[HN Gopher] I wouldn't invest in open-source companies, even tho...
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I wouldn't invest in open-source companies, even though I ran one
Author : wolframhempel
Score : 111 points
Date : 2021-01-24 19:45 UTC (3 hours ago)
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| softwaredoug wrote:
| The sad thing is so few companies really invest in participating
| in FOSS software. That's one reason these "open source companies"
| came to exist. It really should be a community of contributors,
| backed by a diverse set of companies. At best, employers will
| allow contributing bug fixes or small patches. Not the in depth
| dedication these projects really need.
|
| We're heading towards a handful of giant companies that can
| afford to pay large teams to build and maintain FOSS, and hence
| own developer mindshare, for their own selfish reasons.
| wmf wrote:
| A community of contributors backed by a diverse set of
| companies has to be seeded by an MVP. Where would that MVP come
| from? For complex software it's either an internal project spun
| out from a unicorn or a labor of love from a gentleman hacker.
| These are pretty limited routes; it's much easier to start an
| open source startup with the caveat that the community will
| probably never emerge later because the startup will be moving
| too fast for outsiders to jump in. Now startups feel they have
| to use "innovative" licenses to be successful but the powers
| that be are deriding these licenses as "fake open source".
| We're setting ourselves up for an OSS winter where
| sophisticated developer tools or installable infrastructure
| software just won't be created.
| nine_k wrote:
| The term "open source" has a well-known definition, and the
| "novel licenses", like Mongo's, do not match it. They are
| more like the "source available" licenses, as practiced by MS
| in 1990s, and by IBM, much earlier.
| IncRnd wrote:
| There are several definitions for Open Source that come
| from foundations and other groups, which push their own
| beliefs and standards. Opensource.org, for example, pushes
| their own definition that excludes all those who do not use
| the perferred license!
|
| However, dictionaries that mirror collective
| understandings, as used by millions of people, tell a
| different story. According to OxfordLanguages, Open Source
| denotes, "software for which the original source code is
| made freely available and may be redistributed and
| modified." If you look at Dictionary.com. you will see that
| Open-Source is defined as "pertaining to or denoting a
| product or system whose origins, formula, design, etc., are
| freely accessible to the public."
|
| So, no, open source doesn't have a single definition,
| except to groups who are pushing their own definitions.
| temac wrote:
| _For software_ the overwhelming consensus is the OSI
| definition (extremely close to the FSF def, extremely
| close to what is applied as criteria by various distro,
| etc.)
|
| You may want to write "Open Source" to be sure it is not
| confused with something else, but even "open source"
| should be parsed as that definition by default. This is
| not even pushing a political agenda or a judgment of
| value. Just "everybody" calls that like that, so there is
| no point in overloading the term for other approaches.
| Using another term for other things is perfectly fine and
| there are plenty of them possible with a positive tone,
| in case they bring positive things to the table.
| BossingAround wrote:
| > We're heading towards a handful of giant companies that can
| afford to pay large teams to build and maintain FOSS, and hence
| own developer mindshare, for their own selfish reasons.
|
| Can you name some examples of such "selfish reasons" connected
| to some OSS?
|
| I can think of Google taking over the internet with Chrome, but
| MS did the same with IE, so that has nothing to do with OSS.
| It's more that Chrome happens to have source code available.
| lenkite wrote:
| Gradually, more and more of Chrome will become closed source
| as is already happening. DRM, Sync features,...
| dragonwriter wrote:
| > We're heading towards a handful of giant companies that can
| afford to pay large teams to build and maintain FOSS
|
| "Heading toward"?
|
| I remember people talking about that as the existing state...in
| the 1990s. If anything, we're heading away from that, with a
| much wider array of companies actively investing either cash or
| employee time in open source.
|
| What's actually changed, IMO, is that it's a lot harder to get
| traction with commercial software than it used to be, so even
| forms that have no open-source-compatible business model in
| mind launch as open source, meaning that they have to figure
| out a unexpected business model or pivot out of open source at
| some point.
|
| And, for PR reasons, they want someone else to blame for the
| pivot out of open source, so we get all the AWS-blaming and
| "the market has become radically less favorable to open source"
| stories, neither of which is grounded in reality.
| monoideism wrote:
| > We're heading towards a handful of giant companies that can
| afford to pay large teams to build and maintain FOSS, and hence
| own developer mindshare, for their own selfish reasons.
|
| "heading towards"? I'd say we're there.
|
| And it's been a while coming. I wrongly discounted Stallman.
| Like many, I found the GPL onerous and annoying to deal with as
| a developer. But we've paid a high price.
| SpicyLemonZest wrote:
| I don't think it's really a price - including corporate
| projects was always the point of "open source" as opposed to
| "free software". The split is generally understood to have
| started when part of the community embraced Netscape's open
| source browser.
| monoideism wrote:
| To be clear, I don't typically have any issue with
| corporate use of my code. That's why I chose MIT and other
| permissive licenses.
|
| That said, what I had in mind when I licensed my code were
| start-ups and small+medium businesses. It didn't occur to
| me that behemoths like Amazon might stripmine open source
| and fail to contribute back. Even though the permissive
| licenses permit this kind of behavior, it seems
| exploitative.
|
| Additionally, as the GP mentions, we're at the point where
| it's primarily massive tech companies who can afford to
| develop ambitious open source projects.
|
| Far more importantly, it also failed to occur to me that
| tech companies would become the new railroads -- massive
| monopolies that dominate society, the economy, culture,
| politics, etc. When I started in open source, Microsoft had
| recently been slapped down by antitrust regulators, there
| was no social media, and the tech ecosystem - particularly
| the open source ecosystem - was much, much different. It
| was more democratic, egalitarian, and balanced.
|
| Granted, as far as I know, it _has_ been small and medium
| sized companies that have used my own open source code. I
| 'm not aware of any of the Big 5 using it (my most popular
| libaries have been superceded by newer/better projects
| anyway).
|
| Nonetheless, I would have been more wary of philosophically
| supporting permissive licenses had I fully realized the
| implications.
| Rochus wrote:
| > But we've paid a high price.
|
| What price?
| monoideism wrote:
| See my other comment in this thread for my answer:
| https://news.ycombinator.com/item?id=25896907
| DaiPlusPlus wrote:
| Everyone using BSD and Apache licenses - so any changes or
| improvements they make aren't contributed back to the
| source repo.
| yarcob wrote:
| Have a look at PostgreSQL, SQLite, LLVM, Clang ... all
| these are projects that get a lot of support from
| proprietary software vendors. I'm pretty sure that the
| companies contribute to these projects _because_ of the
| liberal license, not in spite of it.
|
| I think a big fallacy with regard to the GPL is that
| companies don't contribute to open source because the
| license forces them to. Companies contribute to open
| source because it makes more sense to collaborate on some
| projects rather than each work on their own.
|
| Licenses like GPL etc. are great for ensuring their
| user's freedom; but they don't really incentivise
| companies to contribute to them at all. Instead, they
| prevent some companies from using them. So counter-
| intuitively project with liberal licenses end up with
| much more contributions than projects with strong
| licenses...
| ithrow wrote:
| Counter argument: the Linux kernel. (Since we are
| mentioning open source projects with the highest profile
| on earth, I don't think neither of the examples are fair)
| yarcob wrote:
| I agree, the Linux kernel is one of the examples where
| the GPL really works, because a lot of companies really
| need it for their products, and they need to distribute
| it, and there are very few alternatives.
| Rochus wrote:
| Well, there are also many who want to contribute code
| back to GPL and LGPL projects, but can't because the
| companies that control these projects want them to sign
| contributor agreements with unacceptable terms.
| nine_k wrote:
| According to GPL, you do not need to contribute _back_ to
| the original authors, you only need to make your changes
| available under GPL.
|
| But maintaining a fork is not everyone's cup of tea.
| Rochus wrote:
| > But maintaining a fork is not everyone's cup of tea.
|
| It is not in the interest or benefit of the community if
| everyone makes or is forced to make his/her own fork.
| Forces should be joined, not scattered.
| satvikpendem wrote:
| Open source is not a business model.
|
| Let me say this again. Open source is not, in and of itself, a
| business model.
|
| People conflate having an open source project with having an open
| source business. Open source businesses can be done, of course,
| but open source in and of itself won't give you that business. It
| is not a business model therefore but rather a _distribution
| /governance_ model.
|
| The key is that being open source should not be a core value
| proposition in most cases (unless you're Red Hat) but rather it
| should be ancillary, merely incidental to your core business. For
| example, say you ran a task management app company. The core
| value driver is not whether it's open source or not (to most
| people). People don't buy based on whether the product itself is
| open source, they buy because it solves their problem, of task
| management in this case.
|
| Labeling oneself as "open source" is a classic engineering trap
| because again, people don't care about that, if a closed source
| solution can solve their problem more than an open source one,
| they'll use the former.
|
| By the way, I happen to run an open source task management app (a
| todo list + calendar hybrid basically, https://getartemis.app)
| but nowhere do I advertise it as open source, even though it is,
| because I know my core customers, non-engineers, don't care about
| that and just want to schedule their days better.
|
| ---
|
| I am reminded of OpenHunt, an open source version of Product Hunt
| that was made. The only value proposition was that it was open
| source, but it shut down precisely because users didn't care
| about that, they cared whether it had enough cool products (as a
| consumer) and enough traffic (as a submitter).
|
| Here's one post-mortem:
| https://news.ycombinator.com/item?id=10940729
|
| > OpenHunt tried solving a problem for the content makers without
| providing any additional benefit to the content consumers.
|
| > It's a nice, heart-warming mission. But in the end of the day,
| content is king, that's what consumers want.
|
| > There have been many examples of people rallying around a "free
| and open" version of a service. They fail to realize that the end
| consumer barely cares. Look at voat (Reddit), app.net (Twitter),
| Diaspora (Facebook), even ycreject.com (Y Combinator) tried to be
| a thing for a while.
|
| > If someone is able to make it "free and open" while also making
| it a better experience than the alternative, then it'll be a big
| success. But so far everyone gets that wrong.
| rhn_mk1 wrote:
| > If you are running a commercial business on top of your open-
| source solution, it is paramount that you own the product's full
| IP.
|
| Why is it "paramount"? While I have seen that behaviour, there
| are also several commercial businesses in my corner of the 'net
| based on open source solutions that don't make an effort to own
| the full IP and they are doing OK.
|
| I think there's some unstated assumption here, anyone care to
| explain?
| IncRnd wrote:
| What is paramount is that risk needs to be reduced, mitigated,
| transferred, avoided, or even sometimes accepted. Risk must be
| managed. That is why some companies want to own the OS project,
| and others want to pay as employees the prime contributors.
| mooreds wrote:
| Control. If you control your IP, then the company is more
| valuable because there are more options (whether selling the
| company, relicensing/dual licensing or something else).
|
| It's similar to developers assigning copyright when they make a
| contribution to an open source project--keeps control in one
| place, makes it easier to make long term decisions about the
| project (for the project's maintainers).
| yarcob wrote:
| I think the implicit assumption is that you are doing the
| majority of the development, and you want to make money from
| licensing, and you want to be the only one making money from
| your product. So basically, the plan is to make money exactly
| like a proprietary software company would make money, except
| that you make the product open source for marketing.
|
| I never understood why people thought that was a good idea.
| People like Open Source because they don't want to depend on a
| single vendor, and yet these companies want to be the only
| vendor of their Open Source solution. It doesn't make sense.
| temac wrote:
| > If you are running a commercial business on top of your open-
| source solution, it is paramount that you own the product's
| full IP.
|
| That sentence is even completely absurd. Suppose you ship a
| product/deploy a service that includes, among other things,
| Linux and PostgreSQL. Is it paramount that you own the full IP
| of Linux and PostgreSQL?...
| marvinblum wrote:
| I'm working on an open-core product [0] right now, and an aspect
| I find missing in the article is that you can generate trust by
| showing how the internals work. This is especially beneficial if
| you work in an area like us. Of course, you need to make sure
| your license is set right and you need to think about where new
| features go, but it's a valid use-case.
|
| [0] https://pirsch.io/ open-source core:
| https://github.com/pirsch-analytics/pirsch
| tommoor wrote:
| Lovely landing page - there seems to be a sudden abundance of
| google analytics alternatives by small teams and indie hackers
| in the last year, any insight into why that is?
| marvinblum wrote:
| Hmm due to the cookie banners probably. I've started this as
| a side project for my personal website, without looking for
| existing solutions :D
|
| The landing page is... meh, a placeholder more or less right
| now.
| tommoor wrote:
| That kind of makes sense, the cookie banners have been
| around quite a while now though.
| dschramm wrote:
| They did get more annoying lately though. Nowadays you
| have to wrestle through a horrible click game of dark
| patterns to not accidentally accept anything. Things like
| putting a small "Accept all" in the top right corner
| where you expect a close button or hiding the settings
| with at 12px in light grey.
| moneywoes wrote:
| What license do you use?
| marvinblum wrote:
| AGPL
| gregwebs wrote:
| The main business proposition of open source is that you can
| create a larger market. This is hinted at in the article by
| saying "easy distribution", but it isn't really discussed.
|
| The goal of open source is to create a market for the product
| that is 10x or 100x bigger than a proprietary product would have.
| You won't ever capture 100% of the market. But if you capture a
| fraction of that larger market you still come out far ahead of
| the proprietary product in which you capture close to 100% of the
| market.
|
| Probably there are some products for which the market is finite
| or open source won't make it bigger, and for those the scarcity
| based viewpoint of this article makes sense.
|
| It is also worth noting that Red Hat has shown that open source
| doesn't require distributing your product for free. Another note
| is that many companies today take an open core approach to try to
| gain some of the advantages of open source without all of the
| downsides.
| alfonsodev wrote:
| This is a good point, any examples that come to mind to
| illustrate it?
|
| I'm genuinely interested.
| [deleted]
| gregwebs wrote:
| Many successful databases are open source. MongoDB (at least
| before the recent license change!) is a good example of a
| huge company where I doubt anyone would have made a
| noticeable business out of a proprietary version of the
| product.
| Closi wrote:
| I actually think MongoDB highlights the challenges in this
| article. Namely:
|
| - Tremendously popular database, a huge success by open
| source standards!
|
| - Their open-source API has been used by Amazon to create
| their biggest competitor (DocumentDB). Or alternatively any
| cloud provider will help you spin up pre-built images with
| MongoDB installed (no path to monetisation).
|
| - Have not (yet) been able to turn it into a profitable
| business, with large (and widening) losses recorded the
| last 3 years (at what appears to be the height of it's
| popularity).
|
| - To create revenue they need a huge sales team (I've heard
| the pitch and seen the cost!). They not only have to bid
| against competing technologies, but also their own free
| tier!
|
| - This resulting in... Mongo having to change their licence
| to create a profitable business.
|
| 23.15B market cap though - but they have had to ultimately
| change their licensing plan to find a profitable way
| forwards.
| Closi wrote:
| > The goal of open source is to create a market for the product
| that is 10x or 100x bigger than a proprietary product would
| have. You won't ever capture 100% of the market. But if you
| capture a fraction of that larger market you still come out far
| ahead of the proprietary product in which you capture close to
| 100% of the market.
|
| The point of the post is that _even if_ you capture a huge
| portion of the market, monetising it is very difficult, and
| profitability potential is the main reason you invest.
|
| While open source databases struggle to be profitable, MS SQL
| Server and Oracle are both very profitable. Why? Strong
| product-market fit - these products are heavily targeted at
| enterprise who are willing to pay money, and there is no 'free
| roll your own' solution to avoid paying the licence fees.
| dragonwriter wrote:
| > giving your product away for free is just as bad a business
| strategy as it sounds.
|
| Has anyone, anywhere, argued the opposite? Because this seems
| like beating a strawman.
|
| > Copyleft licenses such as AGPL force adopters to publish
| changes back to the source repo or offer them via network
| protocols.
|
| The AGPL specifically does this, other copyleft licenses (like
| the GPL do not for "adopters", only for people redistributing
| executables)
|
| > This is meant to deter third parties from offering competing
| hosted services
|
| No, copyleft in general is about prohibiting downstream
| _proprietary_ distributions (and also, in the AGPL case,
| proprietary hosted versions) it is not supposed to prevent
| _competing_ software /services.
|
| > Instead, why not do what traditional businesses are doing, sell
| a product, and simply charge for the value it provides?
|
| That's what "open source" companies do. The thing they sell _is_
| the product (whether it 's support and consultancy, the value-add
| of the enterprise version of an open-core product, or hosted
| SaaS.)
|
| The problem with "prop-tech" is often, as this piece itself
| points out, but entirely fails to address in recommending "prop-
| tech": "the world of FOSS is full of strong and established
| offerings with a zero-dollar price tag." And making your tech
| proprietary doesn't stop you from having to compete with the
| open-source competition.
| systemvoltage wrote:
| I always see FOSS to get super fast traction (Elastic) and
| userbase - hey, because its free - and then later the same people
| complain that their lunch got stolen. Elastic could have grown
| (or not) organically with closed source software but that's hard
| without community help and being able to hire top developers to
| build your product. FOSS seems like a great way to market/PR your
| name out there because _free is popular_. I compare this, perhaps
| not perfect analogy, to Uber. Offer cheap rides, gain popularity
| while burning investor cash and wipe out existing industry
| /competition. Then, investors complain they can't monetize it. No
| shit! In the case of Elastic, the rest of the world benefited
| from it atleast.
| BossingAround wrote:
| > Elastic could have grown (or not) organically with closed
| source software but that's hard without community help and
| being able to hire top developers to build your product.
|
| Yea I don't know. If I saw claims made at [1] by a startup that
| made proprietary SW, I'd think "yea right".
|
| [1] https://www.elastic.co/elasticsearch/service
| tschellenbach wrote:
| Algolia is doing just fine. Open source contributions by
| volunteers are typically very small compared to the work done
| by the corporations behind the open source projects. At least
| for the vast majority of projects.
| systemvoltage wrote:
| I actually love Algolia. They know they're good and they
| charge a pretty penny for it. Excellent.
| habitue wrote:
| I think "Commoditize your complement" comes into play here. Yeah,
| if your core offering is free, you're going to be fighting to
| make money. But you can get huge value if you open source
| otherwise proprietary parts of your stack.
| mooreds wrote:
| We've done this at my current company. We have a closed source,
| commercial offering. But our client libraries, our
| documentation, sample deployment scripts, and other supporting
| libraries are open source.
|
| We get some contributions.
| cat199 wrote:
| post points out that there is variation among what constitutes
| open source companies / potential for profitability, and yet
| self-contradictorily concludes a simplified blanket rule on open
| source being a 'better strategy' and uses this simplified rule to
| conclude a similarly simplified blanket rule for investing in
| them..
|
| seems a bit off.
| f430 wrote:
| I mean you are essentially selling yourself short with FOSS
| unless you were in a very saturated industry and selling support
| was the bulk of your revenue.
| BossingAround wrote:
| If folks at HN ventured to take a guess, what would be your bets
| for the next successful OSS startups/companies? Be it a great
| exit or an IPO.
| mooreds wrote:
| I was at a conference a few years ago and the conversation
| around the lunch table was the chilling effects of the public
| cloud's operational expertise on venture funded open source
| businesses (what we saw with Elastic). Nothing I've seen since
| that conference has changed my mind.
|
| As a developer, I love using open source software. Easy to
| review/bug fix, less risky because even if the company fails,
| it'll be around, and usually very low cost and easy to get
| started with.
|
| As a prospective business owner, I think it stinks.
|
| Another view: as a consumer of software, I love free stuff. As
| a producer of software, I like to get paid.
| vmception wrote:
| Cryptocurrency issuing entertainment companies have monetized
| this pretty well.
|
| They don't have recurring revenue but they don't need venture
| capital investors either so it doesn't matter.
|
| Open source, campaign, sell, book revenue from sell. If market
| has formed, book more revenue in the future from selling into
| liquidity. If market hasn't formed, hire some entertainers to
| babysit a chat room and move on.
|
| Some parent companies are monetizing repeat issuances, those are
| worth investing into because all the shareholders make money. The
| companies dont need capital and would only offer shares to
| provide some exposure to the market. I'm not aware of any broadly
| offered dealflow of a token issuing factory, which is probably
| why people don't understand or notice this business model.
| [deleted]
| [deleted]
| jedberg wrote:
| Same. I've _very_ wary of investing or getting involved with any
| company that has an open source strategy. I worked for one
| (Sendmail) and it did not go well. We talked about how it 's hard
| to compete when your number one competitor is your own software
| for $0. If you look at successful public companies with open
| source, they are all fairly small successes compared to their
| public closed source peers.
|
| When I worked at reddit, we open sourced our code. It didn't gain
| us much. We got a few contributions, and we also got a few
| competitors. The biggest benefit was being able to show people
| the code when they suspected shenanigans.
|
| At Netflix our ethos was "if it's involved in infrastructure,
| open source it, if it's related to movies, keep it closed." That
| actually worked pretty well. But the open source code was
| difficult to use unless you invested in the entire ecosystem. The
| main benefit was recruiting.
|
| For my own company, I try to support open source by donating to
| the people who make it.
| joshuaengler wrote:
| Same here. I run a small game company in San Francisco, and we
| constantly are donating to help fund projects like Blender and
| Godot because they're amazing projects that deserve funding to
| keep them afloat.
|
| But would I invest in an open source company? Eh, that's a
| different story. I love them for what they are, it's amazing
| they exist, but I don't see them as an investment that pays you
| back dividends. Rather, I see them as a useful tool you can
| make money with and is worthy of your donations.
| jrochkind1 wrote:
| > "if it's involved in infrastructure, open source it, if it's
| related to movies, keep it closed."
|
| In the first wave(s) of open source, I think _most_
| contributors were working on company time, but the open source
| was not the primary product of the company. It was something
| useful to the business of the company, without _being_ the
| business of the company.
|
| So what you describe seems to fit into that model.
|
| That model seems to be less and less of open source
| contribution though. (I am not certain why). And I think that
| has a lot to do with current apparent crises in open source
| sustainability -- it was the model that worked, for a while, to
| produce and maintain lots of open source. I am not sure "open
| source companies" ever really have.
| mooreds wrote:
| > The biggest benefit was being able to show people the code
| when they suspected shenanigans.
|
| This is very interesting to me. How was that a benefit?
| jedberg wrote:
| It helped shutting down rumors or runaway conspiracy
| theories. You know how reddit can get when they have an idea
| in their head, wrong or not.
| lifeisstillgood wrote:
| The essential problem is _gatekeeping_. Any commercial business
| uses money as a means of getkeeping what it uses (buys). This
| works well to reduce and so control the purchases of chairs,
| desks, external consultancies and proprietary software.
|
| We all know the horrors and pain of trying to raise a PO to get a
| license for a really useful / necessary piece of software.
|
| I fundamentally guarantee that if React needed a 0.01 cent
| license for every internal and external installation it would
| have four users globally.
|
| FOSS short circuits this gatekeeping function - and it is only
| popular because it is hard to keep track of and easy to load up
| npm and grab 900 libraries.
|
| Imagine there was a FOSS plug-in everyone used, call it
| _mothership_ that on every install (and indeed invocation) it
| routed back a simple packet to say "i am alive and used on this
| machine in this domain in this company" (let's call it a common
| piece of config like git email config)
|
| Immediately every legal department would soil their pants and
| internal software development would grind to a halt - or FOSS
| developers would be able to charge decent value for their work -
| or some ecosystem of foss-aggregators would spring up providing
| licensed, limited installs and support and legal protection.
|
| Personally I am in favour of the last option - for each product a
| series of (local) companies could club together and provide
| support for each other's code bases, (if you use my react-foobar
| I will license company X to indemnify you - sort of approved
| vendors schemes)
|
| I struggle to see many better ways
|
| Edit:
|
| Andressen was slightly wrong - FOSS is going to eat the world.
| And as such it's production will be a public good - paid for out
| of taxpayer money and directed as such - either as a utility
| through regulation or as science through funding only the
| brightest.
|
| And the big question remains - if we could see the whole stack
| easily, and if it all was priced at the minimum wage for every
| developer in the stack how much would it be?
|
| Would anyone pay it? Or worse, would they realise they did not
| need all those in-house developers anymore as they are all
| running "libBusiness.py" and it all kind of fits together.
|
| Or as is more likely - will we see lots of companies like redhat,
| that produce a "bank/airline/retailer in a box" - and the
| internal teams are focused on that 5% of USP?
|
| I am not sure I understand that world - but I also do not think I
| currently could select correctly all the FOSS packages needed to
| build that stack that can just run a business.
|
| Trust me it does not look like the openERP style stacks. at all.
| mooreds wrote:
| >FOSS short circuits this gatekeeping function
|
| There are other ways past gatekeeping:
|
| * free trials
|
| * money back guarantees
|
| * free as in beer solutions
|
| Open source goes one step further than those and says "you
| don't just get to use this, you get to own it" where "own"
| means change as you like.
| moneywoes wrote:
| Very well written article. Why are VCs very interested in FOSS
| companies
| itronitron wrote:
| Probably because they have market share but don't generate any
| revenue.
| ignoramous wrote:
| Mirrors:
|
| https://outline.com/unMZCw
|
| https://archive.is/iVSvI
| tptacek wrote:
| This is unusually insightful for a LinkedIn post. One question,
| though: towards the end, it suggests that GPL/AGPL products,
| which are more defensible against commercial competitors who
| simply resell the open source project, are "legally murky" and
| might be rejected by customer legal teams. But does that matter?
| Can't you just do what Sleepycat did, and offer commercial
| customers a clean commercial license?
| joshklein wrote:
| I suppose it would depend on what one takes "open source
| project" to actually mean. You'd have to reject contributions
| from your community if they weren't interested in giving them
| back upstream in a way compatible with your commercial license,
| and you'd probably be forever open to claims you violated some
| individual's GPL contribution of a feature you may or may not
| have seen if something similar makes its way into your
| commercial project.
|
| There are obviously lots of open source projects that find a
| way to navigate this world via dual licensing, and I'm neither
| a lawyer nor an expert on the subject, but those projects don't
| really fit my own personal definition of "open" (as I derive it
| from the Unix philosophy instead of the GNU is Not Unix
| philosophy).
| mrkurt wrote:
| GPL variants are more defensible but make open-source-as-a-
| marketing-tool way less effective. Developers know they can't
| use GPL software for work, and OSS companies need them to use
| tooling at work so they become leads.
| Alekhine wrote:
| Wait, why can't devs use GPL software at work? How is code
| compiled with GCC any different from code compiled with
| Clang, legally speaking?
| the-dude wrote:
| He obviously means software ( libraries, tools ) which
| become part of your product. Not tools to build your
| product ( compilers, bug trackers, operating systems and
| the like ).
| JoshTriplett wrote:
| > One question, though: towards the end, it suggests that
| GPL/AGPL products, which are more defensible against commercial
| competitors who simply resell the open source project, are
| "legally murky" and might be rejected by customer legal teams.
| But does that matter? Can't you just do what Sleepycat did, and
| offer commercial customers a clean commercial license?
|
| It isn't an issue of "clean"; GPL/AGPL aren't "legally murky".
| (Though if a customer is willing to pay you because they think
| otherwise, by all means.) But if they're "rejected by customer
| legal teams", that's an opportunity to sell an alternative
| license or exception. I've collaborated with the legal teams at
| various companies that review both inbound and outbound FOSS.
| Inbound, there's no open legal question with GPL-family
| licenses; they're only "rejected" in cases where they're
| functioning as intended and that isn't desired. (That includes
| companies that systematically reject AGPL; they're concerned
| about the license _working as intended_.) Outbound, the
| pressure to not use GPL-family licenses when a choice is
| available doesn 't come from the legal department; it comes
| from product teams who don't seriously consider copyleft and
| what benefit they might gain from using it, because all the
| other teams they see are using Apache or MIT or BSD. And then
| those same teams become shocked when their own code is used to
| compete with them.
|
| There's a strong tendency towards "do what other people are
| doing", and there are a lot of companies releasing permissively
| licensed code. This seems self-defeating.
| Sebb767 wrote:
| > It isn't an issue of "clean"; GPL/AGPL aren't "legally
| murky".
|
| Yes and no. I'd agree that, in general, they're legally safe
| and clear, but when you're talking to the legal department of
| a company, it is not about whether they're clearly defined.
| The actual worry is whether a patent troll or a more
| litigious competitor can sue the s out of your company and
| extract millions upon millions of either legal costs or
| settlements. Yes, you _might_ win, but it will still cost you
| and courts are known to not always be deterministic in their
| decisions. So once your out of the "thrown out without a
| second thought"-cleanliness, corporate legal will not be
| happy.
| jrochkind1 wrote:
| > The actual worry is whether a patent troll or a more
| litigious competito
|
| Is there a reason that is more of a risk with GPL/AGPL than
| with other ("permissive") open source licenses though?
| ThePhysicist wrote:
| It really depends on what you're selling. All of the Linux
| core tools and the kernel are released under GPL and
| obviously companies have no issues using them. For libraries
| that are statically compiled or used as part of your own
| software it's a different story though.
| JoshTriplett wrote:
| > For libraries that are statically compiled or used as
| part of your own software it's a different story though.
|
| That's still not "legally murky"; that's the GPL working as
| designed. If the component has enough value, that's an
| opportunity to sell an alternate license.
|
| Of course, if your primary value proposition is something
| other than the library (such as a paid service that the
| library helps programs integrate with), by all means use a
| permissive license.
| moksha256 wrote:
| Well this is why the Commons Clause [0] was created, but many
| people seem to trash it for violating the original spirit of
| FOSS.
|
| So there have been attempts to deal with this issue, but
| there's a lack of consensus on what the "right thing to do" is
| in such scenarios.
|
| [0] https://commonsclause.com/
| iso1210 wrote:
| Microsoft spent a lot of money and energy in the late 90s and
| 00s to convince the world - especially business and legal
| people - that the GPL was a "cancer"
|
| The GPL is one of the cleanest licenses out there. Use the code
| in your project, give the source of your project to anyone you
| give the binaries to, job done.
| Google234 wrote:
| Then they can give the source code out to anyone...
| tptacek wrote:
| I mean, I agree, but isn't it a moot point? Isn't part of the
| reason you get all your contributors to sign CLAs so that you
| can put whatever license on your product you need to close a
| deal?
| JoshTriplett wrote:
| > Isn't part of the reason you get all your contributors to
| sign CLAs so that you can put whatever license on your
| product you need to close a deal?
|
| This is true if you use a CLA, but that's going to reduce
| external contributions. In some cases you may not care
| about that.
| api wrote:
| All we would need to do is rename the GPL to something else.
| That's it. It really is that dumb. Just don't tell anyone
| it's a renamed GPL and maybe rearrange some wording.
|
| We abandoned GPL for the BSL for this reason. The GPL is in
| many ways better but there are a ton of companies that won't
| touch it or anything that comes near it... though they tend
| to grandfather in Linux.
| Google234 wrote:
| Smart companies use a whitelist of licenses.
| Andrew_nenakhov wrote:
| A lot of people wrongly assume that if you license the
| product under GNU GPL, you _must_ publish source code on the
| internet. Many active proponents of free (as in freedom)
| software had very tense quarrells with me when I explained
| them that it 's not exactly mandatory.
| xyzzy_plugh wrote:
| This is a small point to argue. Even if you choose to
| distribute your source on-demand by CD in an envelope with
| postage stamps on it, the next logical step is for a
| customer to just put that code on github. So, what then is
| the difference?
|
| Putting it on github (or a zip file on your website) is
| less of a hassle.
| Andrew_nenakhov wrote:
| If the customer paid a really high price for software and
| source code (like a few million dollars), he might
| rightfully decide that publishing it and giving it to
| everyone for free is not in their best interests.
| xyzzy_plugh wrote:
| This is a naive view. Most companies try to limit or restrict
| the scope of what they _must_ open source. With the GPL,
| depending on the version, how the code interacts with your
| project (static linking, dynamic linking, IPC, etc.) you may
| or may not have to release your code under the same license.
|
| In particular Google's strong anti-AGPL stance has caused a
| chilling effect for adoption of AGPL projects at companies,
| hence why commercial licensing is frequently an option.
|
| Finally, you can believe whatever you want, but ultimately
| it's the lawyers who decide, and your ass (assuming you're an
| IC) isn't the one on the line when shit hits the fan. Lawyers
| don't like GPLv3 and they don't like AGPL.
| enriquto wrote:
| > Lawyers don't like GPLv3 and they don't like AGPL.
|
| Whose lawyers? Why would the lawyers at your company object
| that your choice of license for the free software that you
| publish is the AGPL or the GPL?
| nemothekid wrote:
| This is a post about running an open source company. In
| other words, you have to worry about your prospective
| customer's lawyers objecting to your product just because
| it is in part AGPL. You could just upsell with a
| different license; but from a business model perspective
| that makes the distribution channel of open source
| irrelevant.
| Google234 wrote:
| The AGPL means that all code that links to it must also be
| published as AGPL. You don't have to be Google to recognize
| how contagious thst could be.
| flaburgan wrote:
| Wow. It looks like this man has no idea what the free software
| spirit is. I mean, he definitely hasn't, as he's talking about
| "exit value". Still, he's writing that with HTML, using SSL and
| TCP, on a PHP website probably running on Nginx or Apache on a
| Linux server with a postgresql database... Opensource is what
| allows him to talk to people or even create his business he is so
| proud of that he gives advices to everybody, yet he encourages
| everyone to not join the game. If open source has some problem,
| it's certainly because of people like him.
| pchap10k wrote:
| Do engineers working full time in a FOSS core team need someone
| to pay their salaries? Nothing the author said was against FOSS
| on a volunteer basis. What he said was it's a challenging
| business model, unless you can reach escape velocity, and the
| window for that success is much narrower than simply selling a
| commercial product from day one.
|
| There are real differences between FOSS that provides
| foundational capability (network layer, drivers, OS) and
| application layer projects. Firstly, they largely were built at
| a different time, secondly they were pure FOSS and not backed
| by a founding company that relied on it to keep core
| development going (Redhat's business backed into Linux, so they
| benefitted from an existing core).
|
| TLDR a founder who struggled to establish a business based on
| FOSS is saying don't do it _as a business_ because it's harder
| than you think and can feel like a thankless endeavor.
| tppiotrowski wrote:
| The author only shares his personal opinion on whether he would
| invest money in FOSS. He is not advocating that FOSS serves no
| purpose.
| tommoor wrote:
| I'm working on an "open core" knowledge base [0] right now and
| have been for the last few years. We're definitely leaving money
| on the table by offering an easy docker install option and I'd
| largely agree with the points made in the article but it's hard
| to understate the value of the distribution that open source
| brings, particularly for product-lead teams that aren't so hot at
| marketing.
|
| [0] https://www.getoutline.com
| itronitron wrote:
| If the software fits into the 'infrastructure' bucket then open
| source software seems like the best approach for selling into
| engineering orgs. This is likely due to the longer setup/eval
| time for infrastructure type software (Elastic being an
| example) and the higher price tag (justified or not).
|
| Contrast this with 'tools' (such as IDEs) which tend to not be
| FOSS and are a low enough dollar and time cost that they can
| easily be purchased or even trialed for a month.
|
| My very brief review of your product site leads me to think
| that a good approach for your company would be to offer small-
| team licenses for free with the hopes that they will adopt and
| become champions for their enterprise to buy a site license.
| alfonsodev wrote:
| Your product looks great, I'll give it a try!
|
| I'm curious. What was your thought process when making the
| decision about open sourcing?
|
| Were you open source from day one?
| hapless wrote:
| The author makes a good case against open source businesses, but
| he indulges himself in a false dichotomy between a traditional
| proprietary model and open source.
|
| Increasingly often, _there is no market_ for your proprietary
| software. It is then not a choice between open source and
| proprietary models, but rather between doing open source or doing
| nothing.
|
| A lot of markets are just _gone_ , and they're not coming back.
| Odds are, you're never going to sell another proprietary UNIX
| clone, or a proprietary database, or a proprietary application
| server. There are no punters. Those niches have been
| extinguished.
| mooreds wrote:
| This is a really good point. However, there are still successes
| that I'd never have expected. Jetbrains is a good example. Who
| would have thought that an IDE could be sold when there are
| adequate ones for free?
|
| There are also many many smaller niches where software can be
| sold because there isn't adequate developer interest to create
| OSS. One example is this: https://querix.com/products/lycia
| (not a customer, just ran across their product).
| hapless wrote:
| It's worth noting that Querix was founded back in _1994_ --
| when Informix and proprietary databases were more popular
| than today.
| InvOfSmallC wrote:
| I personally have been being using Intellij for everything
| for the last five years.
|
| I tried to migrate to VSCode for golang.
|
| I mean, don't get me wrong, the situation is not the worst
| possible, but the only reason you would want to use that is
| because you never tried refactoring with Goland.
|
| Are you kidding me? I had to go look for what is the current
| needed extensions for go that are still maintained, configure
| them etc...vs just download and use Goland.
|
| If you can't or don't want to spend money OK, but otherwise
| is a non sense to use anything else.
| ahepp wrote:
| When I was a broke college student, I cared a lot more about open
| source. Now that I have more resources, more experience, less
| time, and a personal interest in getting paid for software, I
| have stronger feelings about the interface.
|
| Whether or not the box is black isn't really on my mind these
| days. I rarely have the skill or time to fix them when they
| break, or don't do what I want. I'd rather the box be easier to
| swap out or build around when requirements change. I'd rather
| have a richer ecosystem of blacker boxes, than a bunch of broken
| transparent boxes laying around.
|
| A problem, of course, is that businesses don't want their boxes
| to be interchangable. Transparent boxes do tend to help.
| ethanpil wrote:
| We live in a fundamentally capitalist society. Venture capital,
| entrepreneurship, the startup culture, etc, are all fundamentally
| profit driven.
|
| Open source is a movement which is ultimately driven by ideology.
| Even open source advocates need to put food on the table.
|
| While there are business models that can support open source
| projects, these will always be the exception when humans are
| involved. There is always an entrepreneur willing to ignore
| ideologies (and sometimes laws and/or morals) to make a buck.
|
| I believe that there is a need and important place for open
| source and free software, but the fact is that this needs to be
| funded by philanthropy and dedication to ideology, at the
| exception of profit in most (almost every) case.
|
| In this context, I think the article is correct. Depending on a
| majority of people for good behavior, good will and altuism is
| naive.
| ignoramous wrote:
| If engineers are the most important resource, I think being a
| company known for open source might act as an inbound sales for
| attracting top talent, too (see: Google, RedHat, Mozilla).
|
| For engineers, it makes sense to work for companies that do have
| FOSS projects because they can always point to their corpus of
| work when switching between jobs as proof of their worth. Most
| engineers who realise this don't ever want to go back to working
| full time on closed source projects.
|
| That said, folks making arguments against open source companies
| conveniently ignore the examples of Cloudera, Linaro,
| Hortonworks. They also tend to forget how much central open
| source is in the current climate because someone or the other
| will attempt to commoditize your core (Firebase vs Supabase,
| GitHub vs GitLab, Oracle vs Postgres, Docker vs Mesos, Windows vs
| Linux, Intel/AMD vs ARM, S3 vs MinIO, Symbian/iOS vs Android,
| Plaid vs Moov.io) and because of the Interwebs, these FOSS
| solutions will be found and a community will develop around it.
| It is almost inevitable.
|
| I'm not an investor, but one should definitely invest in FOSS
| companies with _proven_ tech because they attract the most
| precious commodity of all, developer mindshare. I 'm sure FOSS
| companies will discover newer ways to make their businesses work
| (like GitLab and HashiCorp with "buyer-based open core"), and
| blueprints from the past are already available (especially, in
| terms of what not to do; looking at you, Docker). Despite what
| they may say about BigTech stealing their thunder away... I think
| it is mostly down to FOSS companies digging themselves into a
| hole.
|
| Source-available licensing is a compelling alternative, but I
| hope the community rejects it, because such licenses don't seek
| to truly benefit the overall software ecosystem rather only
| merely appear to do so, and that's why I hate those.
|
| Required reading:
|
| http://dtrace.org/blogs/bmc/2018/12/14/open-source-confronts...
|
| https://www.gwern.net/Complement
|
| https://blogs.apache.org/foundation/entry/the-apache-way-to-...
| hobofan wrote:
| Yes, open source gives you developer mindshare, and cheaper
| hiring, but both of those mean squat if you can't monetize well
| (and most open source companies I've seen don't).
| bitwize wrote:
| Let's face it, a tech company's most important resource is one
| of two things:
|
| * its IP
|
| * the data it's collected on its users
|
| The first precludes open source within the company's core
| competencies. The second makes the company a place where
| talented, morally decent engineers wouldn't _want_ to work.
| jrochkind1 wrote:
| There's possibly "companies with FOSS products" that arne't
| "FOSS companies".
|
| For instance, I know people that work for heroku that work on
| open source (and are primary maintainers in some case) on
| company time -- but heroku is obviously not a FOSS company.
|
| Or, in a comment below jedberg says 'At Netflix our ethos was
| "if it's involved in infrastructure, open source it, if it's
| related to movies, keep it closed.' -- nobody would call
| netflix a "FOSS company".
|
| In the original wave of open source, this was the position of
| _most_ contributors to open source I think. Work on a thing on
| company time that helps the company achieve it 's
| goals/business, but is not the main focus of the company.
|
| This seems to be less and less the case. Because companies are
| more ruthlessly focused on the bottom line, and don't think
| they can afford to have anyone working on something they don't
| own or that might help a competitor? I dunno.
|
| But this change has a lot to do with the current apparent
| sustainability problems in open source.
| ThrowawayR2 wrote:
| > " _the most precious commodity of all, developer mindshare_ "
|
| Reading the above reminds me of a not too long ago news story,
| titled "An Influencer With 2 Million Followers Couldn't Sell 36
| T-Shirts":
| https://www.cosmopolitan.com/entertainment/celebs/a27623334/...
| ignoramous wrote:
| If we are cherrypicking examples, here's one from the time
| when Cisco opensourced a router's firmware because GPL,
| "Linksys continues to earn millions of dollars per year
| selling an 11-year-old product without ever changing its
| specs or design... That product really is what made the
| company." https://thenewstack.io/the-open-source-lesson-of-
| the-linksys...
| madmax96 wrote:
| Microsoft acquired GitHub for $7.5 billion. How much is GitLab
| worth?
|
| How much money has Microsoft made selling Windows vs Linus off
| Linux?
|
| How much money does Apple make off iThings?
| [deleted]
| alfonsodev wrote:
| $6B, It's not so far behind[1] and that before exiting, and I
| don't know how much founders retain vs GitHub founders. But
| what if would be less, not everything has to be about market
| valuations.
|
| [1]https://techcrunch.com/2021/01/15/gitlab-
| oversaw-a-195-milli...
| grayhatter wrote:
| Correct me if I'm wrong but GitHub was first, and has more
| users.
|
| Given that GitHub is more popular, I'd suggest the only
| reason we know about gitlab is because its open source.
| ThePhysicist wrote:
| For standalone software like databases or CLI tools AGPL isn't an
| issue, if legal departments would object against using such
| software those companies couldn't run Linux/GNU tools either. For
| libraries it's a different story of course. The other points are
| mostly true, I think if open-source is just a marketing strategy
| to you it's not worth it.
| the-dude wrote:
| Uhh, wasn't this what the Elastic license change was all about?
| EGreg wrote:
| _The ratio of failed OS businesses to successful ones is worse
| than in prop-tech; revenue kicks in much later, business model
| pivots are hampered by community resistance, and licensing issues
| leave OS businesses vulnerable throughout their lifetime.
| Instead, why not do what traditional businesses are doing, sell a
| product, and simply charge for the value it provides?_
|
| Why not? Because when your project gets so big that lots of
| people rely on it, it would be better for the world to remove the
| private property restrictions, allowing fixes and innovations to
| come from anywhere and be distributed as widely as possible.
|
| The question should be asked the other way: _why not make it open
| source?_
|
| You see, all the objections here come from a capitalist mindset,
| which is based on private ownership and competition. "I built it
| so I own it." That is how we ended up with a feudal society
| online, where conservatives are complaining they're being
| silenced, where bulk collection of everyone's info is possible in
| one place, where rents are being extracted from the ecosystem.
|
| The alternative is collaboration with no private ownership of the
| platform. (Note that this is NOT socialism.)
|
| Linus Torvalds launched Linux, Tim Berners launched the Web,
| Vitalik launched Ethereum, but they don't "own it". And it is
| precisely because there is no private ownership of the whole
| platform, that they have led to an explosion of wealth and
| utility for the entire world.
|
| "Business models are incompatible with open source". Well, sure.
| Rentseeking behavior gets harder when the platform is
| permissionless. But what has led to more value for the world:
|
| AOL or the Web?
|
| Internet Explorer or Chromium?
|
| Britannica or Wikipedia?
|
| Windows or Linux, BSD (including MacOS and Android)
|
| Alchemy or Science?
|
| This is a _mindset_ issue in our culture. In current society the
| vast majority of people are living paycheck to paycheck, so they
| would love to escape this precarious situation. They take jobs
| because they pay, not so much because they like the project. When
| they do get financially independent, they keep going and going,
| trying to make more money and become a capitalist. And we all
| support these few people who "escaped and made it" by ensuring
| that their intellectual private property rights are enforced and
| their business models are enabled in our society (RIAA, MPAA,
| etc). In a society where everyone has UBI, people would work 20%
| of their time on stuff they like - science, open source,
| religion, hobbies, raising children etc. And projects would
| attract people because they are awesome and useful to many
| people, and because they can contribute something that others
| need.
|
| Each small contribution to the gift economy costs very little,
| and there is no limit on the remixing and reusing of effective
| solutions. Private property is all about adding more friction to
| this permissionless model and excluding the rest of the world
| from using a resource and building on others' discoveries. When
| Isaac Newton said "if I saw further, it's because I stood on the
| shoulders of giants" he didn't rent those shoulders. He wasn't
| sued an a SWAT team didn't break down his door. Isaac Newton
| wasn't in pharma.
|
| If I sound like some kind of communist, liste to the venture
| CAPITALISTS who fund the future and see where things are doing.
| For example read https://worldaftercapital.org by venture
| capitalist Albert Wenger general partner of Union Square Ventures
| to understand where we are headed as a society. And read their
| latest 3.0 thesis.
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