The Business of Open Source

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. 

This week on the Business of Open Source I had Galeal Zino, CEO and founder of NetFoundry, which creates OpenZiti. One of the most interesting things about the this conversation was the conversation about how to balance whether you’re promoting the product or the project. I talk to a lot of founders who assume that because you have both, you have to promote both. The same goes for SaaS and onprem options — some people think that just because you offer both, you have to build a go to market function for both. This topic came up in the conversation with Joe Duffy as well — in their case, it was the opposite, though. Pulumi started with both open source and commercial product, but put all the emphasis on the open source project for the first two years. Some of the interesting takeaways from this episode: Even though there was no “GTM” focus on the open source project at the beginning, it still had business benefits to NetFoundry, because it made prospects more comfortable that they wouldn’t disappear overnightHow building an open source company is more difficult, because you end up supporting multiple products. But it also can build a flywheel of innovation that you just can’t get any other way. Do you have to get product market fit twice? We had a long conversation about whether or not you have to get product market fit twice in open source companies. We also talked about testing ideas and business models in the actual market, and how lessons learned in other businesses can influence how you approach you take even with open source companies. Thank you for listening! PS: I’m changing my consulting offerings slightly, to focus on product strategy instead of positioning. And I’m looking for beta clients while I figure out exactly what the offering looks like. So if you’re an open source company and you’re looking for a clear product vision, a better understanding of how your product + project are differentiated and how to build that into your roadmap, reach out. 

Pretix founder and CEO Raphael Michel has a completely different philosophy about what he is building compared to the big players in the event / ticketing platform space. We had a great conversation this week about Pretix, how Pretix is positioned compared to big players, and who care about the fact that Pretix is an open source company. Some takeaways: Pretix is a small company, but Raphael feels like it is able to have a much broader feature set than the big players like EventbriteI think of Pretix and Eventbrite as competitors, but Raphael was able to very easily tell me the difference between Pretix and Eventbrite, how that stems from a different philosophical stance about what they are buildingIt took five years for Pretix to hire one person, about 10 years after starting Pretix there’s about 20 people on the teamAbout 20% of people care about the fact that Pretix is open source, and 80% don’t care. But those who do care, care a lot. Figuring out who cares about open source and who doesn’t depends on the target market and can be trickier than you would expect. Even though SaaS is the main business model for Pretix, they have an on-prem offer — and they have on-prem customer.How growth is a huge challenge, both for the company growing and for the customers and partners, because it becomes more challenging to get support.Notice how clear Raphael was about Pretix’s positioning, and how it was different from the big players in the event space. Are you that clear on how your software is different from competitors? Do you have a clear point of view, like Raphael, that sets you apart from the rest of the eocsystem? If not, you might want to work with me. 

This week on the The Business of Open Source, I spoke with Ashraf Samhouri, the CEO and co-founder of Activepieces. Activepieces didn’t start as an open source company — and we started out the conversation by talking about why it was important to take an open source route because Activepieces is building an ecosystem. Some other highlights from the episode: Making software that is both for technical users (engineers love Activepieces!) and non-technical users (who also love Activepieces, because the UI is good)Understanding the different user types, and marketing to them separately and specifically. I challenged Ashraf to tell my why Activepieces is better than Zapier even without the open source piece — it was a challenge, but he made a good argument about having a simpler interface as well as that Activepieces allows you to run on-premWe talked about product led growth and how there is an obvious starting point for promoting an open source projectWhy lead qualification is so importantIf you’re the founder of an open source company and you’re struggling with your open source strategy, with your positioning of your product or project in the ecosystem or with communicating that value of your product and project, reach out — that’s what I help companies with. 

This week on The Business of Open Source, I spoke with Per Ploug Krogslund, who is currently  senior director of developer programs at Docker, and who previously had a number of experiences at the intersection of open source and business. He founded and ran an open source company, Umbraco, for many years, and also led the Open Source Program Office at Spotify. We had a wide-ranging conversation about open source businesses. Some of the topics we covered:What is the right size for an open source business? How do we make space in the conversation about open source businesses for the companies that will never become billion dollar unicorns? The tension, both internal and external, around building open source software and building a company. We talked about this in the context of Umbraco and in the context of Docker — most fascinating to me was that Per felt like as soon as Umbraco had figured this out, it wasn’t as interesting for him to keep working on the company. Why hasn’t there been an “enterprise Backstage” company to spin out of Spotify? We also revisited the question of Microsoft and open source, because Umbraco is an open source company built on a Microsoft stack at a time when Microsoft was publicly hostile to open source. What should you take away from this conversation? There are plenty of opportunities to build small-to-medium size companies around open sourceYou might have to try a lot of different ways to monetize. Per said he felt like Umbraco tested 17 different income streamsThere will be a tension, both internally and externally, about how much to open source. This is part of the game; you have to figure out how to manage this tension but might never feel like you get it perfect. If you’re listening and want help on your open source strategy, finding the right balance between open source and income streams and figuring out what those income streams should be, reach out to see if it might be a good fit for us to work together. 

Tom Wilkie, CTO at Grafana Labs, shares insights from his journey in the open source space after a brief startup stint. He emphasizes that successful businesses view open source as a privilege and focuses on integrating financial sustainability from the outset. Tom discusses the importance of starting with clean open source code, the secret sauce of monetization through integrations, and the strategic choices between SaaS and enterprise models. His anecdotes highlight the essential balance between technology and business in building a thriving open source company.

This week on The Business of Open Source I spoke with Mike Milinkovich, executive director at the Eclipse Foundation. We had a wide-ranging conversation about the role of open source foundations in the open source ecosystem, especially as related to open source businesses. The existence of open source foundations, and how companies decide to engage (or not) with them, is one of the aspects of open source businesses that is truly unique. Perhaps one of the key things to keep in mind from this conversation is that a foundation’s priority is project sustainability — and that is not always aligned with the goal of increasing profits for a company. On the other hand, there are a lot of advantages to contributing a project to a foundation. But founders should be aware of both the advantages and the constraints that working with a foundation entails. Here are some of the things that stood out from our conversation: Investors want a successful business more than they want a successful project; foundations’ priorities are opposite. You have to take into account commercial/financial interests if you’re thinking about sustainability of a project, because you have to put food on the table; projects take time to maintain.The only community you get around an open source project is the one you build — contributing a project to a foundation is not a magic community pill, and building a community takes work. Running a foundation is not free, so if you’re going to contribute a project to a foundation seriously consider supporting that foundation financially.Your customers should also become sponsors or members of the foundation(s) that your project(s) are hosted under, and you should actively encourage them to do so. Listen to the entire episode for even more insights! 

This week on The Business of Open Source, I spoke with Vinoth Chandar, the founder and CEO of Onehouse and the creator of Apache Hudi. We took a pretty deep dive into the relationship between Onehouse and Hudi, a topic that for me is at the heart of building a company on top of an open source project. In fact, whether or not Onehouse is an ‘open source company’ could be debatable; Hudi is an Apache project — it’s not owned by Onehouse in anyway — and Onehouse is not a ‘managed Hudi’ or ‘enterprise Hudi.’ Onehouse solves a problem that is fundamentally not the same problem that Hudi solves. Here’s some other take aways from my conversation with Vinoth: There were both technical and business reasons for the relationship between Onehouse and Hudi; Hudi is a library, and you can’t offer a library as a service. Also, Onehouse does way, way more than Hudi.Out of Hudi’s 16 project management committee members, 5 are from Onehouse. Which means both that Onehouse has a significant presence, but also that it can’t completely control the project. The disadvantage of being in a ‘hot’ market, which means there are lots of big players trying to define the narrative around data lakehouses.Starting Onehouse two and a half too late… or was it actually too early? We had a discussion about timing of starting the company, and Vinoth had arguments for why they started the company too late, but also why it might have been too early. Are you giving away too much? The Onehouse board sometimes thinks so; but what Vinoth thinks was a mistake was not spending enough time educating both Hudi users and the larger community about just how much Hudi can do, instead of letting external players define the narrative about what Hudi does. Check out the full episode for more wisdom from Vinoth! 

This week on The Business of Open Source, I spoke with Joe Duffy, co-founder and CEO of Pulumi.We kicked off the conversation by talking about why Pulumi is open source in the first place — a mix of Joe’s long-standing interest in open source and a feeling like a developer tool like Pulumi just has to be open source in order to be taken seriously. But there was another reason, too: Pulumi’s founders weren’t just in it to build a company, they wanted to transform their industry and build a lasting community, and felt like open source was the best way to do that. Lots of good take aways in this episode, like: Learning from open source legends... uh, actually, learning from Microsoft. Microsoft is an open source giant, right? It’s interesting to hear Joe talk about learning about open source business strategy from Microsoft, precisely because Microsoft does not make money directly from VSCode, and also does not invest millions of dollars into R&D just to be nice. “If you’re going to try to build a business with open source, you need to be very thoughtful and very strategic about it.” The founding team at Pulumi sort of iterated on figuring out the business model, but to a large extent they just thought about it until they had an Aha! moment. On the other hand, they didn’t go public until they thought they had a winning strategy for building an open source business. In the case of Pulumi, there’s a client side and a server side, so it made sense to build in a natural division between the two. This also made it so users were less likely to feel like Pulumi was holding back essential features in order to drive sales. “The way I always view it is the thing you’re selling has to stand on its own” Pulumi started a company, an open source project and a commercial product at the same time. Joe’s not sure he would recommend that approach, but it worked for them. “Figuring out the relationship was importnat, but actually the most important thing was to have a successful open source technology.” One thing I wanted to pull out: Even though Pulumi launched the open source project and commercial product at the same time, they focused all their efforts in the first two to three years on getting the open source project off the ground. Many founders I talk to think that once the commercial product is out there, you are forced to build a GTM team… but you don’t have to. In fact, I think the strategy of having the possibility to buy the commercial product while focusing the company’s energy on the open source software in the beginning is brilliant. Result: “We were able to create this immense funnel of inbound commercial interest, even when that wasn’t really the top level focus.” Even if you’re primarily a SaaS company, you can still offer an enterprise on-prem version for customers with hard requirements to host themselves, like air-gapped environments. Just because that option exists doesn’t mean you must build GTM motion for it, though. The business value Pulumi gets from the open source project is: generating leads, building the company’s brand, and also recruiting top-level talent. The fact that developers building the tool are so close to developers in the community is also a huge advantage. Listen to the full episode, it has a huge amount of great insights!