Editors note: We wrote this article about a year ago before the blog was established. Although this article chronicles the model used to bootstrap the NetEqualizer from open source, the basic formula applies to any aspiring open source developer.
When we started the APconnections (APconnections makes the popular bandwidth shaping tool NetEqualizer), we had lots of time, very little cash, some software development skills, and a technology idea. This article covers a couple of bootstrapping pearls that we learned to implement by doing.
Don’t be Afraid to Use Open Source
Using open source technology to develop and commercialize new application software can be an invaluable bootstrapping tool for startup entrepreneurs. It has allowed us to validate new technology with a willing set of early adopters who, in turn, provided us with references and debugging.
We used this huge number of early adopters, who love to try open source applications, to legitimize our application. Further, this large set of commercial “installs” helped us ring out many of the bugs by users who have no grounds to demand perfection.
In addition, we jump-started our products without incurring large development expense. We used open source by starting with technology already in place and extending it, rather than building (or licensing) every piece from scratch.
Using open source code makes at least a portion of our technology publicly available. We use bundling, documentation, and proprietary extensions to make it difficult for larger players to steal our thunder. These will account for over half of development work but can be protected by copyright.
Afraid of copycats? In many cases, nothing could be better than to have a large player copy you. Big players value time to market. If one player clones your work, another may acquire your company to catch up in the market.
The transition from open source users to paying customers is a big jump, requiring traditional sales and marketing. Don’t expect your loyal base of open source beta users to start paying for your product. We use testimonials from this critical mass of users to market to paying customers who are reluctant to be early adopters (see below).
Channels? Use Direct Selling and the Web
Our innovation is a bit of a stretch from existing products and, like most innovations, requires some education of the user. Much of the early advice we received related to picking a sales channel. Just signup reps, resellers, and distributors and revenues will grow.
We found the exact opposite to be true. Priming channels is expensive. And, after we pointed the sales channel at customers, closing the sale and supporting the customer fell back on us anyway. Direct selling is not the path torapid growth. But as a bootstrapping tool direct selling has rewarded us with loyal customers, better margins, andmany fewer returns.
We use the Internet to generate hot leads, but we don’t worry about our Google ranking. The key for us is to get every satisfied customer to post something about our product. It probably hasn’t improved our Google ratings but customer comments have surely improved our credibility.
Honest postings to blogs and user groups have significant influence on potential customers. We explain to each customer how important their posting is to our company. We often provide them with a link to a user group or appropriate blog. And, as you know, these blogs stay around forever. Then, when we encounter new potential customers, we suggest that they Google our “brand name” and blog, which always generates a slew of believable testimonials. (Check out our Web site to see some of the ways we use testimonials.)
Using open source code and direct sales are surely out-of-step with popular ideas for growing technology companies, especially those funded by equity investors. But they worked very well for us as we grew our company with limited resources to positive cash flow and beyond.
NetEqualizer News Blog 
NetEqualizer Offers Net Neutrality, User Privacy Compromise
August 12, 2008 — netequalizerAlthough the debates surrounding net neutrality and user privacy are nothing new, the recent involvement of the Federal Communications Commission is forcing ISPs and network administrators to rethink their strategies for network optimization. The potential benefits of layer-7 bandwidth shaping and deep packet inspection are coming into conflict with the rights of Internet users to surf the net unimpeded while maintaining their privacy.
Despite the obvious potential relationship between net neutrality, deep packet inspection and bandwidth shaping, the issues are not inherently intertwined and must be judged separately. This has been the outlook at APconnections since the development of the network optimization appliance NetEqualizer five years ago.
On the surface, net neutrality seems to be a reasonable and ultimately beneficial goal for the Internet. In a perfect world, all consumers would be able to use the Internet to the extent they saw fit, absent of any bandwidth regulation. However, that perfect world does not exist.
In many cases, net neutrality can become a threat to equal access. Whether this is true for larger ISPs is debatable, however it cannot be denied when considering the circumstances surrounding smaller Internet providers. For example, administrators at rural ISPs, libraries, universities, and businesses often have no choice but to implement bandwidth shaping in order to ensure both reliable service and their own survival. When budgets allow only a certain amount of bandwidth to be purchased, once that supply is depleted, oftentimes due to the heavy usage of a small number of users, options are limited. Shaping in no longer a choice, but a necessity.
However, this does not mean that a free pass should be given for Internet providers to accomplish network optimization through any means available even at the expense of customer privacy. This is especially true considering that it’s possible to achieve network optimization without compromising privacy or equal access to the Internet. The NetEqualizer is a proven example.
Rather than relying on techniques such as deep packet inspection, NetEqualizer regulates bandwidth usage by connection limits and, through its fairness algorithm, ensures that all users are given equal access when the network is congested (Click here for a more detailed explanation of the NetEqualizer technology).
Therefore, a heavy bandwidth user that might be slowing Internet access for other customers can be kept in check without having to actually examine or completely block the data that is being sent. The end result is that the large majority of users will be able to access the Internet unhindered, while the privacy of all users is protected.
In the midst of the ongoing debates over net neutrality and privacy, the NetEqualizer approach is gaining popularity. This is apparent in both an increase in sales as well as on message boards and forums across the Internet. A recent Broadband Reports post reads:
“I don’t think anyone’s going to argue with you if you’re simply prioritizing real time traffic over non-real time. Just so long as you’re agnostic as to who’s sending the traffic, not making deals behind people’s backs, etc. then I’d have no problem with my ISP letting me surf the web or e-mail or stream at full speed, even if it meant that, when another person was doing the same, I could only get 100 KBs on a torrent instead of 150.
“I’d much rather have a NetEq’d open connection than a NATed nonmanaged one, that’s for sure.”
It is this agnostic approach that differentiates NetEqualizer from other network optimization appliances. While network administrators are able to prioritize applications such as VoIP in order to prevent latency, other activity, such as BitTorrent, is still able to take place – just at a slower speed when the network is congested. This is all done without deep packet inspection.
“NetEqualizer never opens up any customer data and thus cannot be accused of spying. Connections are treated as a metered resource,” said Art Reisman, CEO of APconnections. “The ISPs that use NetEqualizer simply put a policy in their service contracts stating how many connections they support, end of story. BitTorrent is still allowed to run, albeit not as wide with unlimited connections.”
Although not a proponent of bandwidth shaping, TorrentFreak.com editor-in-chief and founder Ernesto differentiates NetEqualizer from other bandwidth shaping appliances.
“I am not a fan of bandwidth control, the correct solution is for providers to build out more capacity by reinvesting their profits, however I’ll concede a solution such as a NetEqualizer is much more palatable than redirecting or specially blocking bittorrent and also seems to be more acceptable to consumers than bandwidth caps or metered plans.
“There is a risk though, who decides what the ‘peaks times’ are, how much bandwidth / connections would that be? Let me reiterate, I would rather see that ISPs invest in network capacity than network managing hardware.
“The Internet is growing rapidly, and if networks ‘crash’ already, they are clearly doing something wrong.”
The ultimate capacity of individual networks will vary on a case-by-case basis, with some having little choice but to employ bandwidth shaping and others doing so for reasons other than necessity. It has never been the intention of APconnections to pass judgment on how or why users implement shaping technology. The NetEqualizer is simply providing a bandwidth optimization alternative to deep packet inspection that gives administrators the opportunity to manage their networks with respect to both net neutrality and customer privacy.
Share this: