13 ms·

Why you should build an open-source startup

93 points by michokest 15y ago

kenjackson 15y ago
This is a bit disingenious. When your core product is a hosted service, its a lot easier to be open source. There's a lot more into using your product than just compiling it. Take a standalone product like Camtasia. It works really well and its worth the money to buy it. But if it was FOSS and I could just donwload the sources, build and it use it, and only had to pay for support -- well I probably would never buy it. I've never needed support with it. It's so easy to use, I've never had a need for support (in fact, that's partially why I'm willing to pay for it!). Figure out what your business model is first. And then do what makes sense. Open sourcing often does, but not always.
- michokest 15y ago
  Remember that you are not your users. Maybe you would build from the source (and then again, wouldn't you pay for it since you're a developer and you understand how much work they put into it?), but regular users would take something that works every time, and most of the time they'd pay for it.
- scsmith 15y ago
  I think I agree that in some cases it makes sense to open source things and in some it doesn't. I think when you look at a site like Teambox it makes absolute sense to be an open source product. To play devils advocate to your point though what about mysql, that's a downloadable product that makes it's money from commercial support or to a lesser extend tools like Phusion passenger. Most people don't pay for them for the thousands of Rails websites passenger hosts. However, for those larger enterprises it's much better to employ the experts for support. The key is looking to see if you business fits exactly as you say.
- cookiecaper 15y ago
  I think a couple of tweaks to the conventional OSS licenses would go a long way in getting source into the hands of more users. While I appreciate the GPL and think it's a great option for those who want to use it that way, the fact is it's far too limiting for anyone with an intent to commercialize the software (the actual software, not ancillary services like support). If someone would tweak the license to make it so that there was no unlimited commercial distribution it would become much more attractive, and hopefully a lot of software that today is just a blob would adopt the license and come with source.
  - JoshTriplett 15y ago
    I think you'd find such a change counterproductive. Such a license would not qualify as OSS anymore, which would take away the vast majority of the value. So, you'd incur all the costs of releasing the source, without getting the value of OSS. You might consider something like the AGPL instead, which still qualifies as Open Source, but which provides added protections for a hosted service.
    - tbrownaw 15y ago
      Wouldn't AGPL be moving is basically the opposite direction from what cookiecaper was suggesting? (I'd also think AGPL would be less OSS-like than that suggestion, since it limits what changes you're allowed to make instead of just limiting how you're allowed to distribute it.)
    - cookiecaper 15y ago
      It would not qualify as OSS as defined by political figureheads like Stallman, Raymond, et al, but if I can access the code, make changes, and share the changes with others, it's good enough for me. As another commenter pointed out, AGPL is actually the opposite direction, as it merely applies the copyleft constraints of the GPL to hosted software.
  - noahl 15y ago
    Just to clarify - you want a license where you distribute the code to your product along with the product, but your customers (who receive the code) can't then redistribute it themselves? Or perhaps they can even redistribute it, just not commercially (or not in binary form)? That does seem like an interesting middle ground. It seems like your goal would be to develop a community of developers around it, but with the exception that you are the only person distributing the software (for a fee) to non-developers.
    - cookiecaper 15y ago
      Yes, I want to see that kind of license. The unlimited redistribution is the thing that really makes it difficult to make money selling the software portion of GPL'd software. For some applications, doing the Red Hat business model of commercial support works fine, but if you have something consumer level, you will not make anywhere near enough money off of that. Licensing something under the GPL makes financial gain from your copyright practically impossible. People make much more money if they retain their legal right via copyright to be the sole source of (commercial) distribution. Hence, very few corporations are interested in using the GPL for software that they intend to package and sell as its own product. The ideal license in my mind would include a clause that source and/or binaries should only be given to licensed users. I understand this greatly restricts freedom of distribution compared to the GPL, especially since a user can't know if a user is licensed or not (a practical application of this may be a copyright notice bundled with every patch, telling unlicensed persons they are not allowed to use it), but we know that GPL is too lax on this front from a commercial perspective, making it inviable to sell GPL software (the software itself, not attached services) as a major product. In some cases, a merely non-commercial license might be acceptable. I am always in favor of the most freedom, but we know that the amount of freedom given by the GPL is too much to retain profitability. I would still encourage GPL use where possible, but a license like the one I've described would make it possible for consumer-friendly developers (Valve's a good candidate imo) to open up their code, allow the community to hack on it and share their hacks amongst themselves, and still protect their revenue stream. This could also be extended to game engines like Source; a non-commercial license would be ideal for that so hobbyists, academics, etc., could still learn from it and use it, and Valve could still make their money licensing it out to other game developers. The point is to get source into the hands of as many persons as possible. I don't think it's good to restrict this because of divergent economic or political realities; if you're using a computer, you should have source to your programs, and be able to modify them as you see fit, and developers should still be able to make money off of their software.
- mindcrime 15y ago
  For consumer applications, maybe it does make sense to go a different direction if you want to make money from your application; but if you're developing software to sell to businesses, it makes a lot of sense to go the open source route. See, for reference: http://www.zdnet.com/blog/open-source/survey-56-expect-that-more-than-half-of-all-software-spend-over-next-5-years-will-be-open-source/8917 http://www.zdnet.com/blog/open-source/survey-56-expect-that-...
  - kenjackson 15y ago
    Interesting survey. Although avoiding vendor lockin is about open formats and data, not open source. For example, SaaS, may create more lockin than closed source code (though not necessarily). With that said, when I look at the hot enterprise software I see a lot of closed source software. Is this wishful thinking or something that is actually beginning to happen?
    - mindcrime 15y ago
      I believe something is beginning to happen... down at the OS level, Red Hat have absolutely made big in-roads, and in middleware (esp the Java world) you have Glassfish & JBoss doing very well, and MySQL and PostgreSQL have certainly begun to penetrate the enterprise. And higher up the stack, you have Zimbra, SugarCRM, etc. No, SAS, SAP, Oracle Apps, Lotus Notes, etc., won't be going away tomorrow. But I think there are clear signs that acceptance of F/OSS in the enterprise is growing. For my own part, I'm working on an Open Source startup, playing in a space similar to Jive or Yammer... so - for what it's worth - I've bought into the idea. (Then again, I'm a F/OSS ideologue, so I'm not exactly unbiased).
- rick888 15y ago
  "Take a standalone product like Camtasia. It works really well and its worth the money to buy it. But if it was FOSS and I could just donwload the sources, build and it use it, and only had to pay for support -- well I probably would never buy it. I've never needed support with it. It's so easy to use, I've never had a need for support (in fact, that's partially why I'm willing to pay for it!)." Not only this, but anyone could build and maintain a free version and make it so the average user doesn't need to even compile it. Open sourcing an app doesn't really make sense for a business. You will be making it easier for competitors to put you out of business.
  - kenjackson 15y ago
    True. I hadn't even posed that doomsday scenario. Imagine if MS made Windows and Office FOSS, what would happen? Exactly as you state, Google would build it and make it a free binary download and offer free support of it (probably replacing IE with Chrome, and Google as the search default). This would effectively kill MS and Google wouldn't have to worry about MS funding Bing through Windows and Office. EDIT: And to be clear, that's largely what Google's Chrome/Docs strategy is. The total revenue from it isn't very large, even if it is a success. The real win is chopping down the core revenue of someone who wants to chop down their core revenue (search revenue). But today Google has to build this all. If MS did FOSS, MS would be handing Google the keys.
wccrawford 15y ago
Alright, you've convinced me that making life harder for myself is somehow a way to get and maintain customers. What should I make? /sarcasm The only good piece of advice here is to be awesome so your customers will love you and your product. ... I'm pretty sure that's common sense, and everyone would do it if it were that easy.
droz 15y ago
I still don't "get" the allure of open source. As a consumer of my product you are not entitled to anything other than the functionality it provides. That's what you paid for. If you want more than that, then you should pay more to get the source code and knowledge that went into making the product. I just find it striking how people want to give their product (source code) away for free, without limitation. Just seems like such a waste and detriment to the software engineering profession (i.e., why pay someone to write something when you can go get it for free and piece together yourself).
- michokest 15y ago
  yourPricePerHour * ( hoursSpentInstalling + hoursPerMonthMaintainingTheService * monthsYouExpectToRunIt ) + costPerMonthForServers * monthsYouExpectToRunIt > yourPricePerMonth If this formula is true, then users will pay for your service instead of doing it themselves. We have seen this pattern consistently. Our accounts sell at $12, $29 and $99, which is usually much cheaper than setting it up on yourself and running your own server. We even have switchers that used to host their own version and came to our online version. This is also being the case with many Wordpress hosting sites. Multi-tenancy brings an economy of scale that allows you to keep good margins while being cheaper than hosting it yourself.
  - forensic 15y ago
    So you're saying make it very hard to install, very hard to maintain, and run on very expensive hardware. Yep, that sounds like the business model we all know and love. Apache proved it works.
    - jasonlotito 15y ago
      See Mozilla v.s. Netscape.
    - michokest 15y ago
      I'm talking about making your offering better so you're the main choice, not adding crap to your open-source offering so it's harder.
pkteison 15y ago
I worked at an open source startup once. I was -shocked- to repeatedly run into the misconception that because the code was open source, anything -using- the code was open source. I saw several potential sales get tanked because the customer had an advisor who believed that if they used open source to develop their website, they would no longer own the content. For example, a furniture company thought they would lose control of their pictures of the furniture. Another blog style site thought they would lose control of the blog posts they wrote. Literally, I am not making this up. It's like believing that Microsoft owns your document because you wrote it in Word. No amount of discussion, examples, or logic would dissuade them. I can't imagine how this idea survives, but I saw it as recently as a month ago in a comment here on HN (which of course I can't find right now), so it's not completely isolated. I'm not sure open source was a net win for the startup I worked at. Due to complicating some sales and assisting a few competitors, it wasn't a clean slam dunk.
- kenjackson 15y ago
  Dollars to donuts, I bet its because of the GPL license. People hear about it and then extrapolate. If you're not GPL then you need to make it clear that you're not a copyleft license. If you are GPL then its trickier because you have to call out what sorts of assets and distribution mechanisms are covered.
  - pkteison 15y ago
    Why? The license commercial software uses gives you no rights to do much of anything, yet nobody thinks Adobe owns photos edited in Photoshop. Why should granting more rights change that? It makes no sense to me. Edit: And GPL already calls out what is covered. Source code. It's incredibly clear.
    - kenjackson 15y ago
      Why you ask? The license commercial software uses gives you no rights to do much of anything, yet nobody thinks Adobe owns photos edited in Photoshop. Exactly. No one thinks that with Adobe. Yet as the original poster pointed out, people do have confusion with open source licenses. Why should granting more rights change that? It makes no sense to me. Rights granted with GPL aren't strictly more to the person deploying the GPL code. And GPL already calls out what is covered. Source code. It's incredibly clear. The GPL definition of source code is the following: The "source code" for a work means the preferred form of the work for making modifications to it. Honestly, I'm not sure exactly what that means. I have a good idea, but if deploying with it, I'd certainly get a lawyer involved.
michaelchisari 15y ago
There is the issue of attracting venture capital if your core product is open source. It simply isn't there the way it is for proprietary startups. On the other hand, selling services and hosting means an actual revenue stream. Strange world we live in.
shuri 15y ago
I was hoping to see more discussion on the actual premise here. For example, should dropbox open source? Should squarespace open source? What did reddit get out of open sourcing (karma?)? Wordpress obviously benefited from of an amazing supporting complementary ecosystem at the same time they turned their own product into a commodity. Love to hear what you think.

93 points by michokest 15y ago

This is a bit disingenious. When your core product is a hosted service, its a lot easier to be open source. There's a lot more into using your product than just compiling it. Take a standalone product like Camtasia. It works really well and its worth the money to buy it. But if it was FOSS and I could just donwload the sources, build and it use it, and only had to pay for support -- well I probably would never buy it. I've never needed support with it. It's so easy to use, I've never had a need for support (in fact, that's partially why I'm willing to pay for it!). Figure out what your business model is first. And then do what makes sense. Open sourcing often does, but not always.

michokest 15y ago
Remember that you are not your users. Maybe you would build from the source (and then again, wouldn't you pay for it since you're a developer and you understand how much work they put into it?), but regular users would take something that works every time, and most of the time they'd pay for it.
scsmith 15y ago
I think I agree that in some cases it makes sense to open source things and in some it doesn't. I think when you look at a site like Teambox it makes absolute sense to be an open source product. To play devils advocate to your point though what about mysql, that's a downloadable product that makes it's money from commercial support or to a lesser extend tools like Phusion passenger. Most people don't pay for them for the thousands of Rails websites passenger hosts. However, for those larger enterprises it's much better to employ the experts for support. The key is looking to see if you business fits exactly as you say.
cookiecaper 15y ago
I think a couple of tweaks to the conventional OSS licenses would go a long way in getting source into the hands of more users. While I appreciate the GPL and think it's a great option for those who want to use it that way, the fact is it's far too limiting for anyone with an intent to commercialize the software (the actual software, not ancillary services like support). If someone would tweak the license to make it so that there was no unlimited commercial distribution it would become much more attractive, and hopefully a lot of software that today is just a blob would adopt the license and come with source.
- JoshTriplett 15y ago
  I think you'd find such a change counterproductive. Such a license would not qualify as OSS anymore, which would take away the vast majority of the value. So, you'd incur all the costs of releasing the source, without getting the value of OSS. You might consider something like the AGPL instead, which still qualifies as Open Source, but which provides added protections for a hosted service.
  - tbrownaw 15y ago
    Wouldn't AGPL be moving is basically the opposite direction from what cookiecaper was suggesting? (I'd also think AGPL would be less OSS-like than that suggestion, since it limits what changes you're allowed to make instead of just limiting how you're allowed to distribute it.)
  - cookiecaper 15y ago
    It would not qualify as OSS as defined by political figureheads like Stallman, Raymond, et al, but if I can access the code, make changes, and share the changes with others, it's good enough for me. As another commenter pointed out, AGPL is actually the opposite direction, as it merely applies the copyleft constraints of the GPL to hosted software.
- noahl 15y ago
  Just to clarify - you want a license where you distribute the code to your product along with the product, but your customers (who receive the code) can't then redistribute it themselves? Or perhaps they can even redistribute it, just not commercially (or not in binary form)? That does seem like an interesting middle ground. It seems like your goal would be to develop a community of developers around it, but with the exception that you are the only person distributing the software (for a fee) to non-developers.
  - cookiecaper 15y ago
    Yes, I want to see that kind of license. The unlimited redistribution is the thing that really makes it difficult to make money selling the software portion of GPL'd software. For some applications, doing the Red Hat business model of commercial support works fine, but if you have something consumer level, you will not make anywhere near enough money off of that. Licensing something under the GPL makes financial gain from your copyright practically impossible. People make much more money if they retain their legal right via copyright to be the sole source of (commercial) distribution. Hence, very few corporations are interested in using the GPL for software that they intend to package and sell as its own product. The ideal license in my mind would include a clause that source and/or binaries should only be given to licensed users. I understand this greatly restricts freedom of distribution compared to the GPL, especially since a user can't know if a user is licensed or not (a practical application of this may be a copyright notice bundled with every patch, telling unlicensed persons they are not allowed to use it), but we know that GPL is too lax on this front from a commercial perspective, making it inviable to sell GPL software (the software itself, not attached services) as a major product. In some cases, a merely non-commercial license might be acceptable. I am always in favor of the most freedom, but we know that the amount of freedom given by the GPL is too much to retain profitability. I would still encourage GPL use where possible, but a license like the one I've described would make it possible for consumer-friendly developers (Valve's a good candidate imo) to open up their code, allow the community to hack on it and share their hacks amongst themselves, and still protect their revenue stream. This could also be extended to game engines like Source; a non-commercial license would be ideal for that so hobbyists, academics, etc., could still learn from it and use it, and Valve could still make their money licensing it out to other game developers. The point is to get source into the hands of as many persons as possible. I don't think it's good to restrict this because of divergent economic or political realities; if you're using a computer, you should have source to your programs, and be able to modify them as you see fit, and developers should still be able to make money off of their software.
mindcrime 15y ago
For consumer applications, maybe it does make sense to go a different direction if you want to make money from your application; but if you're developing software to sell to businesses, it makes a lot of sense to go the open source route. See, for reference: http://www.zdnet.com/blog/open-source/survey-56-expect-that-more-than-half-of-all-software-spend-over-next-5-years-will-be-open-source/8917 http://www.zdnet.com/blog/open-source/survey-56-expect-that-...
- kenjackson 15y ago
  Interesting survey. Although avoiding vendor lockin is about open formats and data, not open source. For example, SaaS, may create more lockin than closed source code (though not necessarily). With that said, when I look at the hot enterprise software I see a lot of closed source software. Is this wishful thinking or something that is actually beginning to happen?
  - mindcrime 15y ago
    I believe something is beginning to happen... down at the OS level, Red Hat have absolutely made big in-roads, and in middleware (esp the Java world) you have Glassfish & JBoss doing very well, and MySQL and PostgreSQL have certainly begun to penetrate the enterprise. And higher up the stack, you have Zimbra, SugarCRM, etc. No, SAS, SAP, Oracle Apps, Lotus Notes, etc., won't be going away tomorrow. But I think there are clear signs that acceptance of F/OSS in the enterprise is growing. For my own part, I'm working on an Open Source startup, playing in a space similar to Jive or Yammer... so - for what it's worth - I've bought into the idea. (Then again, I'm a F/OSS ideologue, so I'm not exactly unbiased).
rick888 15y ago
"Take a standalone product like Camtasia. It works really well and its worth the money to buy it. But if it was FOSS and I could just donwload the sources, build and it use it, and only had to pay for support -- well I probably would never buy it. I've never needed support with it. It's so easy to use, I've never had a need for support (in fact, that's partially why I'm willing to pay for it!)." Not only this, but anyone could build and maintain a free version and make it so the average user doesn't need to even compile it. Open sourcing an app doesn't really make sense for a business. You will be making it easier for competitors to put you out of business.
- kenjackson 15y ago
  True. I hadn't even posed that doomsday scenario. Imagine if MS made Windows and Office FOSS, what would happen? Exactly as you state, Google would build it and make it a free binary download and offer free support of it (probably replacing IE with Chrome, and Google as the search default). This would effectively kill MS and Google wouldn't have to worry about MS funding Bing through Windows and Office. EDIT: And to be clear, that's largely what Google's Chrome/Docs strategy is. The total revenue from it isn't very large, even if it is a success. The real win is chopping down the core revenue of someone who wants to chop down their core revenue (search revenue). But today Google has to build this all. If MS did FOSS, MS would be handing Google the keys.

wccrawford 15y ago

Alright, you've convinced me that making life harder for myself is somehow a way to get and maintain customers. What should I make? /sarcasm The only good piece of advice here is to be awesome so your customers will love you and your product. ... I'm pretty sure that's common sense, and everyone would do it if it were that easy.

droz 15y ago

I still don't "get" the allure of open source. As a consumer of my product you are not entitled to anything other than the functionality it provides. That's what you paid for. If you want more than that, then you should pay more to get the source code and knowledge that went into making the product. I just find it striking how people want to give their product (source code) away for free, without limitation. Just seems like such a waste and detriment to the software engineering profession (i.e., why pay someone to write something when you can go get it for free and piece together yourself).

michokest 15y ago
yourPricePerHour * ( hoursSpentInstalling + hoursPerMonthMaintainingTheService * monthsYouExpectToRunIt ) + costPerMonthForServers * monthsYouExpectToRunIt > yourPricePerMonth If this formula is true, then users will pay for your service instead of doing it themselves. We have seen this pattern consistently. Our accounts sell at $12, $29 and $99, which is usually much cheaper than setting it up on yourself and running your own server. We even have switchers that used to host their own version and came to our online version. This is also being the case with many Wordpress hosting sites. Multi-tenancy brings an economy of scale that allows you to keep good margins while being cheaper than hosting it yourself.
- forensic 15y ago
  So you're saying make it very hard to install, very hard to maintain, and run on very expensive hardware. Yep, that sounds like the business model we all know and love. Apache proved it works.
  - jasonlotito 15y ago
    See Mozilla v.s. Netscape.
  - michokest 15y ago
    I'm talking about making your offering better so you're the main choice, not adding crap to your open-source offering so it's harder.

pkteison 15y ago

I worked at an open source startup once. I was -shocked- to repeatedly run into the misconception that because the code was open source, anything -using- the code was open source. I saw several potential sales get tanked because the customer had an advisor who believed that if they used open source to develop their website, they would no longer own the content. For example, a furniture company thought they would lose control of their pictures of the furniture. Another blog style site thought they would lose control of the blog posts they wrote. Literally, I am not making this up. It's like believing that Microsoft owns your document because you wrote it in Word. No amount of discussion, examples, or logic would dissuade them. I can't imagine how this idea survives, but I saw it as recently as a month ago in a comment here on HN (which of course I can't find right now), so it's not completely isolated. I'm not sure open source was a net win for the startup I worked at. Due to complicating some sales and assisting a few competitors, it wasn't a clean slam dunk.

kenjackson 15y ago
Dollars to donuts, I bet its because of the GPL license. People hear about it and then extrapolate. If you're not GPL then you need to make it clear that you're not a copyleft license. If you are GPL then its trickier because you have to call out what sorts of assets and distribution mechanisms are covered.
- pkteison 15y ago
  Why? The license commercial software uses gives you no rights to do much of anything, yet nobody thinks Adobe owns photos edited in Photoshop. Why should granting more rights change that? It makes no sense to me. Edit: And GPL already calls out what is covered. Source code. It's incredibly clear.
  - kenjackson 15y ago
    Why you ask? The license commercial software uses gives you no rights to do much of anything, yet nobody thinks Adobe owns photos edited in Photoshop. Exactly. No one thinks that with Adobe. Yet as the original poster pointed out, people do have confusion with open source licenses. Why should granting more rights change that? It makes no sense to me. Rights granted with GPL aren't strictly more to the person deploying the GPL code. And GPL already calls out what is covered. Source code. It's incredibly clear. The GPL definition of source code is the following: The "source code" for a work means the preferred form of the work for making modifications to it. Honestly, I'm not sure exactly what that means. I have a good idea, but if deploying with it, I'd certainly get a lawyer involved.

michaelchisari 15y ago

There is the issue of attracting venture capital if your core product is open source. It simply isn't there the way it is for proprietary startups. On the other hand, selling services and hosting means an actual revenue stream. Strange world we live in.

shuri 15y ago

I was hoping to see more discussion on the actual premise here. For example, should dropbox open source? Should squarespace open source? What did reddit get out of open sourcing (karma?)? Wordpress obviously benefited from of an amazing supporting complementary ecosystem at the same time they turned their own product into a commodity. Love to hear what you think.