Building (a business) on open source
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Transcript: English(auto-generated)
00:00
Happy that a couple of you made it even though the game will be on soon and I'm also happy for everyone that Didn't make it because fun fact is I'm not only announcing myself, but I only just Finished my presentation. So, let's see how what you can do of it building a business on open source and You might have noticed that a business is in brackets and there's a reason for this main reason is
00:25
We have we didn't really yet build a business in the strict sense we have raised our seed round which is good and we think we're on the way of building our business but We are still there to prove it so
00:44
There's a disclaimer don't expect any answers but some learnings This is what you can expect cheesy life quotes because when I was doing the presentation I'm like, yeah That's like so common sense and it applies to every aspect of everyone's life
01:02
That I needed to put a couple of cheesy quotes in there learnings from about seven years being an open source and learning of the last year where I've actually been talking to a lot of Highly successful open source CTO CEOs of large companies and also to a lot of VCS
01:23
raising funds for ourselves So first question not so many people here but still do you contribute to open source? Okay, there's one two, three, four five six seven eight okay, so As you can see by this light and it has a developers study being done recently with a couple of thousand developers
01:44
so quite representative and the majority of developers contributes to open source and There's a couple who haven't yet, but they still want to so Reaching developers why our open source seems to be pretty viable, right?
02:01
Okay, but this just for the beginning so building a business on open source When I thought about this, I thought like what do you want to do? Do you want to build an open source project or do you want to build a business? And of course, there are companies that have shown you can build a business on open source
02:22
but that's not what I'm Aiming at if you would need to compromise one because you could only do one either a business or open source What would it be? Because and there's my first cheesy quote if you don't know where you're going you'll end up someplace else It's not like and I think this is where a couple of open source
02:42
Business failures come from you have an open source library and you know It grows and you want to build a business this can work But it also cannot work if you really want to build a business first, you'll probably approach a couple of things differently Unless you're get lab who was speaking this morning here and obviously
03:05
There are always exceptions there are always those lucky guys and They Seem to have just started having their own project and then being lucky to be able to build it into their business
03:21
So you start building a github project and Depending on what it's for. Is it for business or is it as an open source project? You have different means of measuring your success and one of the first Learnings I want to share is there is a correlation between github stars and users
03:40
but github stars Does not equal users It just doesn't and you'll learn more about that if you have means of tracking what users do with your software But this is pretty important and I'd always go for tracking right from the beginning if you want to build a business. Ah Yes, and the next thing is and I've been suggested it a couple of times
04:03
Oh, you have so successful open source libraries You know, why don't you just ask your users to fund you, you know, everyone could donate a bit. Yeah, that's right I Don't really know Any big companies living solely on pay what you want or donations
04:26
I know it somehow or solely on donations. I know it somehow works for Wikipedia Generally, it doesn't work and to give an example and I think Maria DB is quite widely known right and
04:40
Monty vid a Nios as the MySQL founder also like CEO of open ocean He has quite a wide network. So he has a lot of spread and still in the last five years They got less than 5,000 euros in donations It's an example From what I've learned from other people I think
05:02
There's some truth behind that. It's not easy and you shouldn't count on it. Maybe that's also a former CEO of my sequel and He just says like live if you do open source live with the fact that the majority of your users doesn't pay you anything So basically
05:22
If you want to build a business forget about donations also in my very personal belief building a business means you're aiming for profit and Donations should only be for sustaining whatever you've built. So there's a huge different there. So it's not a business model and
05:40
a quick self-reflection point Would you donate? Do I see a couple of people nodding I'm not sure But then ask yourself to which open source projects did you donate last year because at this point most people like yeah Well last year mmm didn't manage exactly so know yourself as the beginning of all wisdom next cheesy quote and
06:07
Obviously you shouldn't be applying that to your research because Only because it's true for you. It doesn't apply to everyone else right, you know that but then you're doing open source It may be as a business or it may not be that's not as important. Maybe a point at this moment
06:23
But you might be expecting something spec some community love It's all you know, you're all part of the community. We all love each other. It's open source Yeah This very often is true. You get lots of great feedback
06:40
But obviously it's not all great all the time. And this is actually happened just very recently That's probably why I brought it and you know the library it has more than 18,000 get up stars It's widely used. I think it's over 20% of the world's top 500 apps on Google Play among them Twitter and snapchat
07:00
Not everyone loves it and people and open source community as in every other community can be very frank So you need to be able to deal with that? Also, I had a really nice talk this Monday and I wanted to mention it because I was talking To another speaker at the speaker's dinner and at some point he's like, yeah
07:21
You know what? I think I need to apologize. I'm like why and he's like, yeah I'm an event bus user and you know at one time you didn't publish the Feature I had requested for so long and I kind of got a little nasty and I'm really sorry that's like You don't see the person behind project But I really thought it was nice for him to bring that up and being honest and sharing
07:44
Because it's all about you know, you only see projects you see your own projects the other project But it's all people and if you respect that a little more that's easier. Also this morning in the talk by Alice. She mentioned about That you need to use event bus in the right way because you can get it terribly wrong
08:02
If you don't and I know Marcus has been preaching about that for a long time Because he could rip his hair out when he sometimes see how people abuse our library And this is just to show you he still has lots of hair This is another big or quite I think
08:23
Popular library web sockets and I Had the pleasure to chat to Alex a couple of times and he also was Yeah, he he was fighting that internal battle on how to deal with the community getting all kinds of you know
08:42
Feedback maybe not feeling appreciated all the time Here's a solution I think there's some truth to it, but I think what's more important is that everyone is a good open source citizen and For everyone that does open source another cheesy quote don't don't expect anything in return
09:01
You can't it's just like people get freely but also this is not a business model Now the next one is maybe a little bit more crucial Users and customers Yeah, unfortunately, I think I mentioned that we have a couple of
09:22
Big corporate companies using some of our open source libraries their users so having lots of users doesn't mean you will be able to build a viable company from that and I talked to Florian a couple of weeks ago And for me that was really interesting because mesosphere has just closed a 50 million dollar round
09:44
I think it's series C and which is pretty good. They're doing well. They are fast growing company and They initially, you know, they had users of their open source project mesos Netflix uber big names really cool and they were able to build upon this because they
10:05
Raised based on this fact, but turned out none of these became customers And the reason was that they really have to take capabilities to build in-house So they really didn't need to and they were hesitant
10:21
Yeah, I'd say don't expect anyone to pay if you have not thought about a business model Okay And open source also is not a marketing and sales strategy That's also what Florian shared with me Like after they found out that all their great users huge corporate clients big names wouldn't be their clients
10:48
They build up classic sales force Like people calling people making sales Outreach cold calls going there pitching etc. Oh
11:01
This ah MongoDB that's what I wanted to share and also MongoDB which probably is one Of the most successful open source companies they IPO'd More than 40% of their headcount is in sales. So I think you should be expecting to do a lot of sales So now I think I need to jump on back if I don't have a double no
11:22
So think about your business model and expect to have a sales force and this is also something what I Personally think I get a lot having worked a lot in you know open source and with developers It seems like developers hate marketing and I think there's some truth to that
11:42
Maybe we all do But this makes it even more difficult for you as a developer may be doing a dev tool as an open source tool To accept that maybe potentially for building a business. It's not only about the business model. It's also about
12:02
Marketing and sales, which unfortunately doesn't equal open source Okay, but what our business models We all I think that's something we all know. So first of all, there is this service model So you might have support training consulting all around that some you know companies have them
12:22
Foundations whatever certificates all of this up. This is basically the first two okay, and then you have I think the now getting more popular models of Ads brand building let's say it that way and
12:43
Open core basically having something where you to this open source core you are adding features software services Hosted services that are additional that are add-ons Now for the service model, it's always redhead and it seems
13:02
Redhead is the only company that Was ever able to build a business on fully only open source I'm not even sure if that is strictly speaking true because they had a hosted service They were offering to business clients and it seems like quite a lot of profit also came from there
13:22
but generally speaking that's an example given and If you try to pitch an open source company to a VC to get funding And they grin at you and they're like, oh so you want to be like redhead they are basically teasing you to come into a trap because like
13:40
service models today At least highly doubted And so I was really happy when this morning Yup, also shared that they tried to service model and failed and I know a lot of smaller companies that tried to service model and And Users are just not willing to pay for that that easily. So I think this is a very very difficult model to pull off
14:08
Then ads what to do. What do I mean with ads? I'm like, I didn't really mean the classical You know you have a blog and put in some advertisement thingy, so there are a couple of examples
14:21
Some you know may be stretching the model maybe but okay for example sequelite Are you aware how sequelite is financed it's full open source, which is Really cool. They didn't get take funding I think that all kinds of options to get funding as well as maybe you know
14:41
Having some corporations are being bought they didn't want that but What they have they have a consortium into which all big companies including Google and Apple and Microsoft Buy into in order to be able to steer the roadmap and also some enterprise Features, that's how they do it. And this obviously is only
15:01
Possible at a certain stage. So you must have filled up quite some Substantial value already There's the ad blocker you probably all know and use I wasn't even really aware that They get paid but in order to whitelist ads
15:22
By big big companies, so that's their business model. So that's great. That's awesome. They're doing good Mozilla Firefox you may know that you know, for example large Search engines they want to be integrated They want to maybe be made a default search engine and they pay big so that's like one time sales
15:44
But then it really lasts get book You probably all know wordpress obviously, it's a hosted service like how they're making money But I believe this can only work as it does because they have their brand they have the domain and that's the model and I put Jake there because
16:04
It's kind of I mean like he's not building a huge scalable business But it's kind of a small business a freelance business where you build on your reputation and you can use it in different ways Right. So the most important business a model being day probably
16:24
Yeah added solutions model and You can distinguish on all kinds of mates and people obviously very often combine all of these So around one of these you usually would have service models, but I think that's clear
16:43
So as a hosted service, for example Elastic would have both additional solutions like open core and hosted services just to give an example and MySQL also is open core now today. It wasn't earlier before they were having a different business model GitLab this morning
17:03
They just said that they are open core. So it's just like you have an open source solution and you have a closed You have closed proprietary software that's sold and that can be sold I think as a hosted service or As a software solution, so that's why I clustered these
17:21
MariaDB they have still the delayed open source model Which basically just means that your newest if you always want to have the newest bug fixes and the newest versions You'd be paying And if you're on the older version, that's fine for you You're under open source version dual licensing is
17:42
It's also probably known to most of user if you have a open license like a GPL where you have a copyleft protection so meaning whenever you use the core source code and you want to add to it and want to use that and You need to give it back So if you want to use that for your business, you might want a different license and so you pay for it
18:04
Makes makes makes a lot of sense and that's a model that works very well in the database spaces And I put the own product and I really don't know if that's like a real business model in that kind of sense, but I happen to know this guy so
18:21
So he does series series guide and you should check it out because it's a super cool app and he has open sourced His full code so everyone could go ahead and do the same thing and he's quite successful with it on a certain level and No one does so he's fine it's cool and people have been contributing to his project so he has been benefiting from open source
18:43
It's a little different because it's not a deaf tool and maybe that's a huge difference Yeah so There seems to be a huge trends to trend toward open core at the moment definitely When you are raising money and looking to do it, this is kind of the preferred model at the moment
19:06
My learnings from talking to a lot of feces is and now it's like Yes, it's a little tricky. So first of all, they usually want to Have all the product all the code done being done internally by the internal team at least 90%
19:26
Which kind of is a little different from what you'd usually think about open source, right? So it's on the other spectrum and License They're really picky about what kind of license you chose because that narrows down your options and
19:43
If you find a VC and there are VCS that are specialized in this field and faces that do that That are open for open source They're quite happy if you may not have fully open source yet because then they can help you with licensing Because there's a lot to be thought about here and you can ruin your business model
20:01
so if you're aiming for a business, I think license is where you need to be most careful and Then obviously as with any other business VCs people that will give you money are looking for traction GitHub stars users builds etc
20:21
So and and it's all around the license I'd say and we have to hold spectrum from Permissive to proprietary and I think that's where a little bit of the problem comes in Because the ease of commercialization goes up
20:41
At least that's what I think them if you use a commercial license is straightforward So if you go to someone to raise money, that's straightforward But at the same time you need to prove traction to see that what you've built is something someone really wants So now go ahead and choose
21:01
It's really difficult, right? So you're like right at the beginning in some kind of yeah conflict and You would need to make choices and Maybe think about in which way you can always still migrate and where there's no way back, right?
21:21
So overall open source isn't a business strategy I Think open source you can build a business on open source, but it's not a business strategy Personally, I think it shouldn't be I think open source It comes back down to a personal fit what you value what you want how you want to build your company and your product
21:45
This is also a decision you can and need to make at some point on your roadmap as a company as a team But In order for open source for us all to be, you know, happy and successful Try to avoid being bad open source citizens
22:03
I found this and it's another author of a very successful open source library And he was really fed up with all with so many people using all of his work and Coming back to him in Ungrateful ways, I think this is
22:23
This is also really important that everyone is aware of Of course and that's like kind of I'm missing the cheesy quote here, but that's the final sentence we are all like tiny kittens looking for love and So is everyone doing open source projects?
22:45
Okay Questions and I'm right on time for the game. I want an extra applause for that. Yeah, please
23:10
In in our case. Yes at the moment. Yes. Yeah. Oh Yes And she asked how much of our own code is developed internally and the answer is simple. It's all all of it
23:27
Any other questions? I'm happy to answer Thank you all have fun watching the game