The Business of Open Source

This special episode of The Business of Open Source with Tatiana Krupenya, CEO of DBeaver, was recorded on site at All Things Open 2024. It’s a short conversation, so we addressed one main question: What is the difference between running an open source company versus as proprietary software company? Tatiana says the difference is big — and it’s complicated. The bottom line: Your OSS can be your main competitor, and your customers have to really see the value in your commercial offering if you want to make sales. ## If you aren't sure how to talk to your potential customers are about why they should use your commercial offering, you might want to work with me. 

This week on The Business of Open Source, I spoke with Stefano Maffulli, Executive Director of the Open Source Initiative, about the definition of open source and… the definition of open source AI. We recorded this episode on-site at All Things Open, so there’s a little bit of background noise. We talked about why OSI felt like it needed to develop a definition of open source AI, how “open source” is enforced, and the thought process behind the definition that the OSI ultimately published. We talked about open data quite a bit — different kinds of data, what kind of information and data is important to researchers and professionals in the AI space, and if there’s a way to include AI models that are trained on proprietary data in the definition of open source AI. If you are interested in open source AI, definitely check out this behind-the-scenes discussion of how, and why, this definition was published — and what the future likely holds for defining open source AI. 

This week on The Business of Open Source, I spoke with Anais Concepcion and Paul Fitzpatrick , the co-CEO of Grist Labs and CTO of Grist Labs. We talked about managing growth of users versus growth of revenue, moving to an open source approach for technical, not technical, reasons, and open-source related product management questions for open source companies. Some really interesting themes we talked about:Moving from a SaaS first approach to also focusing on enterprise sales. Why they did that, what other sales channels that opened and what questions it also forced the company to addressUser personas versus buyer personasThe situations in which Grist is the best option — which incidentally I could not understand from the website or the project documentationThe relationship between the open source project and both enterprise sales and SaaS sign-ups. How open source has been critical for a strategic relationship Grist has with the French government, which has been important for increasing product development velocityGiving up ‘darlings’ or features that they really want to develop but that they don’t think would drive revenueThe difference Anais sees between running Grist and running non-open-source companies — one of the most interesting differences is that users often have a sense of ownership over the project that you just wouldn’t see in a fully proprietary How open source true believers often work in large companies and control budgets, and should not be underestimated. Why trying to sell based on features — including telling yourself that if you just had one more feature, you’d unlock all the sales — was a big mistake. Are you struggling with price anchors fixed around zero dollars, or can’t figure out how to manage the push and pull of developing open source and building a business? You might want to work with me. 

This week on The Business of Open Source, I spoke with Eric Holscher, co-founder of Read the Docs. We had a really far-ranging conversation that included talking about why documentation is often so bad, why documentation should be a priority, but also Eric’s experience building Read the Docs and Write the Docs. This episode was interesting because it’s both about building an open source company and also about the importance documentation for software projects in general and open source projects. Some things we covered included: What is documentation? Is it a marketing effort, is it a part of the project itself? Eric talks about how good documentation for an open source project is a clear signal of a level of seriousness for the project. How Read the Docs was really started to support open source projects, and that is part of why there’s no enterprise installs — either you use the open source code on your own, or you use the hosted product.How Eric sees building in the open as a way to help other people become better software engineers, but that ‘helping companies use Read the Docs for free’ is not the reason he wanted to build an open source company, and he’s still not sure how to feel about the fact that this happens. You don’t get bonus points for being open source or bonus points for being bootstrapped — it won’t prevent a potential customer from using a competitive product because it has a feature that Read the Docs doesn’t have. How open source in general — and even documentation in general — can help build brand value, but it is super hard to quantify and put in a slide in a board meeting to justify an investment in open source. The decision to build Read the Docs as a business stemmed from the pressure that Eric got from having a successful open source project. How they tried very hard to avoid accepting advertisements, but they should have started doing so much sooner because it turned out advertisements is well-aligned with the things they want to be working on. The difference in risk between being open source for a database company versus an app-level open source project like Read the Docs; for Read the Docs one of the risks is the brand damage associated with people running the OSS on-prem and doing a bad job. Are you the founder of an open source company and struggling with figuring out how to manage the relationship between the project and product? You might want to work with me. Enjoy the show? Help it reach more people by leaving a review and sharing with your friends. 

Chris Holmes, co-founder and CEO of Greymatter, dives into the intricate landscape of open source and its reputation issues. He discusses why Greymatter doesn’t identify as an open source company despite its involvement in the ecosystem. Holmes addresses customer anxieties over hidden costs tied to enterprise software, the financial sustainability of open source, and contrasts selling to governments versus enterprises. He also shares insights on maintaining the Go Envoy Control Plane and the vital role of transparency in building trust within the tech community.

This week on the Business of Open Source, I spoke with David Höck, co-founder of Vendure. We talked about switching licenses from MIT to GPL, the ways that Vendure is different from it’s competitors and how architectural decisions can be a powerful differentiator for an open source company. Favorite quote: “You need to build your product together with your clients.” Some specifics we talked about that you should pay attention to: Why they switched to GPL in order to encourage more people to reach out to them and get more visibility into who was using their open source projectOn the other hand, they wanted to make sure that big companies building commercial platforms on top of Vendure’s platform are forced to pay for a commercial license. They also wanted to choose a less-permissive license, but something that was still well-known and wouldn’t cause a lot of confusion among users or potential customersThe difference between being happy with people using your software for free, and being happy with competitors using your software to build a competitive product, without offering any support to the underlying software. Do your customers care about whether you are VC-backed or bootstrapped? We had an interesting conversation about this, because Vendure is bootstrapped. I think we settled on a real important nugget — if your technology is really critical to the company, they will care about your long-term sustainability. Being bootstrapped can help convince potential customers that you are independent and will be sustainable for the long term. The top advantage of open source, David says, is the ability to get fast product feedback from a community. —> I just was talking with someone yesterday about this advantage of an open source strategy, I think it is under-discussed but extremely important. If you’re the founder of an open source company struggling with your product strategy — uncertain how to differentiate between project or product or how to differentiate the entire company in the ecosystem; don’t know what your project is supposed to do for your business; aren’t clear on the target market for your project or product — you might want to work with me. Find out more here. 

This week on The Business of Open Source, I talked with Allard Buijze, the CTO and founder at AxonIQ. We talked a lot about the importance of open source for getting feedback on your product and validating your idea — or not. One of the things we talked about was how the beginning of AxonIQ was tied to the same consultancy that developed Spring Source; Rod Johnson, the founder and CEO of Spring Source was on the podcast a couple months ago and you can listen to that episode here. We talked about: Spinning the company out of the an established company, and in particular how Allard ended up becoming co-founders with his former boss, and got buy-in from their previous employer to found the company after the open source project took open. How they underestimated some elements of human psychology around sunk costs and how it would impact people’s willingness to move from the open source project to the paid productWhy they originally had two products, and then decided to merge them into one single productHow the key turning point for the company was when a new salesperson joined the company and convinced them to quadruple the prices; the result was both an increase in revenue per customer but also an increase in the number of customers. How they evaluated the success of the decision to consolidate the two products into one. How product market fit is a journey, not a destination. How each individual hire can impact the way your product and project is perceived in the world; and it’s important to get alignment on what people are saying. The importance the avoiding confusion among potential customers***Are you leading an open source company and struggling with product strategy? I will help you improve the quality of your conversations, so people understand your product sooner, remain more engaged in the conversation and understand the relationship between your product and project. Learn more here. 

Robert Hodges, CEO of Altinity, shares his fascinating journey with ClickHouse, which he didn’t create but embraced when his team needed better scalability. He dives into strategic product decisions, explaining why they chose not to include a certain high-security feature for broader user clarity. The conversation also reveals the friendly competition among multiple companies within the ClickHouse ecosystem, underlining how collaboration can drive open-source innovation while maintaining unique revenue strategies.

This week on The Business of Open Source, I spoke with Jesse Williams and Brad Micklea, co-founders of Jozu and each with a long history of experience in various open source companies behind them. Even though Jozu is young, there was a lot to learn from these two and their experience in both open source and non-open source businesses. We talked about open source and not open source from CodeEnvy, Red Hat, AWS and Docker. “It’s very hard to get a sustainable open source project if you don’t have a company behind it paying those developers to work on it.” Some things we talked about: Why it’s important to focus on ‘what people get” instead of ‘what you give people.’ This is a fundamental component of effective product strategy and understanding your value prop: You can’t just talk about about the features you’re delivering; you have to connect that and focus on the value that people get from using the product. Jesse talked about the wizard behind the curtain that makes open source projects drive commercial adoption and revenue. You must be able to communicate the additional value of the commercial product; otherwise you will run the company into the group.Many open source companies get taken hostage by the open source community and end up having trouble monetizing because they make give away value in a way that is not sustainable.Users — and especially customers — are often unwilling to commit to a project if they are not convinced that the business behind it is healthy and has a sustainable business model. Open source, open standards and open governance — the relationship between the three and why we should all talk more about open standards and open governance in the open source ecosystem. The importance of really thinking through why you are open sourcing something, something that many companies don’t think through. We wrapped up the conversation talking about how difficult it is to figure out which features to prioritize — and that this is a really hard decision for any startup. This is a big part of my shift to focusing on product strategy in my consulting. If you’re an open source startup struggling with product prioritization and strategy, check out my product strategy offering. 

This week on The Business of Open Source, I spoke with Jimmy Zelinskie, co-founder and CPO of Authzed, which is behind SpiceDB. We kicked off the discussion with a really interesting discussion about whether or not SpiceDB is a database and whether or not Authzed is a database company. At first they didn’t see it that way, but as soon as they started leaning in on describing the product as a database, the more successful they were at getting people in their community to quickly understand what they did and how to use it. But it wasn’t just important for adoption: Once the team realized they were a database company, the business model they should follow seemed obvious, and they could make product decisions without stepping on anyone’s toes. Some topics we covered: How positioning SpiceDB as a database, and Authzed as a database company, helped everything else fall into place, from growth to product strategyWhy people often do want to avoid self-managing critical infrastructureThe difference in ideal user profile and ideal customer profilesHow transparency is the biggest benefit that Authzed gets from having an open source project. How the decision to release an open source project was a direct consequence of positioning the technology as a database.Why it is extremely important to have a decision-making framework for deciding what features will go into the open source or the proprietary features, that is communicated throughout the companyWhy open source companies need to consider the open source users and communities as one of their stakeholders that needs to be represented in strategic discussionsIf you’re the founder of an open source company — or you know anyone who is — and you don’t have a good framework for making product decisions or struggle to communicate internally and externally what the difference between project and product is, I can help you figure that out. Here’s more information.