Engine Yard Stokes the Boiler for Open-Source Software Developers

Business plan: Hire seven experts to work for a year building a complex product. Then, give the product away to anyone who wants it.

It doesn’t sound brilliant at first glance, but the success of San Francisco-based GOOD Company Project finalist Engine Yard, and the broader open-source community, demand a second look.

Engine Yard provides the infrastructure for companies looking to build software applications online, and takes pride in its commitment to open-source software—code that is freely available for use and modification—particularly the programming language Ruby and its web framework, Ruby on Rails (hence the company’s name). Engine Yard assigns some of its staff to develop open-source tools full-time, provides grants to open-source developers, and encourages more networking in open-source communities.

“This is what the market wants,” says Mark Gaydos, the company’s vice president of marketing. Developers don’t want to be dependent on proprietary software that companies might restrict, charge for, or simply stop supporting.

“We are here not only for a profit,” Gaydos says, “but we are here to benefit the open-source community—and, candidly, that means benefitting your competitors.” The company has decided that's a winning proposition—Engine Yard benefited from open source in building its own service, and the company's executives say their commitment to open code has created far more benefits than costs.

Engine Yard's business may not be easily understandable for the average web user, but it's important because we’re living in an increasingly app-based world. Software developers are creating tools that live in the “cloud”—in other words, they can be accessed over the internet or from your mobile phone rather than taking up space on your hard drive. Consumers are driving this: We expect to be able to do more than just gather information on the internet, we want to do something.

Of course, all that doing something requires infrastructure to handle an application’s behind-the-scenes work, the same way a restaurant needs a kitchen with stoves, electricity, and running water to put the final product on your plate. Engine Yard aims to provide software developers with the best "kitchen" possible so they can focus on making delicious food without worrying about the gas bill—or what happens when their venture takes off and hundreds of hungry customers are showing up outside. That means more innovation and better apps for users, with less hassle for developers.

“[Developers] just want someone else to handle the other issues and offload the management of a platform to someone else so they can focus purely on innovation, time to market, and providing the best experience to customers,” Gaydos says. “We want to be like your electricity—we’re always there, we’re always reliable.”

“The way I refer to it, is ‘expose complexity as necessary,’” says Nic Williams, the company’s vice president of technology. “Until you want to do that little bit extra, you shouldn’t need to look at what flavor of electricity you want.”

Since it was founded in 2006, the company has grown to 130 employees and, while executives don’t disclose its revenue, they believe it is five to 10 times bigger than any of its competitors—a client list that includes Nike, AOL, Apple, Disney, and MTV suggests that there is some weight behind the claim.

Still, Engine Yard’s niche—known in techie parlance as “Platform as a Service,” or PaaS—is becoming increasingly crowded. More and more companies are catering to the burgeoning crowd of app developers, including giants like Microsoft and Amazon (which also funds Engine Yard).

Engine Yard hopes to maintain its competitive advantage thanks to its track record at handling big projects and lots of users, the tools it provides customers who want to customize their platform, and the deep expertise of its team—including their familiarity and support of open-source communities. “The reason that we make these investments,” Williams wrote last spring, “is to ensure the health and success of the Ruby and Rails communities who form our core customer base.”

It’s a something of a symbiotic relationship: Engine Yard helps build sophisticated tools that make these programming languages more useful, and the more developers rely on those languages to build products, the more business there is for Engine Yard in supporting them.

Now, the company is focused on expanding its universe of collaborators with a significant investment in PHP, another open-source programming language, and making itself more useful to developers who are ready to take their projects to the next level with an emphasis on rapid scalability and managing large amounts of data.

They’ve got a pretty good test-case to work with. “We are our own customer, we live with the problems and we want to present those solutions,” Williams says.

Photo via (cc) Flickr user opensourceway