The Business of Open Source

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!

Tyler Jewell, CEO of Lightbend, discusses the company's transition from an open core model to the Business Source License. Facing a near-death experience in 2021, the company made crucial changes due to its churn problem. The podcast explores the challenges of changing business models, vendor alignment in cloud offerings, and the impacts of the license change on revenue and community reception.

This week on The Business of Open Source I have an episode I recorded on site at AI-Dev in Paris with Justin Cormack, CTO of Docker. We finally get around to talking about AI at the very end of the episode, but otherwise we talked business and open source and how Docker manages both. Here’s some of the take aways from the episode:There are upsides and downsides to being an open source company, and you should absolutely make sure you are leveraging the upsides. Because they don’t necessarily translate into business value automatically, you have to be intentional to make that happen. It’s often a good idea for open source businesses to create a commercial product that is complementary to their project, so that if usage of one goes up usage / adoption of the other goes up, too. This is in contrast to an open core model, where the open source project can easily end up being crippled so that people are incentivized to buy the closed source license. If you want to get to $100million ARR, you can either sell $10 subscriptions to 10 million people or you can sell $100,000 subscriptions to 1,000 people. Both get you to the same revenue number, but the business model is very different. We also talked AI and open source, given the event we were at. 

Karthik Ranganathan, Founder of Yugabyte, discusses why engineers choose databases based on intuition, not just features. They explore the importance of prioritizing simplicity vs flexibility for database users. The conversation covers the evolution of open source databases, shifting priorities in choosing databases based on workload, and the significance of open source and managed services in technology evolution.