Business of Open Source: Oxymoron or Opportunity?

Presented at Equinix Metal virtual event on the Business of Open Source, Apr 27, 2022
How should you think about transitioning from a promising open source project to a viable business? In this session, Andy shares lessons from his journey in cloud native open source, navigating the challenge of nurturing a thriving project and community while building a value proposition that appeals to paying customers.

1. @andrew_randall Oxymoron noun a figure of speech in which apparently contradictory terms appear in conjunction e.g. the “business” of “open source” Opportunity noun an occasion or situation that makes it possible to do something that you want to do or have to do e.g. this open source project is really taking off; what a great business opportunity! or
2. @andrew_randall Hi, I’m Andy
3. @andrew_randall Five Steps to Open Source Success Write code Publish project Profit! Get amazing idea
4. @andrew_randall How to Succeed in Business 101 Value (> price) Payment (> cost)
5. @andrew_randall Product-Market Fit = Business Success Value (> price) Payment (> cost)
6. @andrew_randall The Open Source Transaction Value $0 Thank you very much
7. @andrew_randall OSS Project Success != Business Success PRs! Issues! Help me getting started! Enhancement requests! Urgent! Security alert! Outage! ! ! ! ? ? ! ☺ ☺ ! ! ⭐ </> ☹ Value $0 🤯
8. @andrew_randall Sponsorship == ☕ != Business Success
9. @andrew_randall Remember Business 101 Value (> price) Payment (> cost)
10. @andrew_randall Open source as an element of business Value (> price) Payment (> cost) Value $0 Project Product Some subset of user base
11. @andrew_randall Buyer persona != Project user persona Project Product
12. @andrew_randall OSS Product Strategies (1) Support & Consulting Services Proprietary extensions/ tools (open core) Hosted/SaaS ✔ Great learning opportunity ✔ Can generate meaningful revenue at early stage ✔ Adoption enabler ▪ Consulting hours consume time, don’t pay for OSS dev ▪ Scalability challenge ▪ The Renewal Conundrum ✔ Scalable revenue ✔ Effectively segment market ▪ Potential to confuse users ▪ Can undermine long-term project success ▪ Be clear where the dividing line lies ✔ Highly scalable revenue ✔ Stickiness ✔ Clear OSS differentiation ✔ Option of open core or pure OSS ▪ Easily replicated (unless you protect with closed features or non-free license)
13. @andrew_randall OSS Product Strategies (2) Support + Optional Proprietary Add-ons Distro / Branding Dual Licensing ✔ Enable customers to move from Open Source to Commercial solution at their pace ✔ Mitigates the renewal conundrum ▪ Must be clear and explicit to retain trust ✔ Keeps pure open source, while monetizing brand value ▪ Only ever really worked for Red Hat ✔ Get paid for less restrictive license – no additional product development required! ▪ Negatively impacts OSS adoption, perception, community
14. @andrew_randall The price of your open core is always $0 $0 $x Opportunity
15. @andrew_randall Phase 1: Project Community R&D: Heavy investment in project, community development S&M: Focus on building brand (eponymous/synonymous), dev advocacy, user relationships Credit: Ping Li, Accel (used with permission) Phase 2: Product Definition & packaging R&D: Maintain high level of community investment, steady ramp of product development S&M: Build pipeline (mostly from support requests), deepen understanding of buyer personas Phase 3: Profit Scale & go-to-market R&D: Maintain baseline community development, but really scale product investment S&M: scale sales org, lead gen machine, solution-oriented marketing
16. @andrew_randall
17. @andrew_randall Thank you 🙏 Kinvolk team site: https://www.kinvolk.io Open source at Microsoft: https://opensource.microsoft.com/ Andy Randall | Principal PM, Microsoft andrew.randall@microsoft.com