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Losing their independence was from the beginning the most likely outcome of building something that's hard to monetize like Keybase on the VC funding model. FW

Losing their independence was from the beginning the most likely outcome of building something that's hard to monetize like Keybase on the VC funding model. FWIW, I doubt Keybase offering a paid plan would have raised revenue that's significant compared to their burn, so Chris was probably right to not spend resources figuring out a paid offering. For raising their next round, having $5K in revenue from a paid plan few people buy might well have been worse than having $0. The VC funding model is terrible for most open source projects. With a few exceptions, you end up with an acquisition that ends or repurposes the project, or an Open Core project. And a VC-funded Open Core project will end up trying as hard as it can to have everyone need to buy the paid version, since that's clearly the way to optimize revenue and eventually the slippery slope will get you there. I don't blame folks for taking VC; it was easy to get, and there aren't a lot of alternative funding models that can pay the multiple fulltime staff that might be required to create what one wants to create. I don't think VC funding as it currently exists is consistent with running an open source company according to my values, which is why we're not taking venture funding for Zulip. Obviously, being scrappy, applying for NSF grants, and spending my own money have very real downsides both personally and for our growth, especially when every competitor has VC funding, but it also means that I can ensure Zulip continues existing as a real open source project for the long run.

fossuser 6y ago
How much power do the VCs typically have? Don't founders often have the ability to overrule and make their own decisions? Chris is already financially independent from the OKCupid sale, he could have open sourced the server code and/or reduced the overall burn to pivot to paid accounts. Though the weird Stellar wallet addition implied some vision/product issues anyway. Of course it's easy and probably unfair for me to say these things as an outsider with limited information and no real stake, it's definitely possible I'm wrong about important details that would change my mind. It'd be interesting to hear from Chris, but the sale probably restricts public communication? This reminds me a little about the OKC sale actually, they had a blog post about why charging for dating sites made them worse that they took down after selling to match (they used to do cool analysis and publish them as blog posts, most of the details ended up in the book a different cofounder published called Dataclysm). That's more understandable to me though since I think it was their first exit. Reading about Zulip - didn't you get bought by Dropbox before being open source? Is your current situation a lucky outcome - or was it a condition of the sale? [Edit] - To clarify since there are downvotes, my questions aren’t rhetorical - they’re genuinely asking.
- tabbott 6y ago
  > How much power do the VCs typically have? I think it's less about the power relationship, exactly, and more about the way VC-funded companies are setup to be run. As part of raising a round, you prepare a business plan that involves aggressively spending the money over a couple years. You're committed both internally and to your board to execute that plan, and it's cognitively difficult to do something different as there's social pressure to do so (and one of your VC's greatest sources of power over you is they're the reference for your next fundraising round). The result is that your company has planned to run out of money with potentially a multi-million dollar annual burn rate in two years. If as those two years are approaching, the company and/or market situation don't support raising more capital and the company isn't close to profitable, the momentum of that burn rate applies a great deal of pressure for a sale, destructive layoff, or total change in goals to "anything that improves the bottom line". Also, the search for a story to help raise your next round can have a big effect on companies -- my view is most of Dropbox's problems when I was there (2012-2014) resulted from the search for a totally new business bigger than Dropbox Business that could justify a bigger valuation than $10B starving more obvious investments (Carousel, the now-dead photo sharing app, at one point had ~10x the engineering resources of Dropbox Business). > Reading about Zulip - didn't you get bought by Dropbox before being open source? Is your current situation a lucky outcome - or was it a condition of the sale? It's an extremely lucky outcome. There's a combination of factor that made this possible: * Dropbox leadership prioritized doing the right thing by their users, and so we were able to get permission from both leadership and legal. I'm sure my personal position as a leader at the company who had a personal relationship with the people who had approve it made a difference (Though Luke Faraone made a big difference by asking legal if we could and inviting me to the meeting!). But I think Dropbox deserves a lot of credit, because they spend significant time from expensive resources (legal, etc.) making this happen, and I don't know of many companies that would ever do that. * Our users were big fans, enough so that 10 of them flew to Dropbox HQ for a week to help us do the technical work required to do an open source release with all 10,000 commits of history intact and with a scripted installation process. This was essential to Zulip being usable after that release. https://zulipchat.com/history/ https://zulipchat.com/history/ has a bit more background on the early history (though it's a bit out of date).

fossuser 6y ago

How much power do the VCs typically have? Don't founders often have the ability to overrule and make their own decisions? Chris is already financially independent from the OKCupid sale, he could have open sourced the server code and/or reduced the overall burn to pivot to paid accounts. Though the weird Stellar wallet addition implied some vision/product issues anyway. Of course it's easy and probably unfair for me to say these things as an outsider with limited information and no real stake, it's definitely possible I'm wrong about important details that would change my mind. It'd be interesting to hear from Chris, but the sale probably restricts public communication? This reminds me a little about the OKC sale actually, they had a blog post about why charging for dating sites made them worse that they took down after selling to match (they used to do cool analysis and publish them as blog posts, most of the details ended up in the book a different cofounder published called Dataclysm). That's more understandable to me though since I think it was their first exit. Reading about Zulip - didn't you get bought by Dropbox before being open source? Is your current situation a lucky outcome - or was it a condition of the sale? [Edit] - To clarify since there are downvotes, my questions aren’t rhetorical - they’re genuinely asking.

tabbott 6y ago
> How much power do the VCs typically have? I think it's less about the power relationship, exactly, and more about the way VC-funded companies are setup to be run. As part of raising a round, you prepare a business plan that involves aggressively spending the money over a couple years. You're committed both internally and to your board to execute that plan, and it's cognitively difficult to do something different as there's social pressure to do so (and one of your VC's greatest sources of power over you is they're the reference for your next fundraising round). The result is that your company has planned to run out of money with potentially a multi-million dollar annual burn rate in two years. If as those two years are approaching, the company and/or market situation don't support raising more capital and the company isn't close to profitable, the momentum of that burn rate applies a great deal of pressure for a sale, destructive layoff, or total change in goals to "anything that improves the bottom line". Also, the search for a story to help raise your next round can have a big effect on companies -- my view is most of Dropbox's problems when I was there (2012-2014) resulted from the search for a totally new business bigger than Dropbox Business that could justify a bigger valuation than $10B starving more obvious investments (Carousel, the now-dead photo sharing app, at one point had ~10x the engineering resources of Dropbox Business). > Reading about Zulip - didn't you get bought by Dropbox before being open source? Is your current situation a lucky outcome - or was it a condition of the sale? It's an extremely lucky outcome. There's a combination of factor that made this possible: * Dropbox leadership prioritized doing the right thing by their users, and so we were able to get permission from both leadership and legal. I'm sure my personal position as a leader at the company who had a personal relationship with the people who had approve it made a difference (Though Luke Faraone made a big difference by asking legal if we could and inviting me to the meeting!). But I think Dropbox deserves a lot of credit, because they spend significant time from expensive resources (legal, etc.) making this happen, and I don't know of many companies that would ever do that. * Our users were big fans, enough so that 10 of them flew to Dropbox HQ for a week to help us do the technical work required to do an open source release with all 10,000 commits of history intact and with a scripted installation process. This was essential to Zulip being usable after that release. https://zulipchat.com/history/ https://zulipchat.com/history/ has a bit more background on the early history (though it's a bit out of date).