The Business of Open Source

Kim McMahon is the leader of Open Source Marketing & Community at Outshift by Cisco, which is Cisco’s emerging technologies and innovation unit. We recorded this episode at Open Source Summit EU, and talked about Kim’s strategies and tactics related to helping guide users to the correct edition of your product — ie, decide whether the open source option or a commercial option is best for them.Kim talked about the tricky balance open-source companies must strike between embracing open-source principles and driving revenue as a business, Kim’s tactics for community building and why it’s so important to be clear on why you want to build a community and the outcomes you expect from your investment in community building. Highlights:I introduce Kim, who is the leader of Open Source Marketing & Community at Outshift by Cisco, as she joins me at the Open Source Summit EU in Bilbao (00:25)Kim gives an overview of the talk she is giving at the Open Source Summit, which is on the topic of self-identifying when to shift to a managed version of open-source products (01:35)Kim and I discuss the different personas of open-source software users, and the role that product-led growth plays for open-source companies (03:07)Why Kim feels it’s critical to not treat your community as a sales database but rather to provide educational content to drive sales of open-source products (09:10)Kim and I discuss the challenges of marketing an open-source project and whether positioning truly falls under marketing (10:49)How Kim created a feedback loop on her team between sales, marketing, and product to ensure alignment when bringing open-source products to market (13:31)Kim walks through her thought process for community building from scratch (17:23)How Kim evaluates if a community-building strategy is working or not (24:34)What Kim learned about being a part of a community by being a member of a food co-op (28:09)Where to connect with Kim and learn more about her work (34:44)Links:KimLinkedIn: https://www.linkedin.com/in/kimmcmahonco/Twitter: https://twitter.com/kamcmahonCompany: https://eti.cisco.com/

Alexander Krüger is the Co-Founder and CEO of United Manufacturing Hub, an open-source company that develops software for the manufacturing industry. Throughout our conversation, Alexander describes the unusual path he took in going from a services-based consulting company to a product-led company. He also describes the opportunities and challenges of selling open-source software to an industry that has historically been slow to adopt new technology, as well as his choice to hone a go-to-market strategy before exploring fundraising. Highlights:I introduce Alexander, and he gives some background on his company United Manufacturing Hub (00:22)How Alexander decided to develop open-source software for manufacturers (01:39)Alexander describes the early days of launching United Manufacturing Hub and how he got his first customers (04:06)How long it took to go from a consulting firm to a product-based company (06:57)Why it’s important to Alexander that United Manufacturing Hub is an open-source company (08:20)Alexander describes the go-to-market strategy at United Manufacturing Hub and how it impacts their fundraising efforts  as well as their monetization model (11:06) Alexander describes an interesting mistake he made and what he learned from it (19:10)How different it is to sell open-source software in the manufacturing space versus other industries (21:31) The biggest challenges facing United Manufacturing Hub today (22:35)Alexander describes the pros and cons of going from a services company to a product company (25:44)Where people can go to learn more about United Manufacturing Hub and connect with Alexander (29:38)Links:AlexanderLinkedIn: https://www.linkedin.com/in/alexander-krueger/Twitter:Company: https://www.umh.app/

Steven Renwick, CEO of Tilores, shares insights on their decision to forgo open sourcing their entity resolution system. Renwick explains how initial assumptions about open source shifted after evaluating business needs and investor feedback. He discusses the complexities of maintaining proprietary control while addressing customer transparency and security concerns. With valuable lessons on naming startups and navigating market positioning, this conversation highlights the nuanced choices faced by tech companies in today's landscape.

Philippe Humeau is the CEO and Co-Founder of CrowdSec, an open-source security company with a very unique business model that doesn’t fit the usual open source patterns. Philippe talked about how to focus on providing a fair exchange of value between maintainers / open source companies and users, and how to monetize a project that is providing value for free.Philippe also talked about why he thinks open-source founders are under more pressure to get their business model right at the start, tips on making the right hiring decisions, and how to communicate with the community in an effective and transparent way. I also liked Philippe’s cynicism: why he views open source as primarily a pragmatic choice for his business, given the type of company he wanted to build. Philippe also shares the logic behind his uncommon view that only making certain features available to paying customers isn’t a truly open-source business strategy. Highlights:I introduce Philippe, who gives some background on his career journey and what he does at CrowdSec (00:22)Philippe explains why it seems that security companies are underrepresented in the open-source space (03:19)The most common mistake Philippe sees when people start an open-source business (05:03)Why Philippe believes that open-source companies are under more pressure to get their business model right the first time (09:26)How Philippe came up with Crowdsec’s unique business model (16:15)The pushback that Philippe got when he presented his business model initially (19:33)Why Philippe views open source as a means to an end, and how that has affected his choices at CrowdSec (25:10)The most interesting mistake Philippe has made since starting CrowdSec (27:28)Why Philippe believes open source business models are more promising than closed source (31:19)The advice that Philippe would give to an open source founder who is looking to build a successful company (34:11)Why Philippe feels that having certain features behind a paywall is not a truly open-source business model (35:53)Where you can learn more about Philippe and connect with CrowdSec (40:11)Links:PhilippeLinkedIn: https://www.linkedin.com/in/philippehumeau/Twitter: https://twitter.com/philippe_humeauCompany: https://www.crowdsec.net/

Samuel Stroschein is the CEO and Founder of inlang, an open-source company that is looking to not only make localization easy for developers, but also to help companies achieve revenue growth through localization. I was particularly excited to talk to Samuel because, back in my way back past, I was a translator, so I’m always interested in solutions that exist to facilitate translation; but also because localizing software is a good example of the intersection between business problems and technical problems. Inlang also strikes me as a company that could see its primary market as developers, or could see its market as CMOs — because of the way localization is both a technical and business problem. And Samuel is clear about this: He says “What we're basically saying is if you want to make more money, you've got to localize.”Lastly, another thing that stuck out to me about our conversation was that, as we talked about Inlang’s future monetization strategy, Samuel said he thinks that it will likely be around services — which I hadn’t heard from anyone before. His reason: That the software will ultimately become commoditized.  Listen in to learn why localization is such a challenge for developers, what impact it has on revenue growth, and how Samuel took inlang from an open-source project to an open-source company.Highlights:Samuel introduces himself, describes his background and explains what inlang is solving for (00:37)Why localization is such a challenge and how it led Samuel to create inlang (01:21)The circumstances that pushed Samuel to turn inlang into an open-source project (04:30)Why Samuel decided to take inlang from an open-source project to an open-source company (05:43)Samuel explains how localization is a growth opportunity, and how that impacts inlang’s market (09:00)The way Samuel and his team are thinking about monetizing inlang (13:22)Why being an open-source company is important to Samuel (15:15)The collaboration that open-source brings and why it’s so valuable to Samuel (19:00)How financial stability, problem-solving, and the nature of building software all contribute to the success of open source in tech (26:06)Samuel explains how he views mistakes as stepping stones to positive outcomes (28:41)The learnings that Samuel has gathered when hiring for inlang (30:13)How you can connect with Samuel and learn more about inlang (31:22)Links:SamuelLinkedIn: https://www.linkedin.com/in/samuelstroscheinTwitter: https://twitter.com/samuelstrosCompany: https://inlang.com/

Kevin Muller, CEO and co-founder of Passbolt, discusses the risks of commercializing too early, the differences between European and American investors, the importance of clear communication in password managers, and the challenges of transitioning from consumer to enterprise use cases.

Tim Chen is a Partner at Essence VC and also the Co-Host of the Open Source Startup Podcast. Through these channels, he has the opportunity to speak with a broad variety of open source startups. Throughout our conversation, we explore the patterns that Tim sees in the open source startup space. Tim talked about how too many founders take the decision to build an open source company too lightly and the path that he would take if he were to start a venture-backed open source startup tomorrow. We also discuss the different monetization models of open-source startups and the true business value of an open source project. Highlights:Tim introduces himself and describes his role at Essence VC as well as his work as Co-Host of the Open Source Startup Podcast (00:22)The common patterns that Tim sees having worked with so many open source startups (02:25)Tim describes the landscape of open source and how it varies from open source projects to venture-backed, open source companies (06:48)What path Tim would take if he were to start a venture-backed, open source startup tomorrow (09:31)How Tim views different monetization models and their potential profitability (17:29)Tim’s views on the pros and cons of an open-core model (20:34)The business value of an open source project according to Tim (24:47)How Tim’s evaluation and investing tactics have changed as he’s worked with more open source startups (31:58)Where listeners can find more information about Tim and learn more about his work (37:47)Links:TimLinkedIn: https://www.linkedin.com/in/timchenTwitter: https://twitter.com/tnachenCompany: https://www.essencevc.fund/

Franz Karlsberger, CEO of Amazee.io, discusses joining an open-source start-up to scale growth. He emphasizes the importance of go-to-market strategy and knowing the open-source business model. Franz shares interesting mistakes, the significance of open-source ethos, and the differences in their go-to-market for cloud and managed offerings.

It’s kind of a cliche, Vlad A. Ionescu, founder and CEO of Earthly, says, but his first attempts to build something really awesome focused on amazing technology. With hindsight, he doesn’t think it’s so surprising that those efforts weren’t successful. It’s not that passion doesn’t matter, but rather that he had to learn to build things that inspired passion from both the market and the builders. We also talked about:Leaving a job, blowing through his savings, going back to a job before finding entrepreneurial successRealizing that if he wanted to have the kind of impact on the world that he wanted to, he had to figure out a way to make it as an entrepreneur, because the alternative was climbing the corporate ladder and that didn’t sound like funWhy it’s important to be brutally honest with yourself and what you suck atHow Vlad finally found success at Shift Left (now Quiet.ai)I also really liked his ideas about cutting corners — that startups will always have to cut some corners, it’s just up to you to decide which ones to cut. Highlights:Vlad recounts lessons learned from early entrepreneurial failures. (2:31)Taking failure personally to overcome weaknesses (5:19)Vlad explains what led to his first success with Shift Left (7:40)Vlad shares his journey from Shift Left to Earthly (13:40)Why open source? (17:03)How Vlad and his team built Earthly based on what he learned from building Shift Left (25:07)Breaking a product down to its components to find more value (31:38)The Startup Hierarchy of Needs (34:02)Links:VladLinkedInTwitterEarthlyQwiet.aiPersonal Site

Markus Düttmann, a former Principal at Nauta Capital, is steeped in the European open source scene. From his beginnings in theoretical physics, Düttmann’s hard pivot into venture capital funding granted him a spot in the developing tech world as a connoisseur of the culture and a champion for start-ups. He even contributed to Nauta Capital’s European Open Source Report detailing the state of the ecosystem as of October 2022.On this episode of the Business of Open Source, listen to his insight into the European markets, the various business models generally used for open source start-ups, and what he looks for in an open source start-up.Note: Markus has since left Nauta and is on paternity leave. He also asked me to add a follow-up to the episode: After thinking more about the biggest danger to open source companies, he thinks most of them will fail from problems like not building the right team, failure to find product market fit and/or failure to monetize. Hyperscalers are a danger, but probably won’t be what causes most startups to fail. Highlights:The unique qualities of the European open source ecosystem (2:20)European market vs. the American Market in terms of funding (3:45)Advantages and disadvantages of a European open source company (4:40)Navigating the use of different business models within a business (8:14)How Markus evaluates open source start-ups (11:46)Don't be the open source version of an existing enterprise company (16:14)Signs of a company worth investing in (16:45)Potential risks to the open source ecosystem in the coming years (19:24)Links:MarkusLinkedInTwitterNauta CapitalEuropean Open Source Report