Balancing Community and Monetization in Open Source with Birthe Lindenthal

This week on The Business of Open Source I spoke with Pranay Prateek, co-founder of SigNoz. Pranay talked about why open source is important to SigNoz's business, why it's super important to deliver value quickly, even for an observability product, and why founders shouldn't think of open source just as a distribution model. 

We also covered: 

• How SigNoz is differentiated in the crowded observability market
• Why Pranay thinks being open source makes it much easier for developers to play around with the project and get to know it; so for them it made intuitive sense that the company that they’d build an open source company 
• Why Pranay also thinks open source enables much deeper integrations, which is critically important for an observability company like SigNoz
• How one of their first lessons / mistakes was releasing an open source project that didn’t work well on an individual developer’s laptop, because it used too much resources
• The GTM market, and the challenge delivering value within 30 minutes of trying out the project/product for an observability tool that provides maximum value during an incident — but no one is going to be trying out a new tool during an incident situation 
• Why their first commercial product was a cloud offering

And much more! 

And if you’re interested in more discussions of open source businesses, make sure to join us at Open Source Founders Summit this May. 

In this special episode to promote Open Source Founders Summit, I went deep with Thomas di Giacomo about how open source companies can position themselves as attractive acquisition targets for strategic buyers. 

If you are the founder of an open source company and you have the idea of being acquired even in the back of your mind, this is a must-listen episode. Whether or not you plan to join us May 27th and 28th in Paris, though of course we hope you do join us. 

By the way, at OSFS Thomas is going to lead a workshop on the topic of being an acquisition target for open source companies. It will be interactive, which means you can ASK QUESTIONS. 

In this podcast episode, he talked about: 

• Exits 101. You probably know that strategic buyers usually pay more for companies than other types of acquirers, but we talked about different exit strategies and what they entail
• Why strategic buyers acquire businesses (in general) but also why you, as the business seller, need to understand every specific potential acquirer’s story and goals so you can see how your company fits into their strategic plan
• Strategic acquisitions are about 1+1=3… so you have to know what your buyer’s “3” is
• Why it’s important to be self-aware and know your own goals before you sign any acquisition paperwork

And tons more… 

If you want the chance to ask Thomas about strategic acquisitions for OSS companies — as well as to talk about sales strategies, lead generation and more — join us at OSFS 24 in Paris this May 27th and 28th. —> Get your invite here. 

PS the audio was a little quiet, but so if you’re having trouble hearing turn up the volume, it’s worth it. 

This week on The Business of Open Source, I spoke with Zach Wasserman, co-founder and CTO of Fleet. This was a fabulous episode for many reasons, but then again I never do crappy episodes, right? 

The first thing I wanted to call your attention to is that Zach talked about how he’s building an open core business because building an open source business is what he wants to do. When his previous company turned away from open source, Zach left to do consulting around OSquery and Fleet (the project). I always like to talk about how companies / founders need a solid reason for building an open source company… and “this is the kind of company I want to build” is a very good reason. (“Everyone else is doing it” on the other hand, is not a good reason). Everyone puts constraints around the type of company the want to build, and as long as you are intentionally about the decisions, there is nothing wrong about this, business-wise.

Second, we talked about the tension that exists between making a great project and still leaving room for a commercial product that people will pay for, and Zach talked through how Fleet uses a buyer-based open core strategy to decide which functionality to put in the enterprise version or in the open core. 

We also talked about:

• Leaving his first company, Kolide, when the founders had divergent visions about where the company should go
• How his investor arranged a ‘co-founder marriage’ for Zach and his co-founder Mike McNeil
• How the transparency aspect of open source can be extremely important, especially for anything in the security space

Lastly, Fleet happens to be a former client of mine. You can check out what Mike, Zach’s co-founder, said about working with me here. 

And if you’re interested in more conversations like this… but in person!!! you should come to Open Source Founders Summit May 27th and 28th in Paris. 

Slightly different The Business of Open Source episode today! I spoke with Patrick McFadin and Mick Semb Wever about the relationship between Apache Cassandra and DataStax — how it was at the beginning and how the relationship has evolved over the years. 

We talked about:

— How there was a dynamic around Cassandra where many of the many of the contributors ended up being sucked into the DataStax orbit, simply because it allowed those contributors to work on on Cassandra full-time

— How there can be tensions between different stakeholders simply because everyone involved ultimately has their own interests at heart, and those interests are not always aligned. 

— How it is actually hard to really have open discussions about new features, and how often there can be a new feature dropped in a project that clearly had been developed behind closed doors for some time, and sometimes that created tension in the community

— Some open source projects are just too complex to be hobby projects — Cassandra is so complex that you won’t become a code contributor unless you’re working full-time on Cassandra, because that’s the level of skill you need to keep up. 

— How the relationship between a company and a project often changes as the technology matures. 

— The importance of addressing tensions between company and community head-on, as adults, when they occur — as well as why you need to remember to treat people as humans and remember that they have good days, bad days, goals and interests. 

Patrick on LinkedIn

Mick on LinkedIn

In this episode of the Open Source Founders Podcast, I talked with Frank Karlitschek, CEO and founder of Nextcloud. Frank is going to be talking specifically about lead generation at Open Source Founders Summit, but in this episode we took a slightly wider view and talked about go to market, for open source companies in general and specifically for Frank’s experience at Nextcloud. 

A couple other things to pull out as takeaways. 

First of all, Frank talks about how he originally planned to target big companies who wanted to keep their data private — but as it turned out, most big companies don’t really care deeply about keeping their data private. On the other hand, the public sector and universities really do care, and those have ended up being a huge part of Nextcloud’s customers. 

Frank also talked about the rather obvious differences in needs between home users and big organizations. Nextcloud has some customers with millions of users — their needs are different from a home user. And as far as home users go, Frank says these users are obviously never going to pay Nextcloud anything. On the other hand, they have built mechanisms into the software to nudge open source instances with over 1,000 users to get in touch to talk about a commercial relationship. 

He also talked specifically about the importance of really talking with your customers and your users — and incorporating their feedback into your product roadmap. For open source companies, you have so much more information and feedback than proprietary companies, and you should take advantage of that to inform your go to market strategy. 

We also talked about how the millions of home users who will never pay Nextcloud are still extremely valuable to the company — and why Frank think it’s really wrong to think of pure open source users as just leads to be converted. 

And much, much more. 

If you’re the founder or leader at an open source company, and you want to be a part of more discussions like this, join us at Open Source Founders Summit May 27th and 28th in Paris! 

This week on The Business of Open Source, I spoke with Percona CEO Ann Schlemmer. This episode was recorded on site at State of Open Con in London, outside in a van! 

There’s a ton of great info in this episode, too. First of all, Ann talked about being a ‘suit’ in a geek’s world and her career trajectory that led her to lead Percona. She also set the stage around the constraints that Percona has chosen for itself: To be completely open source and only sell services, and to be completely bootstrapped. And what the ramifications of those decisions are for the business. 

Here’s some concrete takeaways:

• The key to thinking about managing the tension between creating a project that’s high quality and still being able to sell services on top of that is to ensure that the services really create value
• There’s a difference in profile between happy anonymous users and happy customers — often customers are operating at scale or are working in companies that simply always have to have support for critical software. But just as importantly, customers are often not database experts —they just need a database that works, and can turn to Percona to be their database experts. 
• Founders are often more emotionally attached to aspects of the company that a non-founder CEOs like Ann can sometimes be more analytical about what’s working and what isn’t
• Collaboration isn’t automatic, and how to make it actually happen
• How Ann decides what problems to collaborate with others on, what they don’t collaborate on and when in the project / feature lifecycle they look for collaboration

We also had a bit of a random conversation about controlling status in relationships — the book we talked is Impro: Improvisation and the Theatre. And talked about how founders who are ready to step down as CEO can find a replacement and manage the transition. 

Ann’s links:

LinkedIn

Percona 

In this episode of The Business of Open Source, I talked with four-time entrepreneur Mike Schwartz, CEO and founder of Gluu as well as the host of Open Source Underdogs podcast, about his long career in entrepreneurship. Here’s some particularly interesting things to take out of this episode:

• “Beware an entrepreneur’s second company.” — Mike says his second company was a disaster because he tried to apply the lessons from the first company in the second, and often those lessons aren’t right for the new business
• Going all in on being a product company — the toughest year in Gluu’s history was when they decided to stop consulting and make it or break it as a product company
• Why it’s a good idea to look at the market analytically and start a company in a market you’ll be able to compete in without a huge number of features
• Why Gluu actually has more features in the open source version than the enterprise edition — because the open source distribution gets features that are in beta whereas the enterprise customers need a product that is 100% fully baked. 
• Why Mike doesn’t believe in making the enterprise product more ‘scaleable’ — the open source project should be just as scaleable as the enterprise product

This episode was recorded on site at State of Open Con 24, outside in a media van! 

As part of the preparation for Open Source Founders Summit, I’m interviewing both our speakers and our attendees for a special podcast that’s hyper focused on one thing. In this episode I spoke with Peter Zaitsev, founder of Percona, about sales. We talked about the specifics of sales as a bootstrapped company — which means sales are exceptionally critical from the beginning, and how sales changed as the company moved from a consulting model to a support model on the open source software that Percona creates. 

Also, this episode was recorded on site at OpenUK’s State of Open Con! 

Here’s the concrete takeaways from this episode: 

• Even before starting the company, Peter had built up a personal brand as a MySql expert — this is what made it possible for him to get consulting gigs pretty much immediately
• Peter’s personal brand wasn’t just around MySql in general, but was very specifically focused on MySql performance optimization
• How a growing team meant that the sales process had to get much more disciplined — and deal sizes had to get bigger so that it’s worth the sales team’s time 
• How to align sales incentives with your business goals — how it’s important to adjust sales quotas and incentives so that sales people don’t oversell, which can hurt your reputation long-term, and don’t sell long-term agreements at too much of a discount. 
• Why it’s important to separate out your revenue that comes from new customers and your revenue that comes from customer renewals, and how to do so in the organization

If you want more opportunities to go in-depth on sales for open source companies — and to discuss sales and other aspects of business development with other founders, join us May 27th and 28th in Paris at Open Source Founders Summit. 

Garima Kapoor, COO and co-founder of MinIO, joins me to share her journey from investor and advisor to co-founder of MinIO and the wealth of knowledge she’s amassed along the way. 

In this episode, Garima explains how her experience in finance and belief in the power of open source helped MinIO to break into the data storage market. She also reviews the challenges she faced as a first-time founder and what others can learn from her mistakes and take away from some of their own. Since Garima started her journey with MinIO as CFO, she outlines that role for me and explains how she thinks a CFO should operate in an open source company. In reviewing mistakes she’s seen from other founders, Garima states some principles that create the “foundation for any open source business.”  - “You should always be very honest to your community. You should always be very transparent to the community”

Highlights:

• Garima introduces herself and explains why she and her co-founders started MinIO (1:31)
• Garima describes how the MinIO founders honed in on a problem they wanted to solve (3:55)
• How the MinIO founders used open source crack the market (6:37)
• What triggers a user to purchase a commercial license for the product (10:33)
• Garima explains why she and her cofounders were set on their open source strategy from day one (11:35)
• Garima explores the differences between being an investor and advisor for other companies and starting her own. (13:25)
• Garima shares go-to-market advice for other founders (15:21)
• Garima outlines her strategy for building on small successes (18:38)
• Garima explains why she started as CFO for MinIO and breaks down the role a CFO can play in a new company (21:46)
• Why Garima thinks a CFO’s role remains the same in an open source company as compared to a proprietary company (27:17)
• How to avoid competing with your open source product when you also have a commercial offering (34:06)

Links:

Garima

• LinkedIn: https://www.linkedin.com/in/garimakap/
• Twitter: https://twitter.com/garimakap
• Company: min.io

Today I’m joined by Federico Wengi, who is a Partner at SquareOne VC. In this conversation, Federico sheds light on the conversations he’s had with many companies who consider making the pivot from a closed-source business strategy to an open-source strategy. Federico explains why it’s so uncommon for businesses to make that pivot, and lays out the challenges businesses face when they consider taking on such a change. Federico also gives a great example of a company that did successfully complete the pivot to open source, and the choices they made that led to their success. Federico and I discuss why this is one pivot you can’t take back, and also why it won’t solve all your problems. Despite all that, Federico shares his optimism for the value of open source and the importance of at least considering this strategy when you need to make a change. 

Highlights:

• Intro (00:00)
• I introduce Federico, who is a Partner at SquareOne (00:59)
• Federico describes his role at SquareOne and the areas of investment they focus on (01:28)
• What Federico typically sees when companies move from closed source to open source (04:42)
• How important conversations come up about business strategy and open source versus closed source (07:40)
• Why many companies end up not pursuing an open-source strategy (11:17)
• Federico tells the story of a company he worked with that made the leap from closed source to open source (15:03)
• The most critical things businesses have to do in order to utilize an open-source strategy (16:23)
• What decisions led to success in the company Federico helped shift from closed source to open source (18:09)
• The psychological challenges leaders face when considering making a pivot to open source (23:54)
• Federico shares the advice he would give to a founder who’s considering an open-source strategy (26:40)
• How you can connect with Federico (31:40)

Links:

Federico

• LinkedIn: https://www.linkedin.com/in/federicowengi/
• Twitter: https://twitter.com/federicowengi
• Company: https://squareone.vc/