exist a scalable business model for commercial open source application companies. Well it did not exist any business model at all except selling services. eZ being a Web Content Management software provider, we had to develop our own business model, in parallel with other pioneers in the commercial open source industry.

We believe in Open Source

We have always believed that open source is the software model of the future as it creates the most value for our customers, and eZ has been a commercial open source company from day one. In developing our business model, we have stuck to a few core principles, the main one being that the core development always should be open to allow for rapid open innovation. Closing in the core was never an option, as in my opinion, we then would no longer be an open source company.

From Services to Subscriptions

Surviving the first years on selling services and raising capital from a network of Angels we were able to steadily develop our software, business model and market. Coming into 2007 we had launched the first version of our subscription based software model, we raised a significant amount of money from our first VC and we strengthened our Board of Directors with Tom Jørgensen, Richard Seibt, Bjørn Skare and Alexander Bruehl.

From Direct to Partner Channel

We defined a strategy to grow eZ into a major global player in the CMS industry. The core of that strategy was a scalable commercial open source business model. This implied three key metrics:

• We are a software company our core revenue is software subscriptions. Except for core services supporting our partners, services are provided by partners. 
• We sell and deliver through a network of partners.
• We are a commercial open source player, in the higher end of the market. We deliver significant value to our customers, both on the core open platform and our commercial offer.

A Successful Transition and the Next Steps

So how have we then developed over the last 4 years? It has been a successful transformation. eZ now has a proven scalable commercial open source business model and we are growing rapidly because of it. We are all excited towards the future as eZ is growing into a significant player in the CMS business.

In the next post I will address why we believe investing in eZ.

Aleksander Farstad