The Business of Open Source

As part of the preparation for Open Source Founders Summit, I’m interviewing both our speakers and our attendees for a special podcast that’s hyper focused on one thing. In this episode I spoke with Peter Zaitsev, founder of Percona, about sales. We talked about the specifics of sales as a bootstrapped company — which means sales are exceptionally critical from the beginning, and how sales changed as the company moved from a consulting model to a support model on the open source software that Percona creates. Also, this episode was recorded on site at OpenUK’s State of Open Con! Here’s the concrete takeaways from this episode: Even before starting the company, Peter had built up a personal brand as a MySql expert — this is what made it possible for him to get consulting gigs pretty much immediatelyPeter’s personal brand wasn’t just around MySql in general, but was very specifically focused on MySql performance optimizationHow a growing team meant that the sales process had to get much more disciplined — and deal sizes had to get bigger so that it’s worth the sales team’s time How to align sales incentives with your business goals — how it’s important to adjust sales quotas and incentives so that sales people don’t oversell, which can hurt your reputation long-term, and don’t sell long-term agreements at too much of a discount. Why it’s important to separate out your revenue that comes from new customers and your revenue that comes from customer renewals, and how to do so in the organizationIf you want more opportunities to go in-depth on sales for open source companies — and to discuss sales and other aspects of business development with other founders, join us May 27th and 28th in Paris at Open Source Founders Summit. 

Garima Kapoor, COO and co-founder of MinIO, joins me to share her journey from investor and advisor to co-founder of MinIO and the wealth of knowledge she’s amassed along the way. In this episode, Garima explains how her experience in finance and belief in the power of open source helped MinIO to break into the data storage market. She also reviews the challenges she faced as a first-time founder and what others can learn from her mistakes and take away from some of their own. Since Garima started her journey with MinIO as CFO, she outlines that role for me and explains how she thinks a CFO should operate in an open source company. In reviewing mistakes she’s seen from other founders, Garima states some principles that create the “foundation for any open source business.”  - “You should always be very honest to your community. You should always be very transparent to the community”Highlights:Garima introduces herself and explains why she and her co-founders started MinIO (1:31)Garima describes how the MinIO founders honed in on a problem they wanted to solve (3:55)How the MinIO founders used open source crack the market (6:37)What triggers a user to purchase a commercial license for the product (10:33)Garima explains why she and her cofounders were set on their open source strategy from day one (11:35)Garima explores the differences between being an investor and advisor for other companies and starting her own. (13:25)Garima shares go-to-market advice for other founders (15:21)Garima outlines her strategy for building on small successes (18:38)Garima explains why she started as CFO for MinIO and breaks down the role a CFO can play in a new company (21:46)Why Garima thinks a CFO’s role remains the same in an open source company as compared to a proprietary company (27:17)How to avoid competing with your open source product when you also have a commercial offering (34:06)Links:GarimaLinkedIn: https://www.linkedin.com/in/garimakap/Twitter: https://twitter.com/garimakapCompany: min.io

Federico Wengi, Partner at SquareOne VC, talks about the uncommon pivot from closed to open source strategy. He shares the challenges businesses face and gives an example of a successful pivot. Open source won't solve all problems, but it's worth considering for change. They discuss the importance of discussing closed source decisions and the challenges of monetization and differentiation in open source. Valuable advice is shared for founders considering going open source and enhancing a product's unique selling proposition. The concept of open source companies providing free functionalities is explored using the example of Cal.com.

How can we get founders of open source companies together to share ideas, share strategies and tactics and build a community not just of open source practitioners, but of open source business owners? We create a conference/summit/retreat to bring them together to learn and to work on their businesses together. At least that is the bet that Remy Bertot and I are makingIn this episode, I talked with Remy about Open Source Founders Summit, a summit they're organizing on May 27th and 28th, 2024 in Paris, France — we each shared our motivations for organizing the event, and talked about why we think it's important for people to come together in person. You should listen to the episode, but if you don't want to, the bottom line is that we think there needs to be a space for all open source founders (not just the DevTools, not just the VC-backed) can come together to share business ideas — a place where business, not tech, is the focus. Listen to the episode, and join us in May! 

Ben Haynes, Founder and CEO of Directus, shares insights on building an open-source company with a solid product-led growth strategy. He discusses the value of optimizing for government agencies, choosing a SaaS business model, and why open-source is the best strategy to start a company. Ben also reflects on the importance of timing and transparency, and the challenges of building and running an open-source business.

Peer Richelsen is the Co-founder of Cal.com, an open-source calendar scheduling tool. This week, Peer and I discuss his personal experience with needing a customizable scheduling tool, the big leap from taking donations to running a profitable business, and the thought process behind seeking VC funding. Peer also talks about the major advantage of starting with only a paid version of the product in order to build a small community of super users. Lastly, I pick Peer’s brain about how he feels being constantly compared to non open-source scheduling products.Highlights:Intro (00:00) I introduce Peer Richelsen, the Co-founder of Cal.com, and he discusses the company and its calendar scheduling tool (00:59)Does Peer think about Cal.com as a dev tool (2:09)What is Cal.com’s business model (03:57)The lack of customizability in the scheduling tool marketplace (06:15)Switching from accepting donations to selling a profitable product (09:48)Launching without a free version (12:50)The human cost of freemium usage (16:20)The decision to raise VC funds (17:41)What business value being open source brings to the company (20:48)How Cal.com positions itself in the market (24:13)Interesting mistakes Peer has made as an entrepreneur (28:22)How “free” is the software (30:57)Peer’s parting words (32:27)Where listeners can connect with Peer and learn more about Cal.com (33:04)Links:PeerLinkedIn: https://www.linkedin.com/in/peer-richelsen-221233138/Twitter: @peer_richCompany: https://cal.com/

Birthe Lindenthal, Co-founder and CMO of OpenProject, discusses the benefits of being open source, monetizing the user base, and the challenges of marketing an open-source product. She shares the motivation she feels when contributing to something larger than herself and talks about merging branding between free and paid versions of the software. Birthe also gives advice for founders of open-source companies and discusses the difficulty of creating a glossary of company terminology.

Didier Lopes, CEO of OpenBB, shares how the project grew from 4,000 GitHub stars to a successful open source business. He discusses the origins of OpenBB, the involvement of his co-founder, the evolution of the company, and the benefits of open source in their monetization strategy. Didier also emphasizes the importance of building a cohesive team in achieving success.

Loris Degioanni is the CEO and Founder of Sysdig, an open-source company working to make cloud deployment more secure through the use of runtime insights. Loris and I sit down to discuss the bet Sysdig is making to position itself as a leader in cloud security, how Loris leverages the power of a useful tool to create a brand, and the framework he uses to decide what should be open source and what should be paid for. Loris also shares an in-depth history of his previous company, Wireshark, and his excitement for building open source projects that outlast their business and creators.Highlights:Intro (00:00)I introduce Loris Degioanni who is the CEO and Founder of Sysdig, and he provides a little bit of context about himself and his company (01:00)Loris gives an overview of his previous company, Wireshark (01:57)Ways in which Loris was able to commercialize Wireshark as a tool for open-source end-users (04:30)How Loris used open-source as a marketing tool to create a profitable business model (07:28)The difference between Sysdig and Wireshark in their relationship to open-source (08:57)The bet that Sysdig is making and how that positions the company to become a leader in cloud security (12:36)Loris and I discuss Wireshark’s continued longevity (15:14)Where the inspiration for Sysdig came from and its journey from open-source project to commercial product (19:41)How building something useful replaces the need for a sales and marketing team (24:22)Closing the gap between the Sysdig project and the Sysdig platform (27:52)The framework for deciding what is offered open-source and what needs to be paid for (30:21)Loris’s most interesting mistakes in entrepreneurship and building Sysdig (33:20)How listeners can connect with Loris and learn more about Falco and Sysdig (36:31)Links:LorisLinkedIn: https://www.linkedin.com/in/degio/Twitter: https://twitter.com/lorisdegioCompany: https://sysdig.com/

Bob van Luijt is the CEO and Founder of Weaviate, an open-source vector database company that helps contribute to the advancement of AI technology. Throughout this episode, Bob and I discuss the complexities of moving from an open-source project to building an open-source company, and the challenges that come with monetization strategies. Bob shares insightful anecdotes around why it’s important to be careful that you’re measuring the right things for the right reasons, and also emphasizes the importance of determining the best approach to profitability.  Highlights:Intro (00:00)I introduce Bob van Luijt who is the CEO and Founder of Weaviate, and he provides a little bit of context about himself and his company (01:00)Bob gives us the run-down on Weaviate’s operations, including fundraising, staffing, and monetization data (02:04)How the Weaviate project became the company it is today (04:03)The value that open-source brings to Weaviate’s business model (11:21)Bob and I discuss the disadvantages to building a company around an open-source project (17:55)The complexities of having an open-source project that is used within other companies and products/projects (20:19)How Bob and Weaviate have approached monetization (22:18)The most interesting mistakes Bob feels he’s made along the way in his journey to build Weaviate (24:37)Bob tells us more about his decision to shift from professional services to a product-led approach (25:50)Bob and I discuss the complex catch-22 of focusing on either profitability or growth as an open-source founder (28:39)How Bob filtered through product feedback and feature requests when first shifting to a product-led approach (32:19)Bob’s advice to people who want to be a part of the open-source ecosystem (37:54)How listeners can connect with Bob and learn more about Weaviate (39:13)Links:BobLinkedIn: https://www.linkedin.com/in/bobvanluijt/Twitter: https://twitter.com/bobvanluijtCompany: https://weaviate.io/