Sourcegraph is now open source

I tend to agree, although I probably wouldn't state it in exactly the way you have. Open core's main goal is to sell proprietary software using the open source version as a loss leader.

Having said that, I think there are some companies/individuals who truly believe that open core is a good way of funding free software development. I have even heard Bruce Parens claim that dual licensing is practically the only reasonable business model for free software. This was quite a long time ago (on Slashdot of all places), so I have no idea if he still feels that way, but I mention it only to point out that the issue is far from clear to a lot of people -- even those in the open source community.

Red Hat is almost unique in their business model and they are one of the very few companies who actively try to make money doing custom development contracts. I have argued many times in the past that people should look at what Cygnus Software did and try to emulate it. You may remember that Red Hat acquired Cygnus Software for $600 million and installed Michael Tiemann in various executive positions. Although Cygnus (after having taken VC money) ended up doing some open core work, they happily abandoned it after they were acquired by Red Hat.

I've asked the questions in my original post to several open source and open core companies (possibly most notably GitLab) and have received almost the exact same answer from each of them. I'm hoping to receive an answer here (and I won't try to spoil the response by priming it with what I've received before). My main goal is to at least understand why businesses choose to go open core, why they feel that custom development contracts are not feasible, why they can't build a business of hosting and other similar services alone, etc. It may be a widely held belief simply because businesses are not ready to follow the example of Red Hat, or it may be the case that Red Hat really is special. I'd like to understand as best as I can which it is -- and since I don't run an open source/free software business, the best I can do is to ask those who do.

Cool! Are you working on IDE plygins, e.g. for Atom?

Sourcegraph CEO here. I share your interest in open-source business models, going back quite a while. My public middle school back in 1999 had a mock investment club, and students voted on which stocks to invest in. (It's funny looking back on this.) I campaigned for RedHat and VA Linux, and we ended up "buying" those (and some JDS Uniphase, naturally).

I plan to write more about this, but here's the summary of why we went open core.

- Hosting is less viable for developer tools, especially those that are intended for companies above ~30 engineers, because those companies usually want their code to stay on-premises. Selling hosting means you'd only sell to small companies.

- Now, compared to 10-20 years ago, customers perceive software needing custom development as bad. Expectations are higher for the product to just work out of the box. They might not ever use it if they can't quickly see that it solves their problem (without getting custom development).

- Doing custom development probably entails a top-down sale, not a bottom-up sale. Compared to 10-20 years ago, bottom-up (having a single dev bring your product in and then spreading from there) is much easier. Bottom-up means that, especially in the early days, you can focus on building the product/eng teams instead of the sales/marketing team.

- Custom development doesn't scale, and we think every dev will be using Sourcegraph (or something like it, if we mess up :) in 5 years. We can only get there by building a product that works for almost everyone, not one that works really well only for a few companies.

- Open core is easy to understand because (if you ignore the availability and open-sourceness of the code, which is purely a benefit) it is just like freemium, which is a well understood concept.

I'm just stating our decision process in choosing open core. I make no claims that these are universally true.

If someone out there is thinking to themselves, "I'd love to pay Sourcegraph to build custom features for my company", then please reach out. At the very least, your desire for those features would be a strong vote in favor of prioritizing them on our roadmap.

Was Fair Source a detour or a stepping stone?

Sourcegraph CEO here. :) Thanks for creating GitLab and for the kind words. We're indeed looking forward to adding Sourcegraph to GitLab by default. Look out for a prototype/proposal MR from us in a bit. That's one of the super valuable kinds of features/integrations that we can do now that Sourcegraph is open source!