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Comment by PaulDavisThe1st | Hacker News Reader

"Profit" is a strange and ambiguous term here.

I've been running an open source, libre project for closing in on 24 years now, and generating revenue from it for about 17 years. There's never been any "profit", but there has been revenue.

I regard profit as what's left of the revenue after you pay the people who work on the project and any expenses, which is the way most corporations and accountants would view it.

The only sort of open source project that needs "profit" defined this way is one funded by a capital investment of some kind, where the investor expects a "return". While there are some open source projects that fit this description, the vast majority do not.

Also, as is typical for things linked from HN, this whole article seems very web-y and SaaS-y. There are other kinds of open source projects, believe it or not.

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The article is talking about businesses being on Open Source foundations, not the myriad of other possible Open Source projects.

In that context profit is what's left once revenue is received and expenses paid.

Implicit in those expenses are (fixed) salaries, employee contracts, payslips and so on.

What a business does with the profit can be varied. Firstly it can be added to cash reserves, which can contine to pay expenses through poor-revenue months. It might be spent on assets, like new hardware. It might allow for another hire. In some cases, although less often than you might think, it pays out dividends to owners.

You don't mention too many details, so I can only presume your situation. I suspect it's a different kind of setup. If you are man-alone, and the project is small, (ie you have no desire or need to add a employee) then basically the revenue is just income to you. Some months you get more, some months you get less. In this context there isn't "profit" but revenue. This is especially possible for software where other overheads are trivial and the effort of tracking expenses for tax purposes meaningless. You may not even keep a set of books.

If you are indeed in this space, then I understand why the article feels unrelateable. It's discussing a very different situation.

As with all articles of this nature, context is important.

TFA said:

> To be clear, I’m talking about open-source projects that compete with popular paid solutions.

[ ... ]

> Excluding non-profit projects that are sponsored by donations or parent organizations, a typical open-source business needs profit to be the ultimate north star.

So, I think you've somewhat misinterpreted the space the author thinks they are referring to.

Ardour is a small project in terms of man-power - 2 full time paid developers, other individuals paid for media and other work, various commercial collaborations along the way, certainly dreaming of being able to use more paid development hours. We absolutely compete with at least a dozen popular paid solutions, with at least 3 on Linux alone.

The main reasons I think this article feels so unrelatable to me is (a) it's strange focus on profit (b) it's web/SaaS centric nature (c) it's B2B centric nature. It just doesn't have much to say about the "space" of writing native/desktop applications for individuals involved in creation workflows, free of VC influence.

Hi Paul, I've been a long time user of Ardour and would love to send some bread your way, but I'm absolutely allergic to Paypal, is there a way for EU users to send you funds directly via SEPA or something like that?

Sorry, there's no way for us to interface with SEPA at this time. It would not be that hard to setup a way to just receive money via SEPA (probably using Wise's multicurrency account system), but integrating it into the rest of our payment system would be gigantic, because of the totally different interaction model inherent in SEPA-based transactions (i.e. a bank would have to notify us of a payment). While I'd love to do this as a matter of principle, we think it better for our users that we focus more on features and bugs in the software.

We explain why we use PayPal over here: https://ardour.org/faq.html#why-paypal

People complain a lot about PayPal (especially on HN), but I have yet to see a viable alternative especially given (a) my status as a US citizen (which makes it harder to bank elsewhere (b) micropayment fee structure (PayPal is unique in offering something that makes $1 payments somewhat viable (saving around $0.25 per transaction, and there are LOT of them). The other well-known payment processors do not have the footprint nor the features that PayPal offers.

That's understood. I've sent you a mail.

FWIW that link didn't work for me seems the anchor tag is #paypal

https://ardour.org/faq.html#paypal

I am kind of amused to see someone here on HN, of all places, who allegedly runs a business use scare quotes around the word profit and make it sound like there's something ambiguous about it.

Is the word "allegedly" meant to cast doubt on the story? The user mentioned working on "Ardour" in the comments, and it wasn't hard to find what he was talking about from a quick Google search that led me to Wikipedia [0].

I think the quote marks around "profit" are appropriate here because the comment was about defining that specific word.

[0] https://en.wikipedia.org/wiki/Paul_Davis_(programmer)

Allegedly because I don't have time or interest to check it, and because if you're running a for-profit business and you need someone to clarify for you what profit means, I feel like there's something weird going on.

There is, but it's not where you think it is.

That's the guy who runs Ardour. It's a fundamental DAW on Linux, as familiar as Excel on Windows: it is the foundation of Harrison Mixbus. He's also fundamental to the JACK audio subsystem. It's possible you've heard of him as one of the two first programmers at Amazon.

His objection is mighty valid, here. You cannot say profit is a basic principle of open source. The whole point of open source is communication of ideas in the form of software and the ability to reformulate those ideas freely, leading to an empowering of communities of software users and the ability to DO THINGS.

That's the point. Making wealth for individuals isn't in the equation.

Fair enough, but saying ""Profit" is a strange and ambiguous term here." is bonkers regardless. It's not strange nor ambiguous, anyone reading this post should know exactly what those terms mean and the way an open-source company trying to make money would use the term. Whether you find it obscene or whatever that people want to make profit off open source seems like an unrelated discussion: profit is a basic concept everyone understands without ambiguity.

"The only sort of open source project that needs "profit" defined this way is one funded by a capital investment of some kind"

I guess this is what you chose to refer to... this is also a really weird take. The author finds himself in a position to define who needs profit and who doesn't because he's been participating somehow in open source for a few decades?! The OP's point seems much stronger to me, as they say something like "if you intend on growing and paying people to work on open source" you need to make a profit. If there's an argument against that, saying "you don't need it" is not at all a good one.

> Making wealth for individuals isn't in the equation.

So open source is only for people who are already wealthy enough to not need to make money? If you accept that working on open source is not feasible if you cannot make a living off it, and that you won't do it just for fun after day job, then you really should rethink this.

>So open source is only for people who are already wealthy enough to not need to make money

In practice, yeah. Counts for me: I inherited enough money to develop the world around my open-source work, though I began that work while I was still extremely poor.

Understand that what 'need to make money' means to a Silicon Valley tech bro, is one hell of a lot different than what it would mean to a normal person. If you live in a place where the cost of living isn't impossibly brutal, if you are willing to accept that if you get sick you'll die unless you are lucky enough that government healthcare comes through for you, if you're prepared to leave nothing behind you (like a Terry Pratchett wizard, dying drunk, happy and owing vast sums of money), then there is much less stopping you from getting into open source.

It's a bit like the music business, really (which I also work in, by virtue of my project). If you can afford to persistently do the work, you get to live the life and in the long run, be the guy who's done the work, to whatever degree of recognition that gets you. I know numerous sound engineers who've blown a fair bit of money doing it, and have no great financial security, but they were in the room when the magic happened, and when the echoes die away in the live room that's what they cared about.

When you die, your bank account is just numbers. I suppose you might want to arrange that it then does something. You could also do something while you're alive, and be there to see it.

Making wealth for individuals isn't in the equation… except when they're predatory vampires there to suck wealth FROM those who do the work. Being in the music business naturally I know about those stories. I'm given to understand this happens in Silicon Valley, and open source, too ;)

What's your project?

I'm Chris from Airwindows.

I've recently done a bunch of work on extending what's possible in slew clipping and slew softclipping, and I'm about to do my level best to provide legit big-analog-console sounds ITB as open source free software: that is through minimal but unorthodox DSP to target the end state of the sound rather than putting up GUIs and then using traditional DSP to imitate every last analog step in the process.

A recent milestone is Console Zero https://www.youtube.com/watch?v=rDAZTEUtSpk which is a bit of a radical experiment in applying only such mathematical calculations that preserve the mantissa of the floating-point value being worked on (where possible). This led to a 'switched' panner with a completely different (or absent!) pan law, in which every pan position retains the mantissa of the audio word, for an LCR-like effect where you also get a mid-right and mid-left position plus a whole array of increasingly hard-panned positions.

baconpaul from the Surge Synth project has helped me extend my codebase to things like VCV Rack support and is generally pleased with the relentless consistency of my code library (especially the VST2s which are all stereo and have no control variation beyond 0-1 inputs) and my ability to write notes and descriptions in such a way that he can write code to parse that and do things like bring all the plugins, INCLUDING what documentation they have, into a single package via elaborate scripting.

As a rule I put out a new open-source plugin under the MIT license every week. I am paid a bit over minimum wage by my Patreon, and if I didn't need or want to get studio gear to use and study, that would cover my cost of living handily :)

Hey Chris. Interesting HN nick :) Happy to be a Patreon supporter.

…wow. How'd you sneak in without me noticing?

I'm far from a Paul Davis, but if there's anything you'd like, let me know. Worst that can happen is I'll go 'I have no idea how to code that' :)

Profit has many meanings. The IRS considers my wages to not be profit to my company, but they are profit to me.

I could setup a non-profit that explicitly doesn’t aim to profit, but it does so by paying my very comfortably. Profit‽

This disconnect is what causes many businesses that are successful (they earn enough for expenses and rainy days) to explode and die when sold, because they don’t earn enough for all that plus interest expenses plus return on capital.

Your wages are not profit by any definition I've seen.

You arrived at an employment contract with your employer. The contract is an exchange of value: your labor for some of their money.

If you are being paid more than the price your employer could otherwise obtain your labor for, then I suppose you could call some of that profit. But that is rather unlikely. Your employer is buying your labor, and is almost certainly paying you less than the value (to them) of whatever it is you do for them.

It's certainly profitable to me to be employed, I get money. It's one way you can "profit" from an activity. You can also profit via other things, but it's a wider meaning of "profit" than the financial one.

And people do enrich themselves via that method.

I am aware of the colloquial english use of the terms "profit" and "profitable". But in the context of TFA, that's not the use we're discussing.

We would profit by focusing on what the author of TFA actually meant.

If the owners overlap with the employees, then what part of the revenue is divided between salary, benefits and profit is often a tax-optimization question, which I think is the point in the GP. A single-person company paying themselves 200k in yearly wages or 100k in wages and 100k in dividends from 200k in revenue can look like a “non-profit” or a high-margin company with the same effect for the owner.

> I've been running an open source, libre project for closing in on 24 years now, and generating revenue from it for about 17 years. There's never been any "profit", but there has been revenue. I regard profit as what's left of the revenue after you pay the people who work on the project and any expenses, which is the way most corporations and accountants would view it.

You don’t need VC’s to be organized as a corporation and/or have a growth/profit mindset

It removes a lot of pressure to not have pure investors expecting constant returns. Easier to do the right thing for the project.

But growth is likely to be necessary, and sensible, in any product space competing against ambitious corporations who are going to be strongly growth oriented.

Booking profits so you are prepared for downturns, opportunities, or large expenses isn’t just reasonable. The more people & customers involved, the more reason not to burn through all revenue as it comes.

The basic problem here is HN posters unable to conceptualize the idea 'right thing for the project'. They're stuck in 'investor mode' so to them, anyone interacting with the project (or the world) can only be interested in extracting profit from the system, rendering what the project does, meaningless.

Not a good way to get work done. At the end of the day you have to have done something.

My view, for ambitious projects likely to be in a competitive space, is that “right thing” converges in the long term for profit-seeking and non-profit-focused paths.

I.e. aim for maximum growth of happy customers/users in the long term to best grow and thrive in the long term.

Short term worries about quarterly growth can seriously inhibit long term potential. Often without this huge opportunity loss being recognized.

Alternately, a rejection of profit as healthy can limit the ability of a non-profit focused project from achieving more also.

The key is, aim long term, for best positive impact, then work back from that to now, and use all constructive positive-sum tools available.

That's fair. Good luck selling investors on this 'long term' thing.

Better to, like Bezos, retain control and COMPEL them to deal with you over the long term. That guy is somebody who understands the value of power over profit.

Never underestimate the amount of chaos a homo economicus can run into when they're dealing with a fanatic, a prophet, or a vindictive businessman with a taste for vengeance. You don't only need to worry about self-interested idealistic hippies. You might also run into someone who is able to take a position using open source against you specifically to undermine you, and who can take a loss if it's for the purpose of taking you out.

This too is 'long term' in a sense. I like your 'long term' better, mind you. I'm just saying.

Agreed on Bezos, for a long time.

Perhaps one reason he retired, is Amazon got so big he couldn’t see any more significant long term growth, relative to its monstrous size, without enshittification:

Extorting income from partners, using sales data from third parties to compete with them, forcing ads and a gamed search onto customers.

He could only (or only wanted to) hold off Wallstreet for as long as he had a better plan.

Other than staying private, with stakeholders who care about the discipline & rewards of only finding quality growth (even if that path isn’t always clear), I don’t know of a way out of that trap.

I am no hippie, but I don’t think public ownership has found the perfect structure yet. There must be a way to better incentivize positive sum-only games. Keeping individual company growth tied more closely with customer improvement.

I presume you pay yourself, so you rely on profit. The profit is nullified in the books but in practice it's no different than using the profit for dividends.

This runs counter to every definition of profit I've ever read.

You use the profit to pay your salary. You could choose not to, or use the money for other things. That's no different than any other company.

Money used for business expenses like salary is not profit. Profit is (roughly speaking) what's left over after you deduct all your business expenses from your revenue.

And if you don't take a salary that money becomes profit, so the profit is effectively used for salaries. Claiming my company is not profit-driven because I use 100% of the surplus revenue for my salary is of course nonsense.

Were your company (partially or wholly) owned by capital, there would almost certainly be different decisions made (in many different areas) because of capital's desire for a return on its investment. If you were lucky, capital would be interested only in long term value (i.e. eventually selling it, and making a profit on the stock at that time). If you were unlucky, all the short term decisions would be made with an eye to generating profit that can be returned to the shareholders as dividends. Either way, that scenario would be a "for-profit" company.

As it is, your company (like mine) is just trying to generate as much revenue as it can within whatever other parameters matter to you.

What would you call the difference between a capital-dividends-driven organization and one that only cares about actual revenue?

Profit is an accounting term, so ambiguous. To be actually clear, it would be useful to qualify it as "taxable profit" or "investor profit," for example. In practice, these are two unrelated numbers for most big companies. Each one is defined by who you are communicating to, and what the rules are for this communication.

You might also have "management profit," a catch-all term for unstandard & unregulated metrics. For example, A business graduates from "cash accounting" for tax and investor purposes... but it's still useful for the old management to track the old definition of profit. Maybe because habits. Maybe because it tracks cash flow or is useful some other way.

It's one of those pomo problems. The SEC, IRS or bank manager will not stand for "SEC Profit." They want "real" profit. It's like a naive local politician demanding to know what the hospital "really" cost the contractor.

Anyway.... like the SEC, IRS and such... author is using terms from their own perspective. When they say "Open Source does not win by being cheaper," "open source" specifically refers to an open source business modeled after MongoDB or similar. So yes, investors, growth goals and such are implied.

He clarifies himself on this point and there's no real point taking it into semantic growling.

Are you in the US? Do you report that revenue as personal income on your taxes? If yes, then I think it’s fair to call it profit (since you’re also presumably deducting expenses).

That's true if it is a sole proprietorship, but not if it is a corporation of some kind.

A corporation holds the profits (after expenses) on its books and they may (or may not) be distributed proportionally to shareholders. If it's not distributed, it is part of the value of the company.

Yes, sole proprietor, all revenue reported as personal income ... hence I consider it income.

It would be profit if I was organized as an LLC that agreed to pay me $X/year and took in $(X+Y) in revenue.

Like what’s your point really

Bikeshedding the meaning of profit.

Perhaps you think it is trivial. I don't. Open source has the potential to bring lots of benefits to society, but if coupled to a particular conception of what "profit" is and the way in which companies "doing" open source should relate to it, I believe that a lot of those benefits will be squandered.

Huh? “Profit” is not ambiguous, even in your business. It’s a value you calculate each year on Schedule C.

Positive income is profit. Negative income is loss.

I'd rather profit. :p

The Net Income you report on your Schedule C is your businesses profit whether you like to think of it that way or not. The opposite of this would be a loss where your business generates negative Net Income.

If you don't make profit, you are a non-profit organization, or at least, you should be. Companies of all kinds, including open source companies are for making profit.

Now you can make money running a nonprofit, by having the organization pay you, but few people do that, even in open source. Usually, you want your company to be worth something. A company often requires personal investment, and if you want to stop, you want to be able to sell the company and get some return on that investment, or at least, not lose everything. But in order to do that, you need profits. On a nonprofit, because obviously, you can't make profit, you can't get anything back from what you created.

In the USA, a 501c3 organization that sees revenues of over about $10k needs a fairly extensive board, officer insurance (to protect board members from claims about misappropriating funds) and other legal stuff. I considered this years ago, but decided that it was not worth the effort.

> On a nonprofit, because obviously, you can't make profit, you can't get anything back from what you created.

I do not agree with your assessment. I do not want the "company" to be "worth" anything. The software is the value, and in keeping with the open source license, the software is a gift to the rest of the world. There merely has to be sufficient revenue associated with it to allow people to work on it at an appropriate level. Profit and "value growth" is not part of the goal.

Ok, I don't live in the US, I didn't realize a nonprofit involved so much paperwork and bureaucracy. I shouldn't be surprised, it is a way to avoid taxes after all and governments like taxes.

But clearly, your goals are in the spirit of a nonprofit, and I think you are part of a minority.

You can be a non-profit and not a 501c3. A 501c3 is an exempt purposes non-profit, specifically "charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals."

That is how Wikipedia doesn’t have a profit while it’s CEO takes 6 figure bonus.

> Also, as is typical for things linked from HN, this whole article seems very web-y and SaaS-y. There are other kinds of open source projects, believe it or not.

You mean the rest of computing...

However little that is. What isn't implicitly a SaaS these days anyway? :/

What does being implicitly a saas mean?

Everything. Like e.g. my robot vacuum that I couldn't operate between 1600 yesterday and noon today, because the Internet was down and the robot insists on being able to talk with servers in China to be able to vacuum the floor. Same with my A/C and floor thermostats, except those at least have IR remotes or wall panels for local control.

Of course, I am operating all those via an Open Source HomeAssistant app, connecting to an Open Source HomeAssistant instance running on an Open(ish) Hardware Raspberry Pi. But all of that means fuck all, when the malicious vendors make a cloud server a required control intermediary. Despite all that Open Source, my home appliances are still run as a Service. That's one of many cases of what I mean by "being implicitly a SaaS".

Oh, yeah. There's a lot of iot webshit out there.

Worst thing is, you have little choice. In my case:

- There's approximately zero non-SaaS robot vacuums among the newer models. I gave up on this after a long search for something free of this insanity.

- With my A/C unit and thermostats, the brand and model choice was made by the people doing the installations. I'm not sure if there are non-cloud, network-controllable options anymore, and even if they were, I'd have to look for local HVAC companies that actually offer them.

- I spent much more time and money than is reasonable to have a fully-local networked baby cam, that doesn't leak videos to the cloud. Specifically, I had to buy a camera and two pieces of expensive network gear from Ubiquity (per HN advice, thank you), because that's apparently the only option in Europe (US folks have Amcrest), other than hacking something together from a spare Android phone, or webcams and Raspberry Pi. There's literally no other cloud-bullshit-free option I could find.

(The "baby cam" is at least made of professional, high-quality gear, so that's a silver lining, but I doubt normal people would be happy to spend €500+ just to keep the video stream in-house.)

Your browser. Your OS. Your video editor. Your DAW. Most embedded systems found around your home and workplace and transportation. Air traffic control. Scientific data analysis. Most video/computer games.

> Your browser. Your video editor. Your DAW.

I'll grant you those, though I've been hearing noise about DAWs starting to move to the browser. And, of course, you omitted image editing, which at this point is almost completely taken over by a small number of SaaS offerings (Adobe Creative Cloud, Figma, Canva).

> Your OS.

I'd wish. At this point Microsoft is, both explicitly and unironically, saying that Windows "is a Service". I literally saw that on a Win10 installer screen the other day.

> Most embedded systems found around your home and workplace and transportation.

Much good it does me if the control plane goes through a cloud server. See my other comment in this subthread.

> Air traffic control.

Hopefully, maybe, but I'm no longer certain of it. Web SaaS apps have been popping up in ground and maritime transportation for a while now, so aviation may be already affected too.

> Scientific data analysis.

That's cloud-dependent these days.

> Most video/computer games.

Most high-end video games are SaaS now. Even in single-player mode, as again, the vendor's servers are on the control path, and the game won't boot without at least acquiring a license from a server and checking for updates.

Just because it doesn't run in a browser, doesn't mean it's not SaaS.

SaaS does not mean "the software opens a socket and communicates with a server for brief portions of its runtime". It does not mean "cloud-based". It does not mean whatever Microsoft wants it to mean.

SaaS means that a substantial portion of the compute task associated with "an application" can only be completed via a server request (whether it's to initiate the compute task, or fetch the code that will run it, or some combination of the two).

> SaaS means that a substantial portion of the compute task associated with "an application" can only be completed via a server request (whether it's to initiate the compute task, or fetch the code that will run it, or some combination of the two).

Does "ask for permission to run local code" count? Then modern video games, and quite a lot of other software, count. Per your "initiate the compute task", my robot vacuum is fully SaaS.

> It does not mean whatever Microsoft wants it to mean.

What Microsoft means fits your definition, they're just taking a soft approach - Windows now constantly fetches new code from the cloud, they're just not forcing it to be a required dependency, should you want to turn this behavior off.

Also remember I called out software being implicitly SaaS, not explicitly.

Related: forcing people away from Windows 7. Half a year ago, my wife was forced to upgrade her perfectly fine Windows 7 laptop to Windows 10, which she actively hates, because suddenly, third-party software like Spotify begun refusing to work, showing instead messages to the tune of "upgrade to newer Windows or GTFO". Yes, it's not Microsoft doing this per se, but the effect is the same. Implicit SaaS is a software ecosystem problem.

I mean, you answered your own conundrum here. Profit is an overlay of Revenue, minus some other overlay. In this case, your profit is 1:1 with your revenue.

But you certainly have profit.

>as is typical for things linked from HN, this whole article seems very web-y and SaaS-y

Is there some sort of Hacker-er News that filters that stuff out?

It's not really a matter of filtering. Web and SaaS are interesting topic. But it is irritating and frustrating how many articles, and commenters, refer to web programming as the whole universe of software development.

> as is typical for things linked from HN, this whole article seems very web-y and SaaS-y

I see loads of variety in things linked on HN.

Profit is one of the least ambiguous term possible.

If you pay yourself 100% of your revenue as income you don't make any profit which is your choice.

Profit is needed to sustain periods when revenue decreases and to act when an investment is needed (for pivoting, adapting to evolutions in the market, scaling or whatever move the business has to make).

I don't see what is controversial here for a business, profit is like capitalism 101.

If profit was completely unambiguous, accountants wouldn’t have had to invent the word ‘EBITDA’.

The article rather ambiguously says:

> Profit is what allows the company to hire employees, grow, and sustain itself—it is quite literally what funds ongoing development

There’s a key distinction between reinvesting profits - using accrued money to develop or acquire capital assets that can grow the company - and expenses.

Cash used to ‘sustain the business’, ‘grow’ (increase sales) and ‘hire employees’, as well as ‘ongoing development’ in the sense of business development, is largely going in the ‘operating expenses’ bucket. It doesn’t come out of profits, it comes out of revenue and it reduces your profits.

But in the case of a software focused organization, engineering staffing costs and ongoing product development can absolutely be reinvestment into developing software assets - but with a lot of caveats.

So it’s certainly a little ambiguous for the original article to claim that all those things are ‘what profit is for’. Often they are preprofit expenses.

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