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How can an open source company have a valuation of $1B? How do open source businesses work at all? I sometimes read about companies like these, with huge valua

by TekMol 3y ago

How can an open source company have a valuation of $1B? How do open source businesses work at all? I sometimes read about companies like these, with huge valuations and then the next day I read about some open source developer asking for donations because their project, which powers half of the internet [1], is not making him enough to pay for food. What makes the difference? Over the years, I wrote some tools for my own use, which are way better than their commercial counterparts. If I would spend a few weeks to polish one of them and open source it, it would probably gain widespread adoption. But how could I then build that into a business? [1] Relevant XKCD: https://xkcd.com/2347/ https://xkcd.com/2347/

lgeorget 3y ago
Not all projects are "business-able" I think. A nice tool with an identifiable user base, a nice UI, etc. is easier to market than a NTP library even if the latter has more probability to be critical and to get installed in billions of devices.
blackoil 3y ago
Very common way: Go Open Core, sell hosting and plugins and proprietary engines etc and if that's not enough do a coup and change license to prevent competition from providing same services.
flarion 3y ago
like any other startup. time, energy and passion. define problem/pain. talk loads w potential customers. ask them if they would pay for it. excel in customer success. find ways to scale and be found :)
- upupupandaway 3y ago
  Or... or... s/he could convince a VC that the startup would multiply the potential opportunity in the space the tools cover by 10x and get a really fat check for generating the right hype with the right crowd. /s
  - flarion 3y ago
    doesn't work w/o traction.
bman_kg 3y ago
the visual you linked makes perfect sense, wonder how many companies are like that...
imjonse 3y ago
In this case being open source is a nice feature, but not the main one the business is built around. If you have terabytes of data and thousands of GPUs to train on plus the talent to work on it you have a clear advantage over many other possible competitors, even if you give them the source. This is not nearly comparable to building yet another open source todo app or analytics dashboard in JS.
throwaway4good 3y ago
It is the price equity is being raised at. OpenAI is at 80B.
pierrefermat1 3y ago
You could spend sometime looking into the business models of Elasticsearch/Docker. Albeit not successful in some eyes as they are exactly profit printing, but they have indeed raised enough to be unicorn status.
thibo_skabgia 3y ago
Listed OSS business models here if useful: https://github.com/anhtho-lago/awesome-opensource-company#business-models https://github.com/anhtho-lago/awesome-opensource-company#bu... Also, the comments here were interesting: https://news.ycombinator.com/item?id=37682684 https://news.ycombinator.com/item?id=37682684

by TekMol 3y ago

lgeorget 3y ago

Not all projects are "business-able" I think. A nice tool with an identifiable user base, a nice UI, etc. is easier to market than a NTP library even if the latter has more probability to be critical and to get installed in billions of devices.

blackoil 3y ago

Very common way: Go Open Core, sell hosting and plugins and proprietary engines etc and if that's not enough do a coup and change license to prevent competition from providing same services.

flarion 3y ago

like any other startup. time, energy and passion. define problem/pain. talk loads w potential customers. ask them if they would pay for it. excel in customer success. find ways to scale and be found :)

upupupandaway 3y ago
Or... or... s/he could convince a VC that the startup would multiply the potential opportunity in the space the tools cover by 10x and get a really fat check for generating the right hype with the right crowd. /s
- flarion 3y ago
  doesn't work w/o traction.

bman_kg 3y ago

the visual you linked makes perfect sense, wonder how many companies are like that...

imjonse 3y ago

In this case being open source is a nice feature, but not the main one the business is built around. If you have terabytes of data and thousands of GPUs to train on plus the talent to work on it you have a clear advantage over many other possible competitors, even if you give them the source. This is not nearly comparable to building yet another open source todo app or analytics dashboard in JS.

throwaway4good 3y ago

It is the price equity is being raised at. OpenAI is at 80B.

pierrefermat1 3y ago

You could spend sometime looking into the business models of Elasticsearch/Docker. Albeit not successful in some eyes as they are exactly profit printing, but they have indeed raised enough to be unicorn status.

thibo_skabgia 3y ago

Listed OSS business models here if useful: https://github.com/anhtho-lago/awesome-opensource-company#business-models https://github.com/anhtho-lago/awesome-opensource-company#bu... Also, the comments here were interesting: https://news.ycombinator.com/item?id=37682684 https://news.ycombinator.com/item?id=37682684