10 ms·

Going open-source as a VC-Backed company

159 points by lucasfcosta 2y ago

ezekg 2y ago
This is a good reminder to folks that Open Source isn't a business model [0] -- it's a distribution model. You have to figure out your business model if you want to survive. Good to see Briefer figuring this out early on. The decision to offer Cloud + Open Core is a great, well-traveled path. [0]: https://cra.mr/open-source-is-not-a-business-model/ https://cra.mr/open-source-is-not-a-business-model/
- ekidd 2y ago
  Open source is business model, but it's not a VC-friendly, easily-scaled business model. Relatively few companies ever made it work, and it's only gotten harder with the rise of one-stop cloud vendors that host other people's software. But open source has absolutely worked as a business model. This is actually easier to see if you look at companies like IBM. Back around 2000, IBM used to charge $40,000/year per CPU for software that was often mediocre. But as one very smart IBM marketing guy told me, the software was basically an excuse to sell IBM Global Services for consulting and customization. At heart, they were making a service play. And IBM of the early 00s loved Linux, for two rather weird reasons: 1. It allowed them to freely collaborate with other companies like RedHat based on nothing more than a handshake. 2. Even more surprisingly, it allowed collaboration within IBM, between different groups that usually had complex politics. I as understand it, IBM was not, generally speaking, selling Linux. Linux was just one more way to sell Global Services. And of course, RedHat themselves were a service company in those days, at least from what I heard from some of their clients. But service companies are hard, they're sales intensive, and they're not valued nearly as highly as pure software plays with the same revenue. And if you want to be big, you'll eventually need to serve big enterprises. And of course, AWS will happily eat any low-customization revenue you might otherwise be able to snag. So open source + consulting might be a business model, but it relies heavily on running a successful consulting or services business. A much more common way to use open source in business is the "stone soup" model. I've helped my employers open source tons of stuff over the years. It was almost all useful tools, not their main products, so it didn't help competitors directly. The upside is that other companies may occasionally contribute something. This is usually pretty modest unless you put in extra effort promoting your software, but it happens. Sometimes, the biggest advantage is that open sourcing a tool is a great way to draw a boundary that says, "This is a generic tool that focuses on one thing. It does not contain business logic." For certain kinds of tools, this can be a fantastic discipline. But definitely don't think that you can release your core product as open source, and then just run a standard product-based business.
  - dragonwriter 2y ago
    > Open source is business model, No, it isn't. It’s more or less compatible with different business models, but it itself is not a business model.
  - mindcrime 2y ago
    > Open source is business model, It isn't. It's a development model, which (mostly likely) has profound implications FOR your business model, but it's not a business model in and of itself. It boggles the imagination that people are still confused about this in 2024. sigh
  - arminiusreturns 2y ago
    I hope to prove you wrong.
  - satvikpendem 2y ago
    You are just describing various business models that are compatible with open source software, but simply open sourcing your software is not in and of itself a business model, which is exactly what the article in the comment you are replying to says.
- skeeter2020 2y ago
  Not sure exactly what they figured out; they landed were multitudes have before, even this specific market and product has similar dual-offerings. It's a very crowded space.
deleted 2y ago
[deleted]
marvin-hansen 2y ago
VC backed companies love AGPL because it’s basically a poison pill that still makes them look OSS good. The entire blog post can be summarized as “we ticked all the boxes on paper, now pay us for looking good”. People, however, usually pay for good software instead of good virtue signaling.
- ezekg 2y ago
  I actually agree with this in practice. OSS purists might argue that AGPL and non-compete source-available licenses are fundamentally different, with the former being OSI-approved, but in reality -- at least in business -- they're used to serve the same purpose: to give the author an unfair advantage. And that's totally fine -- I'm all for unfair advantages in business. But the distinction between these licenses is blurrier than the OSI would like to admit, yet they insist it's a crystal clear line. /rant
  - rectang 2y ago
    As an open source advocate, I'm fine with source-available licenses. They've been around forever! What ticks me off is freeloading on the goodwill generated by open source, for instance, by calling your license "Apache License Version 2 with the Commons Clause" or by insisting that "source available" is actually "open source". In other words, what you're trying to do here. That goodwill doesn't belong to you. Don't try to steal it, and don't be surprised when those who are invested in open source push back hard when you do.
    - ezekg 2y ago
      > ... by insisting that "source available" is actually "open source". In other words, what you're trying to do here. I never said that. I said the lines are blurry when it comes to how the AGPL is used in business The AGPL isn't used to uphold OSS values, it's used as a defense against competition.
      - gwd 2y ago
        > The AGPL isn't used to uphold OSS values, it's used as a defense against competition. It's only a defense against competitors who want to use it and not give back -- just like the original GPL. If you prefer the BSD ethos, that's fine, but just say "I disagree with the copyleft philosophy", not "AGPL doesn't uphold OSS values".
FL410 2y ago
This looks like cool software and something I might be interested in, but I hate hate hate locking SSO behind the "enterprise" tier. I wish this wasn't so common.
- noname120 2y ago
  Why not?
- themanmaran 2y ago
  Having built and offered SSO to non-enterprise customers, there is a good reason people don't. SSO is a two party system, which means even if you have everything configured perfectly, your customer can still mess up their Okta setup. And no amount of docs will stop them from doing that. And when they mess it up, they'll blame your auth for not working. And if it's an enterprise customer that's fine. Just spend a day debugging for them. But if it's a free tier user, it creates pure headache with no upside.
  - ezekg 2y ago
    It's also incredibly expensive per-connection if you use something like WorkOS to handle SSO/SAML. The only way to make the financials work is to only offer it on enterprise tiers.
    - ffo 2y ago
      On the note of oss and sso that works well for b2b. Zitadel can be tool to get rid of the plumbing work that you encounter with all the permutations one can have with the different customer requirements. Disclaimer: I am a co-founder
lenerdenator 2y ago
They'll throw a wrench in your "free as in freedom" at some point or another. VCs are in business to do exactly one thing: make all of the possible money, forever. If that means making it "source available" and charging out the ass once you reach a certain point, they'll do it.
- wslh 2y ago
  VC business is looking for the exit, so they could exit before the company charges something.
- passion__desire 2y ago
  Looked another way, isn't it great that we, as a society, are allowing such experiments to be conducted. At the same time, training people to build stuff who will go on to build other great stuff even if this particular experiment fails. Sort of like cambrian explosion.
- whiterknight 2y ago
  Like people, VCs are also motivated by status, recognition, and making cool things. If they were only financially interested they would play the game with much less status bias.
muratsu 2y ago
The hard part is not going open-source today but remaining open-source as your product evolves. When using a split model like this, inevitably the open-source version serves SMBs and the paid version serves Enterprises. Given enough time, you end up having two different versions of the product for two different customer segments and logically axe the version that doesn't make you money anymore.
- tinco 2y ago
  It's likely not even going to be a conscious or intentional choice. At some point your enterprise customers are going to have enough bugs and feature requests to keep you busy full time, and your open source project might languish unless you make a conscious effort to dedicate a percentage of your time on it. Ironically as some companies have already started noticing, when you stop being able to market your product as open source the start of the funnel will start to dry up. The start of the funnel is often not monitored, and the sales might even continue going up as your successful open source users go to enterprise. By the time you realise the funnel has dried up it might already be too late to turn back as competitors have filled the void you left.
- that_guy_iain 2y ago
  In my opinion, this just means you've done a poor job on the architecture side of things. If you need a paid version that has extra functionality then your free version needs to be extendable. Your free version should in theory just be a freemium version of your product. And your freemium version of your product should lead to paying customers and be a major way of generating leads and customers. If it's not doing that then it should be a case of do you need to stop adding so many features to the free version or is it that a free version just isn't used by enough people to even matter? If no one is using it, then really stop building it you're just wasting your time just so you can virtue signal that it's open-source. Really, the only people who will be mad will be the ones not helping you out.
  - rbetts 2y ago
    When your enterprise product is a superset of your open source product, you need a trigger that leads to buying. If that trigger is a feature, then it is only effective as a trigger if it is broadly useful to the product. In which case, you either withhold it from open source or cripple (or rate limit it) in open source. Your sales team - told to meet quarterly revenue targets and held accountable to that - will lobby for strict limits on these features. My first hand experience is that there are two likely outcomes: (1) You limit the utility of the open version to create a buying trigger and your open source users dwindle away as the open product doesn't meet their needs. Or, (2) your community has sufficient momentum to build the feature itself and your sales team starts losing deals to your open source offering. This model also creates harmful intra-organization conflict between those who argue for short-term revenue (probably their continued employment depends on that) vs. those who argue for the largest open source user base. It also creates conflict with your users as you intentionally offer a worse product to your largest user group (open source users).
WhereIsTheTruth 2y ago
Who doesn't like free manpower to kickstart your VC backed startup? "We only have 2 employees btw, we are so good"
- wmf 2y ago
  Realistically there is no free manpower. Small COSS projects initially get no contributions and once the project scales it's more work to manage the community and merge "contributions" than to ignore them.
ndiddy 2y ago
I’ve seen people try this strategy before. Generally what happens (assuming the project gains adoption) is that eventually someone will independently implement one of the enterprise exclusive features and try to get it added to the free version. Either you lose one of the selling points for the enterprise version or you reject the PR and get bad publicity and risk people forking your software.
- fsflover 2y ago
  Does it also happen with AGPLv3?
zeeg 2y ago
I just wanna remind folks that Open Core is not the same as Open Source. I didn't look at specifics, but I was triggered by this comment: > Some people call our strategy "open-core" and that's technically right. Still, I'd rather say that we have two pieces of software: one that is open-source and another that is not. I think that's more honest because we're not trying to hide the fact that we're selling a non-open-source version of our software. I'm not morally opposed to open core software - and any version of more open source is valuable open source to me - but I think its important we do not conflate the two, just as we need to not conflate other approaches like source available.
- unclad5968 2y ago
  Open core and open source are orthogonal. Open core is a description of what part is open source. Just because the entirety isnt open source doesn't mean the part that is somehow isn't. At least that's the idea OP is trying to communicate, which makes sense to me.
  - yawnxyz 2y ago
    I think the author did a great job communicating that some parts of software are fully open, and a few other pieces of code / repost are not. I like this way better than software with complicated licensing schemes, where you can only use certain packages on Wednesdays.
- danenania 2y ago
  I would argue that they are not in any way exclusive of each other or opposed to each other. An open source project can be built upon and extended by anyone, and that includes its creators. We don’t say that an open source project is diminished because some third party productizes it and makes money. PostgreSQL is not diminished by neon or rds. No, we continue to judge the project on its own merits. If it continues to offer value, to be compelling, well-supported, and stack up well against alternatives, then we keep using it. We don’t think “it doesn’t have all the features of rds, so screw postgres”. If the commercial side of the project takes away from the oss side and the oss project goes downhill as a result, then that certainly is a frustrating and disappointing outcome. But when both sides are thriving, it’s a fantastic win-win. The maintainers get to focus their full attention and passion on the project. The community gets better and better software. And people who are willing to pay for advanced or niche use cases get their problems solved too. Summing up, the problem is not with the whole model of open core, but with specific projects and companies that get it wrong. There’s no fundamental reason why the oss side and the product side have to be at odds. It’s just freemium, and there are countless successful and beloved freemium products out there who figured out how to get the balance right.
bachmeier 2y ago
Not to rain on anyone's parade, but this is little more than a crippled free trial of a product they're selling. They wouldn't be able to sell that part profitably anyway, so open source doesn't mean much from a business perspective.
- wmf 2y ago
  Historically the "crippled" version works fine and many people use it. Also, attracting tons of free users has real value; for example it creates awareness about the paid version.
  - bachmeier 2y ago
    Definitely. They're doing this because it will help them sell more. But this is not "going open-source". They're selling the same not open source product as before.
0xbadcafebee 2y ago
Their reasons for going open source (and they're not, they're open core) is: 1. "If Briefer disappears tomorrow, people can still use the software" 2. "it helps us build a strong community" 3. "by going open-source we commoditize our competitors' core functionality" But none of this pans out. With 1), GitHub is littered with abandoned company projects that nobody forked. If people were paying for your product because they wanted managed hosting and support, they're not going to try to keep using it forked (if they even can) if there is a competitor who provides a managed hosting product. So nobody's going to keep using your product after your company dies just because it's open source. With 2), companies almost always end up completely ignoring the "community" and just doing whatever they want. The real "community" is often just people on StackOverflow, Reddit or somewhere else, trying in vain to get someone to help them solve a problem the company won't, and usually has nothing to do with code. Even if the product is open source and a user wants to do the hard work of fixing a problem in code and submitting a PR, the company can just balk and reject it (which many companies do). So just because it's open source doesn't mean there will be support for a real community. With 3), nothing is commoditized, because you're open-core. Like with all "open source companies", the really good features will be locked up behind a paywall. So being open source doesn't really give an advantage over competitors either. The only good reasons to go open source are 1) there's still people out there who will get excited about the idea of open source, and use the product just for that fact alone, because they haven't been burned by an "open source company" yet, and 2) open source is a great way to attract engineering talent.
- ezekg 2y ago
  Off-topic, but your bio sent me down a fun rabbit hole with ChatGPT.
rubenfiszel 2y ago
Ola from windmill.dev, another open-source VC-backed company using AGPL. We actually spoke before your pivot and we now have a bit overlap on the dashboard builder but our audience is fairly separate. Congrats, you made what I believe is the best move a software company can do in our space. You will hear a lot of naysayers, and sure the software we build is not as permissive as Apache 2.0 and MIT. Those are all true and valid points. It's also true that VCs have perverse incentives and as a naturally skeptic myself, I understand not wanting to touch it. Let me bring a little bit of counter-points to those: - AGPL or Commercial Open-Source Software would probably just not exist at all if there was no path to commercialization at all. So the dichotomy between making it true MIT or AGPL is a false one, it's the choice between proprietary/no software and AGPL and I think we can all agree the latter is better. Software Engineers need to eat and there is a pool of talented engineers for whom glory is not fully sufficient and also need their work to be a reasonable financial paths. This enables more SWE to compete to build more software and make the software landscape more competitive for the benefit of the end-users. - Taking VC money is not signing a pact with the devil that strips away your entire freedom, especially at @lucasfcosta stage and ours. The real issue is with being fully dependent on that money by having bad financial health and needing to raise in X months. COSS company like ours can stay lean and profitable, taking just the right amount of money from VC to kickstart a long-term journey to become a behemoth of a software company through having advantages over all the proprietary alternatives. Windmill for instance is profitable, and no investors has ever pressured us to go faster or monetize more. 99% of our users are using the free/open-source version but the 1% that is not is made of medium and large enterprises that hugely appreciate running their infra on open-source software that they can easily audit and contribute to. It would have been SO MUCH harder to convince them without being open-source given our size. Another fact that helps is pricing but that is also related to our open-source nature. It's harder to over-price your large customers because at a certain point they can say screw it, they will just build in-house to go above the proprietary features. All that to say that companies do have incentives but also are made of humans which have their own values and goals, and have some agenda to set their own path, especially early on. It's all about balance and I would argue taking a bit of VC money at the seed-stage at a good valuation and then not much more is the optimal path right now.
- 2y ago
thayne 2y ago
> As a result, this approach often falls short of investors' expectations for significant returns, which makes it hard to raise funding and thus prevents most founders from being able to go full-time on their project. This is IMO, a major problem with VC. VC doesn't care about funding companies that are moderately profitable. They only care about companies with extreme growth that can lead to an extremely lucrative exit. Which means that viable business models that might work well with Open Source may not be attractive to VCs.
paxys 2y ago
User base #1 wants free (as in freedom and free beer) and open source software. Company wants to cater to them to generate goodwill. User base #2 wants fully featured, fully supported, easy to use software, and doesn't care about the source code. Company wants to cater to them to make money. Ultimately when the VC money runs out both these aims are going to be in direct conflict with each other, and you are going to have to pick a side. Companies pretty much always start by focusing on 1 (OSS contributors, enthusiasts, indie devs) and switch to 2 (corporate customers) over time. I have lost faith that any such project can walk this line successfully and stay true to group 1.
- debacle 2y ago
  A rare few do. I think WordPress being the most noteworthy.
  - paxys 2y ago
    That's because it is owned by a non-profit foundation, and never took VC funding to begin with.
- ezekg 2y ago
  Are you sure that most users actually want #1, and not just free an in beer?
raebyddub 2y ago
I hope this isn't a trap where someone uses open source to tap into a community of skilled engineers for feature development, then shifts to a private model, and ends up with a refined product created at no cost with the help of talented contributors.
koolhead17 2y ago
I can bet on the product switching to open core in next few quarters.
echan00 2y ago
It doesn't matter as long as you can rationally detail how you have a chance at becoming a billion dollar plus company
iamleppert 2y ago
Fat chance you're ever going to get a callback for the next deal from your VCs and even so the term sheet going to look really rich on the VC side with a move like this.

159 points by lucasfcosta 2y ago

This is a good reminder to folks that Open Source isn't a business model [0] -- it's a distribution model. You have to figure out your business model if you want to survive. Good to see Briefer figuring this out early on. The decision to offer Cloud + Open Core is a great, well-traveled path. [0]: https://cra.mr/open-source-is-not-a-business-model/ https://cra.mr/open-source-is-not-a-business-model/

ekidd 2y ago
Open source is business model, but it's not a VC-friendly, easily-scaled business model. Relatively few companies ever made it work, and it's only gotten harder with the rise of one-stop cloud vendors that host other people's software. But open source has absolutely worked as a business model. This is actually easier to see if you look at companies like IBM. Back around 2000, IBM used to charge $40,000/year per CPU for software that was often mediocre. But as one very smart IBM marketing guy told me, the software was basically an excuse to sell IBM Global Services for consulting and customization. At heart, they were making a service play. And IBM of the early 00s loved Linux, for two rather weird reasons: 1. It allowed them to freely collaborate with other companies like RedHat based on nothing more than a handshake. 2. Even more surprisingly, it allowed collaboration within IBM, between different groups that usually had complex politics. I as understand it, IBM was not, generally speaking, selling Linux. Linux was just one more way to sell Global Services. And of course, RedHat themselves were a service company in those days, at least from what I heard from some of their clients. But service companies are hard, they're sales intensive, and they're not valued nearly as highly as pure software plays with the same revenue. And if you want to be big, you'll eventually need to serve big enterprises. And of course, AWS will happily eat any low-customization revenue you might otherwise be able to snag. So open source + consulting might be a business model, but it relies heavily on running a successful consulting or services business. A much more common way to use open source in business is the "stone soup" model. I've helped my employers open source tons of stuff over the years. It was almost all useful tools, not their main products, so it didn't help competitors directly. The upside is that other companies may occasionally contribute something. This is usually pretty modest unless you put in extra effort promoting your software, but it happens. Sometimes, the biggest advantage is that open sourcing a tool is a great way to draw a boundary that says, "This is a generic tool that focuses on one thing. It does not contain business logic." For certain kinds of tools, this can be a fantastic discipline. But definitely don't think that you can release your core product as open source, and then just run a standard product-based business.
- dragonwriter 2y ago
  > Open source is business model, No, it isn't. It’s more or less compatible with different business models, but it itself is not a business model.
- mindcrime 2y ago
  > Open source is business model, It isn't. It's a development model, which (mostly likely) has profound implications FOR your business model, but it's not a business model in and of itself. It boggles the imagination that people are still confused about this in 2024. sigh
- arminiusreturns 2y ago
  I hope to prove you wrong.
- satvikpendem 2y ago
  You are just describing various business models that are compatible with open source software, but simply open sourcing your software is not in and of itself a business model, which is exactly what the article in the comment you are replying to says.
skeeter2020 2y ago
Not sure exactly what they figured out; they landed were multitudes have before, even this specific market and product has similar dual-offerings. It's a very crowded space.

deleted 2y ago

[deleted]

marvin-hansen 2y ago

VC backed companies love AGPL because it’s basically a poison pill that still makes them look OSS good. The entire blog post can be summarized as “we ticked all the boxes on paper, now pay us for looking good”. People, however, usually pay for good software instead of good virtue signaling.

ezekg 2y ago
I actually agree with this in practice. OSS purists might argue that AGPL and non-compete source-available licenses are fundamentally different, with the former being OSI-approved, but in reality -- at least in business -- they're used to serve the same purpose: to give the author an unfair advantage. And that's totally fine -- I'm all for unfair advantages in business. But the distinction between these licenses is blurrier than the OSI would like to admit, yet they insist it's a crystal clear line. /rant
- rectang 2y ago
  As an open source advocate, I'm fine with source-available licenses. They've been around forever! What ticks me off is freeloading on the goodwill generated by open source, for instance, by calling your license "Apache License Version 2 with the Commons Clause" or by insisting that "source available" is actually "open source". In other words, what you're trying to do here. That goodwill doesn't belong to you. Don't try to steal it, and don't be surprised when those who are invested in open source push back hard when you do.
  - ezekg 2y ago
    > ... by insisting that "source available" is actually "open source". In other words, what you're trying to do here. I never said that. I said the lines are blurry when it comes to how the AGPL is used in business The AGPL isn't used to uphold OSS values, it's used as a defense against competition.
    - gwd 2y ago
      > The AGPL isn't used to uphold OSS values, it's used as a defense against competition. It's only a defense against competitors who want to use it and not give back -- just like the original GPL. If you prefer the BSD ethos, that's fine, but just say "I disagree with the copyleft philosophy", not "AGPL doesn't uphold OSS values".

FL410 2y ago

This looks like cool software and something I might be interested in, but I hate hate hate locking SSO behind the "enterprise" tier. I wish this wasn't so common.

noname120 2y ago
Why not?
themanmaran 2y ago
Having built and offered SSO to non-enterprise customers, there is a good reason people don't. SSO is a two party system, which means even if you have everything configured perfectly, your customer can still mess up their Okta setup. And no amount of docs will stop them from doing that. And when they mess it up, they'll blame your auth for not working. And if it's an enterprise customer that's fine. Just spend a day debugging for them. But if it's a free tier user, it creates pure headache with no upside.
- ezekg 2y ago
  It's also incredibly expensive per-connection if you use something like WorkOS to handle SSO/SAML. The only way to make the financials work is to only offer it on enterprise tiers.
  - ffo 2y ago
    On the note of oss and sso that works well for b2b. Zitadel can be tool to get rid of the plumbing work that you encounter with all the permutations one can have with the different customer requirements. Disclaimer: I am a co-founder

lenerdenator 2y ago

They'll throw a wrench in your "free as in freedom" at some point or another. VCs are in business to do exactly one thing: make all of the possible money, forever. If that means making it "source available" and charging out the ass once you reach a certain point, they'll do it.

wslh 2y ago
VC business is looking for the exit, so they could exit before the company charges something.
passion__desire 2y ago
Looked another way, isn't it great that we, as a society, are allowing such experiments to be conducted. At the same time, training people to build stuff who will go on to build other great stuff even if this particular experiment fails. Sort of like cambrian explosion.
whiterknight 2y ago
Like people, VCs are also motivated by status, recognition, and making cool things. If they were only financially interested they would play the game with much less status bias.

muratsu 2y ago

The hard part is not going open-source today but remaining open-source as your product evolves. When using a split model like this, inevitably the open-source version serves SMBs and the paid version serves Enterprises. Given enough time, you end up having two different versions of the product for two different customer segments and logically axe the version that doesn't make you money anymore.

tinco 2y ago
It's likely not even going to be a conscious or intentional choice. At some point your enterprise customers are going to have enough bugs and feature requests to keep you busy full time, and your open source project might languish unless you make a conscious effort to dedicate a percentage of your time on it. Ironically as some companies have already started noticing, when you stop being able to market your product as open source the start of the funnel will start to dry up. The start of the funnel is often not monitored, and the sales might even continue going up as your successful open source users go to enterprise. By the time you realise the funnel has dried up it might already be too late to turn back as competitors have filled the void you left.
that_guy_iain 2y ago
In my opinion, this just means you've done a poor job on the architecture side of things. If you need a paid version that has extra functionality then your free version needs to be extendable. Your free version should in theory just be a freemium version of your product. And your freemium version of your product should lead to paying customers and be a major way of generating leads and customers. If it's not doing that then it should be a case of do you need to stop adding so many features to the free version or is it that a free version just isn't used by enough people to even matter? If no one is using it, then really stop building it you're just wasting your time just so you can virtue signal that it's open-source. Really, the only people who will be mad will be the ones not helping you out.
- rbetts 2y ago
  When your enterprise product is a superset of your open source product, you need a trigger that leads to buying. If that trigger is a feature, then it is only effective as a trigger if it is broadly useful to the product. In which case, you either withhold it from open source or cripple (or rate limit it) in open source. Your sales team - told to meet quarterly revenue targets and held accountable to that - will lobby for strict limits on these features. My first hand experience is that there are two likely outcomes: (1) You limit the utility of the open version to create a buying trigger and your open source users dwindle away as the open product doesn't meet their needs. Or, (2) your community has sufficient momentum to build the feature itself and your sales team starts losing deals to your open source offering. This model also creates harmful intra-organization conflict between those who argue for short-term revenue (probably their continued employment depends on that) vs. those who argue for the largest open source user base. It also creates conflict with your users as you intentionally offer a worse product to your largest user group (open source users).

WhereIsTheTruth 2y ago

Who doesn't like free manpower to kickstart your VC backed startup? "We only have 2 employees btw, we are so good"

wmf 2y ago
Realistically there is no free manpower. Small COSS projects initially get no contributions and once the project scales it's more work to manage the community and merge "contributions" than to ignore them.

ndiddy 2y ago

I’ve seen people try this strategy before. Generally what happens (assuming the project gains adoption) is that eventually someone will independently implement one of the enterprise exclusive features and try to get it added to the free version. Either you lose one of the selling points for the enterprise version or you reject the PR and get bad publicity and risk people forking your software.

fsflover 2y ago
Does it also happen with AGPLv3?

zeeg 2y ago

I just wanna remind folks that Open Core is not the same as Open Source. I didn't look at specifics, but I was triggered by this comment: > Some people call our strategy "open-core" and that's technically right. Still, I'd rather say that we have two pieces of software: one that is open-source and another that is not. I think that's more honest because we're not trying to hide the fact that we're selling a non-open-source version of our software. I'm not morally opposed to open core software - and any version of more open source is valuable open source to me - but I think its important we do not conflate the two, just as we need to not conflate other approaches like source available.

unclad5968 2y ago
Open core and open source are orthogonal. Open core is a description of what part is open source. Just because the entirety isnt open source doesn't mean the part that is somehow isn't. At least that's the idea OP is trying to communicate, which makes sense to me.
- yawnxyz 2y ago
  I think the author did a great job communicating that some parts of software are fully open, and a few other pieces of code / repost are not. I like this way better than software with complicated licensing schemes, where you can only use certain packages on Wednesdays.
danenania 2y ago
I would argue that they are not in any way exclusive of each other or opposed to each other. An open source project can be built upon and extended by anyone, and that includes its creators. We don’t say that an open source project is diminished because some third party productizes it and makes money. PostgreSQL is not diminished by neon or rds. No, we continue to judge the project on its own merits. If it continues to offer value, to be compelling, well-supported, and stack up well against alternatives, then we keep using it. We don’t think “it doesn’t have all the features of rds, so screw postgres”. If the commercial side of the project takes away from the oss side and the oss project goes downhill as a result, then that certainly is a frustrating and disappointing outcome. But when both sides are thriving, it’s a fantastic win-win. The maintainers get to focus their full attention and passion on the project. The community gets better and better software. And people who are willing to pay for advanced or niche use cases get their problems solved too. Summing up, the problem is not with the whole model of open core, but with specific projects and companies that get it wrong. There’s no fundamental reason why the oss side and the product side have to be at odds. It’s just freemium, and there are countless successful and beloved freemium products out there who figured out how to get the balance right.

bachmeier 2y ago

Not to rain on anyone's parade, but this is little more than a crippled free trial of a product they're selling. They wouldn't be able to sell that part profitably anyway, so open source doesn't mean much from a business perspective.

wmf 2y ago
Historically the "crippled" version works fine and many people use it. Also, attracting tons of free users has real value; for example it creates awareness about the paid version.
- bachmeier 2y ago
  Definitely. They're doing this because it will help them sell more. But this is not "going open-source". They're selling the same not open source product as before.

0xbadcafebee 2y ago

Their reasons for going open source (and they're not, they're open core) is: 1. "If Briefer disappears tomorrow, people can still use the software" 2. "it helps us build a strong community" 3. "by going open-source we commoditize our competitors' core functionality" But none of this pans out. With 1), GitHub is littered with abandoned company projects that nobody forked. If people were paying for your product because they wanted managed hosting and support, they're not going to try to keep using it forked (if they even can) if there is a competitor who provides a managed hosting product. So nobody's going to keep using your product after your company dies just because it's open source. With 2), companies almost always end up completely ignoring the "community" and just doing whatever they want. The real "community" is often just people on StackOverflow, Reddit or somewhere else, trying in vain to get someone to help them solve a problem the company won't, and usually has nothing to do with code. Even if the product is open source and a user wants to do the hard work of fixing a problem in code and submitting a PR, the company can just balk and reject it (which many companies do). So just because it's open source doesn't mean there will be support for a real community. With 3), nothing is commoditized, because you're open-core. Like with all "open source companies", the really good features will be locked up behind a paywall. So being open source doesn't really give an advantage over competitors either. The only good reasons to go open source are 1) there's still people out there who will get excited about the idea of open source, and use the product just for that fact alone, because they haven't been burned by an "open source company" yet, and 2) open source is a great way to attract engineering talent.

ezekg 2y ago
Off-topic, but your bio sent me down a fun rabbit hole with ChatGPT.

rubenfiszel 2y ago

Ola from windmill.dev, another open-source VC-backed company using AGPL. We actually spoke before your pivot and we now have a bit overlap on the dashboard builder but our audience is fairly separate. Congrats, you made what I believe is the best move a software company can do in our space. You will hear a lot of naysayers, and sure the software we build is not as permissive as Apache 2.0 and MIT. Those are all true and valid points. It's also true that VCs have perverse incentives and as a naturally skeptic myself, I understand not wanting to touch it. Let me bring a little bit of counter-points to those: - AGPL or Commercial Open-Source Software would probably just not exist at all if there was no path to commercialization at all. So the dichotomy between making it true MIT or AGPL is a false one, it's the choice between proprietary/no software and AGPL and I think we can all agree the latter is better. Software Engineers need to eat and there is a pool of talented engineers for whom glory is not fully sufficient and also need their work to be a reasonable financial paths. This enables more SWE to compete to build more software and make the software landscape more competitive for the benefit of the end-users. - Taking VC money is not signing a pact with the devil that strips away your entire freedom, especially at @lucasfcosta stage and ours. The real issue is with being fully dependent on that money by having bad financial health and needing to raise in X months. COSS company like ours can stay lean and profitable, taking just the right amount of money from VC to kickstart a long-term journey to become a behemoth of a software company through having advantages over all the proprietary alternatives. Windmill for instance is profitable, and no investors has ever pressured us to go faster or monetize more. 99% of our users are using the free/open-source version but the 1% that is not is made of medium and large enterprises that hugely appreciate running their infra on open-source software that they can easily audit and contribute to. It would have been SO MUCH harder to convince them without being open-source given our size. Another fact that helps is pricing but that is also related to our open-source nature. It's harder to over-price your large customers because at a certain point they can say screw it, they will just build in-house to go above the proprietary features. All that to say that companies do have incentives but also are made of humans which have their own values and goals, and have some agenda to set their own path, especially early on. It's all about balance and I would argue taking a bit of VC money at the seed-stage at a good valuation and then not much more is the optimal path right now.

2y ago

thayne 2y ago

> As a result, this approach often falls short of investors' expectations for significant returns, which makes it hard to raise funding and thus prevents most founders from being able to go full-time on their project. This is IMO, a major problem with VC. VC doesn't care about funding companies that are moderately profitable. They only care about companies with extreme growth that can lead to an extremely lucrative exit. Which means that viable business models that might work well with Open Source may not be attractive to VCs.

paxys 2y ago

User base #1 wants free (as in freedom and free beer) and open source software. Company wants to cater to them to generate goodwill. User base #2 wants fully featured, fully supported, easy to use software, and doesn't care about the source code. Company wants to cater to them to make money. Ultimately when the VC money runs out both these aims are going to be in direct conflict with each other, and you are going to have to pick a side. Companies pretty much always start by focusing on 1 (OSS contributors, enthusiasts, indie devs) and switch to 2 (corporate customers) over time. I have lost faith that any such project can walk this line successfully and stay true to group 1.

debacle 2y ago
A rare few do. I think WordPress being the most noteworthy.
- paxys 2y ago
  That's because it is owned by a non-profit foundation, and never took VC funding to begin with.
ezekg 2y ago
Are you sure that most users actually want #1, and not just free an in beer?

raebyddub 2y ago

I hope this isn't a trap where someone uses open source to tap into a community of skilled engineers for feature development, then shifts to a private model, and ends up with a refined product created at no cost with the help of talented contributors.

koolhead17 2y ago

I can bet on the product switching to open core in next few quarters.

echan00 2y ago

It doesn't matter as long as you can rationally detail how you have a chance at becoming a billion dollar plus company

iamleppert 2y ago

Fat chance you're ever going to get a callback for the next deal from your VCs and even so the term sheet going to look really rich on the VC side with a move like this.