Ask HN: Are there startups that went open-source and succeed? | Hacker News Reader

Ask HN: Are there startups that went open-source and succeed?

67 pointswonderingman59 comments

Here is where we are:

We have a valid product, paying customers, Currently $50K MRR and we are growing.

We have competitors, they are bigger, got huge investment rounds (we only got small seed round from friends), yet we have a better product. Much better!

How do I know? Customers, customers who left them, told us clear and simple. This product is far beyond what we have had with A and B.

Now, A and B are strong with PR, most of it are exaggerations (typical to PR), one even get to post almost every week at HN's front page.

To really really beat them, we will need to inject some cash and start the PR channels, conference attending and spend a lot of time in marketing. I hate doing that. I am happy to develop the product. Very happy to meet customers and present the product, and strongly convinced the world deserve to know about our product.

Open sourcing will make the product better, will make it well known and might even speed up our growth.

I will be happy to see companies that started as closed source, then went open source, and succeeded.

Got some examples?

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>> To really really beat them, we will need to inject some cash and start the PR channels, conference attending and spend a lot of time in marketing.

So far so good, standard business stuff.

>> I hate doing that.

Here lies the problem IMHO. To make your business a success, you need to do stuff you don't necessarily like, enjoy or are familiar with.

You think of "open sourcing" as a lazy marketing channel that will keep you in your comfort zone. It doesn't work like that.

You could either find a co-founder or hire someone to handle that stuff. Or, you could suck it up and do it yourself.

Completely agree. Open sourcing isn't going to help a business when the business owner doesn't want to do business stuff.

Exactly this

This is not a job anymore. It is a company. Your company.

You have to take care of every single aspect. Including toilet paper

"You could either find a co-founder or hire someone to handle that stuff."

That is the correct answer.

It would depend on your definition of "succeeded", but Docker (formally dotCloud) made a great transition after releasing docker and just raised a very nice round of funding.

"In 2013, recognizing the need for flexible, PaaS-like environments inside enterprises and across clouds, the company released much of its PaaS container technology as the open source Docker project. Docker is an open source engine for deploying any application as a lightweight, portable, self-sufficient container that will run virtually anywhere. By delivering on the promise “Build Once…Run Anywhere,” Docker has seen explosive growth, and its impact is being seen across devops, PaaS, and hybrid cloud environments.

The success of the Docker project led the company to change its name from "dotCloud, Inc." to "Docker, Inc." in October 2013 in order to reflect its focus on the new product. Docker, Inc. continues to run the dotCloud Platform, supporting thousands of containers running applications for a wide variety of businesses."[0]

[0] https://www.dotcloud.com/about.html

Yeah, Docker seems to be more popular than dotCloud ever was, but do we actually know how the pivot affected their finances?

Your product is already succeeding. Why do you think open sourcing it will make it more successful? Are you sure you can make an open source project bigger than your company?

Why do you think these competitors matter if their own customers are telling you they're shit and you're great?

Why does HN matter to your startup? Are you sure it matters to theirs? One simple way to tell - do your competitors get on HN with stories about being a startup/engineer, or is their product itself interesting to HN? If HN isn't the best source of your customers then it shouldn't be a factor in any decisions or marketing/pr.

What about these conferences - are they closing deals and making money at these things, or are they just spending on them?

How about leveraging their marketing? Let them find unsatisfied customers and poach them straight from hn/twitter/linkedin/facebook/anything you can find.

>Open sourcing will make the product better, will make it well known and might even speed up our growth.

Open source by itself won't do any of those things.

The question is, what advantages would being open source give you over remaining closed source? Whether it is open or closed, you still have to do the promotion to make it well known. If you go open source, does that automatically mean you will open the development process as well, and if so, you'll have to consider the process by which you accept changes into your product, IE: will there be an open level and then a supported "commercial" one, for example? how will you build a team of community supporters?

Yes, there are obviously examples of open-source success in the world, but it isn't clear from your posting whether there is a strategic advantage or not.

At the moment, no examples of start ups which started as closed source and went open, come to my mind.

However, there are a few open source startups out there which started open from the beginning, such as Drupal or WordPress. You could also have a look at NewsBlur which got some traction after Google shut down Reader.

Whether or not being successful depends on a few things:

First, will open sourcing really make the product better? From my experience people tend to overestimate the capabilities of the open source community. This community does not translate to "legion of free developers at your disposal" but require an proactive engagement and community management. Are you well prepared for that?

Second, the nature of the product and the audience: If you're selling server software, for example, such like RedHat, there will be those "private" and "small" users which take your product and use it on their own. But there are also corporate users who will buy SLAs and first and foremost want someone to blame for things that are not working. Second, there are products who benefit from centralization. NewsBlur for example may less valuable for individuals if it would not provide a "hosted service". The same goes for Facebook. Their asset is more the user base than the technology (even if that's, of course, also a huge stack).

Third, what is your "open source strategy". There are companies like Pentaho or Alfresco which offer an "open core" and sell additional features for that. I would consider that more as closed than as open source, in some way it is a bit like a "demo version".

I would love to hear what you've build so far, because open source in a commercial environment is a topic of interest for me.

LiveJournal and Reddit both started as closed-source and went open, and it didn't kill the company. Both were already succeeding, though, so it's hard to tell whether open-sourcing their code actually helped them.

Netscape open-sourced their code as Mozilla when they started failing. Again, it's hard to tell causality, though - did they fail because they were so distracted by open-source that they couldn't react to IE? Or did they fail because the Netscape 4.7 codebase was so bad and their resources so constrained that they couldn't react to IE? And does Firefox, born out of the open-source effort, count as a "success" because it grew out of Mozilla and finally broke Microsoft's monopoly, or a failure because it was eventually eclipsed by Chrome?

Is Reddit really open sourced?

The code is [0], but I don't think the data is.

[0] https://github.com/reddit/reddit

Wow I didn't know that, thanks

For the most part, yes.

Repository: https://github.com/reddit/reddit

yes, except for things like spam filtering and voting ring detection, which they keep closed source to prevent gaming.

I don't know about LJ, but I get the impression that Reddit released the source just out of the desire to be "good OSS citizens", and not out of any hope that it would directly benefit the company. I would be surprised if they thought it had a measurable positive impact.

To echo some sentiments already voiced, open sourcing a product is about more than simply publishing your source to Github. It is about building a community around that source code to evolve the product. Contributions can take many forms such as code, defect submissions, documentation, testing, etc. This community drives conference attendance, on-going media attention, and, most importantly, your company actually gaining market position from an open source strategy. Building such a community takes a fair amount of time and effort. Very few spring up like Docker. If you are committed to the long haul of building such a community then you could gain a tremendous amount. If you are expecting to simply publish the code and get immediate and long-term PR from the act of your company working in a public repository, then I think open sourcing will not only fail to meet that expectation, but likely be a critical distraction for your company.

xara is a good cautionary tale along those lines - they open sourced what from all accounts was a very nice vector graphics editor, but it languished for want of active community management from the company.

One huge problem with Xara's "open source" move was they kept a critical element closed source:

"Xara and the volunteer developer community disagreed from almost the very beginning about a crucial issue: the company's decision to keep the application's core rendering library CDraw closed source. The developers said time and time again that a half-open, half-closed application was a dealbreaker."[1]

[1] http://archive09.linux.com/feature/119790

If you do any such thing you can't expect open source to work for you.

ah, missed that! for some reason i thought they'd eventually given in and opened up the CDraw code.

Define "succeed".

Anecdote time. The last open source company I dealt with worked in the big data space. They messaged themselves as a product company and listed 3 products on their page.

I was working for a company providing client tools and we were teamed together by a larger System Integrator on a contract proposal.

While working with them I got curious about their product (hey, maybe someplace cool to go work someday).

The conversation went something like this:

   Me: So you guys have some impressive software, you must have a heck of a dev shop

   Them: We do. The good news is that we got a nice head start using some open source stuff, hadoop, etc.

   Me: Oh. So what bits did you guys make?

   Them: Well we made this (points to web accessible management console) and did the glue work to pull together the open source bits

   Me: Oh. So is your value proposition then that you guys have tightly integrated this technology stack and...

   Them: *Right* and provide the technical expertise to run it. (sits up proudly) and all the work *we* did has been open sourced as well (goes to their github page).

   Me: so....if I were a customer and I bought x amount of product A from you, what exactly am I getting?

   Them: you're getting the integrated stack and our expertise and support.

   Me: Support available by contract?

   Them: Right.

   Me: So let's say I'm the customer...what's to prevent me from just downloading and compiling all the source code for your stack and your glue and just poaching a couple of your guys and saving myself a few million dollars in FTE hours?

   Them:Well that's highly unethical...poaching our people

   Me:okay, or I find a couple really good guys on most of this stack and give them 3 or 4 months to come to grips with it and your glue...same thing...what's your guys' value proposition to go with your company instead of just doing that?

   Them:...

They sold to another company a few months later and I've heard it was mostly for the customer contracts they already had in place. I'm not aware they were ever profitable or on a path to profit. Great success?

My point is, you have to really consider this kind of line-of-questioning and put together a rock solid value proposition to have a chance at succeeding. Because why pay you for whatever when I can get it free as in beer and use my own people who I'm already paying for?

I am a bit biased, being the founder of a startup whose products are all Open Source. BUT... nonetheless, I'll say that I don't necessarily think that going Open Source is going to be a magic cure-all for you. And it could make things worse, depending on may details.

Remember, Open Source really is more of a development methodology than a business model. And being Open Source doesn't obviate the need to think about marketing, advertising, sales, etc.

If you wanted to go the OSS route because you believe in OSS ideologically, or because you think it's a way to make the world a better place, I'd wholeheartedly say "go for it". But if you want to do it just because you don't like marketing, I'd say you should consider giving the whole thing some more thought.

Basically, what d0m said is pretty much dead-on, IMO.

There is an entire movement about open companies, among them

https://assembly.com/

https://gratipay.com/

https://www.balancedpayments.com/

Something to think about: a proprietary program can be delivered to its users such that they have the source code. It is "open" to the licensed users who purchased the program, but not redistributable. The license can allow those users to form a community for sharing modifications to the program with each other. "Open source" doesn't necessarily mean slapping a GPL or BSD on it and blowing it out the door.

In The Mythical Man Month, I seem to recall that Fred Brooks called a program without source code to be "incompletely delivered"!

The idea that proprietary programs are only given to users in some hard-to-modify mangled code, byte code or machine language form is not some axiom of the proprietary software business.

'"Open source" doesn't necessarily mean slapping a GPL or BSD on it and blowing it out the door.'

Your broader point - that it is possible to provide source and still keep the software proprietary - is a good one, but as most people (including the OSI) use the term "open source" does necessarily mean "not proprietary":

http://opensource.org/osd

That's just the definition of "open source" by some people who have an agenda and want to hijack the language for their own use; I will buy it when it appears in the same form in Merriam-Webster or Oxford. Until then, "open source" is purely a compositional compound noun in the English language that is understood by combining the meanings of "open" and "source". Open doesn't say anything about non-proprietary. If you're taking an "open book exam", that doesn't mean that the book comes with a license that allows unlimited photocopying for all your friends. If you "open up" to someone, you aren't publicizing your life to the whole world. If all the users of a program have the source code, or easy access to it, that source is open. If he program is proprietary, then perhaps some of those who have the source code are unlicensed users. They still have the source code, and it is still effectively "open source" to them too.

And in the context of some programming language that has no binary code, would you even continue to use the term "open source" and "closed source"? Could some uncompiled, unobfuscated script that is sold to users under a license that prohibits redistribution be called "closed source", when it is delivered in properly indented, well-commented code with meaningful identifiers?

Richard Stallman builds a good case for avoiding the term "open source" when referring to free software.

http://www.gnu.org/philosophy/open-source-misses-the-point.h...

Hey look, like me, he recognizes the "obvious meaning" of the term:

RMS> "Since the obvious meaning for “open source” is not the meaning that its advocates intend, the result is that most people misunderstand the term."

I don't agree with Stallman on this point, though: those people are English speakers who understand the term. They just don't understand how those advocates are using it, which is their fault: they are not communicating effectively.

RMS> "Open source supporters try to deal with this by pointing to their official definition, but that corrective approach is less effective for them than it is for us [advocates of 'free software']."

This is inane. I wasn't making any claim to a "true" definition; just pointing out that it is manifestly the case that using it that way is going to confuse a lot of people - including, I think, most programmers. If you intend to reclaim the term , it's best to explicitly make plain that you are doing so.

Edited to add:

And, as it happens:

http://www.merriam-webster.com/dictionary/open-source

"of software : having the source code freely available for possible modification and redistribution"

http://www.oxforddictionaries.com/us/definition/american_eng...

"Denoting software for which the original source code is made freely available and may be redistributed and modified."

Note that both of these include that redistribution is permitted. So, um, buy it.

Bought.

They adopted that surprisingly fast!

Interestingly, both dictionaries recommend that it be hyphenated as open-source.

"They adopted that surprisingly fast!"

Heh, it's been around much longer than "tweet" (in the sense of posting two twitter) or "sexting", which have both apparently made it in.

Sounds like you should sell the product to someone that wants to do the business side of things, and stay on as the head of product development.

It is doubtful to me that open sourcing it will make it well known unless it is a technical product and your customers are developers. Do your customers care if it is open source? Most people selling Asterisk installations never explained to the customers that technically the software was free. All that will be accomplished is that someone who likes marketing & PR can pickup your work and create competitor D, that has everything you have, but with someone that likes to sell. Better to get that person on your team after they pay you some money.

> To really really beat them, we will need to inject some cash and start the PR channels, conference attending and spend a lot of time in marketing. I hate doing that. I am happy to develop the product. Very happy to meet customers and present the product, and strongly convinced the world deserve to know about our product.

Why would you compete directly against their strengths? It doesn't sound like you can outspend them. Play by different rules. Focus on being more creative, more targeted in your customer acquisition, more focused in your messaging, more good.

I'd also consider ways you can outsource components of your codebase instead of the full thing.

Open sourcing doesn't necessarily mean the product will get better. There are often "fights" in the open source community, and you could spend a lot of time discussing what features to add or not add instead of implementing them. (This of course all depends upon the method in which you open source the project/product.)

If you like developing and dislike marketing, use some of that $50K and hire a marketer. You don't necessarily need lots of money to market, it just makes it easier. For example, you probably missed a good free marketing opportunity by not mentioning the name of your company or your site in this post. Try and find someone to help you become a bit more clever and tactical in your marketing efforts, and it will probably pay off much better than open sourcing. My $0.02...

NewsBlur[0] is open-source[1] and seems to be doing well.

[0]: http://www.newsblur.com/

[1]: https://github.com/samuelclay/NewsBlur

One of the early success stories of an open source SaaS product was Alfresco.

For them Open Source was a strategic advantage because it short circuited the usual enterprise sales process.

That is, their competitors in the enterprise CMS space most had very long sales cycles and highly paid salespeople to get in to companies just to do a pilot project... and meanwhile some engineer could just download and deploy Alfresco to show it did what it claimed, before the other project even got off the ground.

Upshot is that Alfresco pretty much had a full inbound sales pipeline for support contracts and their 'value added' version, and consequently higher margins.

Is your product aimed at enterprise customers?

Matt Asay interview that expands on this point: http://www.networkworld.com/article/2294068/lan-wan/selling-...

Summary: http://openlife.cc/blogs/2007/august/matt-asay-alfresco-busi...

Note: These are from 2007, and these insights about enterprise open source products and sales aren't unique anymore.

A lot of companies seem to be using this model quite well. DataStax, Couchbase, Cloudera etc.

Didn't those companies start with the open-source then build a company around it? As opposed to starting out closed then later open-sourcing?

Yes, that should be pointed out. But I don't know if that situation is different enough to make those companies irrelevant.

Yep - and I agree that's a very different scenario. They didn't (necessarily) open-source the product because they thought that would be the game changer, they saw a market connected to the project and looked at how to fulfill that market's needs.

Downvoters care to explain any disagreement with what I said or how I said it?

The ArsDigita story is interesting.

http://waxy.org/random/arsdigita/ might be the best textual source on the web, but if you can rustle it up (download link not working for me), Greenspun's IT Conversations interview is a good listen:

http://web.archive.org/web/20130729213414id_/http://itc.conv...

I don't see in any way how exposing your IP will make you bigger.

You say that your competitors are better at PR. Have you analyzed your growth and PR strategies?

What is your competitive positioning? Are you cheaper? Are there fundamental technological advances that you have that make you innately better?

Here is a cheat sheet that is sort of the standard when it comes to competitive strategy: http://en.wikipedia.org/wiki/Porter_five_forces_analysis

If you want to go the route of improving marketing, I'd suggest https://training.kalzumeus.com/ and associated links as a first cut.

That may not totally apply and you may be in a situation where you could easily justify hiring, depending on the income of the business, but it'll start you down what's probably a much better path than you're on now.

I know it's frustrating to ask how to do X and get told about how to do Y. However, I will say this: You describe some problems, then ask if open sourcing will work, and to be honest, I honestly have no idea why you think that problems connects with that solution. The average open source project crawls in a corner and dies. I think you'd be trading some admittedly long odds for some much longer ones.

Sleepy Cat Software, the makers of Berkeley DB, went on with a fully open-source model for 10 years until getting acquired by Oracle in 2006. They however started the company around an existing open-source product, so it may or may not be relevant to your case.

[0] https://en.wikipedia.org/wiki/Berkeley_DB

There are a shitton of companies that are open source and don't succeed. Do what you're comfortable with. Are you more excited to nuture and manage a community rather than do marketing stuff?

Also, if you've stolen customers, and your marketing is non existent, then maybe you should just fix your marketing and not radically change your business model.

$50k MRR and growing sounds like you're in a position to pay the salary of someone who actually likes marketing and PR.

Open-sourcing the product is only going to help it grow in very specific niches, and open source projects often succeed because someone behind the project is very good at marketing and PR.

Instructure (the guys behind the LMS Canvas), are pre-IPO.

https://github.com/instructure/canvas-lms/wiki

http://www.instructure.com/

Open source is a different business model - you won't be able to do SaaS and open source at the same time. You could try open core where open source would be your marketing channel, this one works - e.g. Talend or RedHat.

> Open source is a different business model - you won't be able to do SaaS and open source at the same time.

Open source plus pay us to have a supported, hosted, managed installation doesn't seem impractical. Obviously, there is a challenge in that the code isn't "secret sauce" and you have to provide adequate value in terms of support/hosting/management to justify people not hosting it themselves, and open source means that a competitor can use your code to compete with you -- so you have to compete on the value of support/hosting/management or risk competing on price alone -- OTOH, the fact that they can host it themselves or have someone else host it, if you have a usable outbound migration facility, also mitigates lock-in risk of your paid service, and may be a value to some customers on its own.

> Open source plus pay us to have a supported, hosted, managed installation doesn't seem impractical.

That's the wordpress.org + wordpress.com model. Seems practical enough. Successful even.

What kind of product is it? If this is a SaaS application, I would not recommend open sourcing it.

If you are shipping software that runs on client hardware (e.g. a database) it might make sense.

I'm not sure if you would consider it a startup anymore, but:

https://github.com/mongodb/mongo

--- Thank You ALL ---

Reddit started out proprietary, and then became open source. Of course, their community is necessary for a site of that type to succeed.

How about Netscape? I think they've been reasonably successful with open source development and foundation governance.

it seems to me open sourcing means more risks than upsides. Can't you raise funds based on your growth/customers and hire someone who will make the PR you hate? Sorry for not answering your question :-) +1 for the Docker example below

https://getsentry.com/

codecombat went opensource and this accelerated the growth. http://blog.codecombat.com/uid/137237

How is the commercial arm of Nginx doing? Nagios?

github.com is mostly open source.

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