In 2015, we announced a pivot in our business model. Instead of developing only open source software and selling support services, we switched to an open core business model. In addition to our open source product Odoo Community, we developed extra proprietary apps as Odoo Enterprise.
From a business point of view, the switch was necessary. The margins on services do not allow to finance the activities of a software vendor: massive investments to develop the product, building a brand and a worldwide partner network. Besides, our revenue stream was not sustainable; new customers were paying support for the first year but, then, as everything worked fine, they did not renew the next years.
From the open source point of view, the switch was necessary too. We are in an evolving market; customers expectations and competitors are improving fast. If we did not invest massively in the product, Odoo Community would have been deprecated in a few years, as it happened with other open source ERPs. So, we needed a sustainable revenue stream that would allow us to recruit more developers to improve the open source software.
From this date, it has been a fantastic journey. On the business side, we were losing 500k€ per month in 2015. We only had a few weeks of cash available. By the end of 2016, we were cash flow positive by 500k€ per month. And the community won a lot too: we now have 4x more developers developing and maintaining Odoo Community, our open source product. (~180 developers)
A Punchy Headline
A key decision in the design of this pivot was to avoid creating two conflicting products (Odoo Community vs. Odoo Enterprise). Instead, we made Odoo Enterprise depend on Odoo Community. That way, the success of one drives the success of the other: Odoo Enterprise benefits from the visibility created by millions of community users, and Odoo Community benefits from a part of the improvements made on Odoo Enterprise.
How do we decide when a new feature goes to Odoo Community or Enterprise?
Most of our developments concern improvements of existing modules, not new apps. In these cases, it’s obvious; if we improve a community module, we develop in Odoo Community, and if we improve an Enterprise app, we develop in Odoo Enterprise.
We have interests in improving both Odoo Community and Odoo Enterprise:
Odoo Community & Enterprise