The major problem is that you don't really have a competitive advantage. What will stop your potential competitors from simply downloading the open-source softw

The major problem is that you don't really have a competitive advantage. What will stop your potential competitors from simply downloading the open-source software and start using it themselves? When you do a startup you want to find a good niche that makes good money, and where competition won't start pouring in once you've proven that there is a market. So you need some kind of barrier, with YC startups it seems to be technology.