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The life and death of open source companies

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Re: The life and death of open source companies

#131

Post by wavemode »

JW_00000 wrote: post #125
wavemode wrote: post #113

Earlier quoted context omitted.

There are four business models that I believe are sustainable for open source development. 1. Solo developer (or small group), funded via e.g. Patreon 2. Non-profit funded by sponsorships and donations 3. For-profit but the software is free; the company charges for support and/or cloud services 4. Open collective, where donations fund bounties that are paid out to people who contribute patches In other words, I think…

I'd slightly modify 3: a for-profit company that open-sources some software that is not a product in and of itself. For instance, Facebook can open source React because it's something they need, but it would not be a viable product on its own. Releasing it as open source doesn't give them any disadvantage. Similarly, a GPU manufacturer can open source their drivers because this won't prevent them from selling their h…

I mean, in that case I'd see that as a company which makes its money in other ways, throwing their scraps at the open source public. (Which, let's be honest, has been greatly beneficial for the public - it's given us Kubernetes, TensorFlow, etc.) But I wouldn't call it a business model onto itself.

Re: The life and death of open source companies

#132

Post by remram »

mkl wrote: post #58
remram wrote: post #24

We should come up with a name for this new generation of licenses. They are not "open source" or "free software", and using those words would be both confusing and immediately polarizing. But having nothing more specific than "source available" seems very insufficient, since most of them turn open source quickly or only deny rights that do not usually matter to the end-user. (licenses in that family: BUSL, FSL, Commo…

I agree. How about "eventually open source"? Commons Clause is not in that group, as it's not time-limited.

I like that, eventually-open source software (EOSS) (or deferred open source maybe? or delayed open source?).

Re: The life and death of open source companies

#133

Post by fragmede »

JW_00000 wrote: post #125
wavemode wrote: post #113

Earlier quoted context omitted.

There are four business models that I believe are sustainable for open source development. 1. Solo developer (or small group), funded via e.g. Patreon 2. Non-profit funded by sponsorships and donations 3. For-profit but the software is free; the company charges for support and/or cloud services 4. Open collective, where donations fund bounties that are paid out to people who contribute patches In other words, I think…

I'd slightly modify 3: a for-profit company that open-sources some software that is not a product in and of itself. For instance, Facebook can open source React because it's something they need, but it would not be a viable product on its own. Releasing it as open source doesn't give them any disadvantage. Similarly, a GPU manufacturer can open source their drivers because this won't prevent them from selling their h…

> Similarly, a GPU manufacturer can open source their drivers because this won't prevent them from selling their hardware

I agree with your broader point, but GPU manufacturers can't, because then we'll see just how much is done in software which makes their cards better than their competitors, which means their competitors can adopt those software techniques in their drivers. Also the manufacturer may not have the rights to the code in the driver's to release them as open source.

Re: The life and death of open source companies

#134

Post by jraph »

usrusr wrote: post #105
jraph wrote: post #34

Earlier quoted context omitted.

It's not always pure marketing. There are companies who truly have open source / free software in their DNA. The founders are true open source proponents, and some people joined these companies because of the open source aspect. Because of this, sometimes, a majority of the people in these companies are pro-open source and will skew things towards this. Some don't even have investors pushing against this. What do you…

People, founders or not, are of little consequence when they are not owners, and majority at that. Which companies of that list are bootstrapped, and which have taken outside investment? I would only consider the bootstrapped ones valid entries, all others just haven't left the pretend stage yet. If you already did base your list on bootstrappedness, consider this post strong agreement: because that's what I'm trying…

> I would only consider the bootstrapped ones valid entries, all others just haven't left the pretend stage yet.

I agree with this, though excluding companies burning investors money is already raising the bar higher than for closed source ones. Most companies are not bootstrapped and never leave the pretend zone. Of course not a fan.

XWiki and Nextcloud [1] are definitely bootstrapped. Element is definitely not.

Automattic (behind WordPress) has raised funds, also bought back private stock [3], not clear what it means. They also seem to make money from closed source software.

I would expect any of these company, except maybe Element, to actually make money from their open source activity.

When I'm making those lists, I also don't consider open core and/or obviously VC-founded companies, like Mattermost and GitLab.

Side question, in which ways SQLite is not open source for you? It seems pretty much open source, I'm fine with open source software not accepting outside contributions. They still guarantee the important user freedoms of free software.

[1] https://nextcloud.com/about/

[2] https://www.igalia.com/about/history

[3] https://en.wikipedia.org/wiki/Automattic

> Fully employee-funded and pursuing an organic-growth strategy, Nextcloud already turned profitable by the end of 2016

Re: The life and death of open source companies

#135

Post by abetusk »

bruce511 wrote: post #6

I feel like the problem is defined in the title. Open Source. Company. These are two pretty distinct concepts, and the (traditional) motives for those two things don't merge terribly well. Over and over we see the same story playing out. Companies need to make revenues to sustain the employees. Open Source makes "competing" with an existing company trivial, but with none of the invested costs. So the first mover, the…

The cathedral vs. the bazaar refers to a way of operating an open source project, not open source vs. closed source [0]. Raymond uses the example of Emacs vs. Linux (Stallman vs. Torvalds) where Stallman works in private, only allows a privileged few to contribute vs. Torvalds who accepts changes liberally.

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

Re: The life and death of open source companies

#136

Post by mistrial9 »

bruce511 wrote: post #6

I feel like the problem is defined in the title. Open Source. Company. These are two pretty distinct concepts, and the (traditional) motives for those two things don't merge terribly well. Over and over we see the same story playing out. Companies need to make revenues to sustain the employees. Open Source makes "competing" with an existing company trivial, but with none of the invested costs. So the first mover, the…

valid point but reductionist by narrowing the terms that are considered at all before reaching a broad conclusion. Just as the essay mentions that software distribution is no longer a bottleneck, the "social ecosystem of inventors-builders-makers-users" is a far different proposal in 2024. Some here recall when "using a computer" was a niche activity, now "all of China, yes or no" is ordinary talk? Fish need to see the water - coders need to see the social ecosystems. In this small post, markets are a subset of social ecosystem, but a powerfully charged one.

Re: The life and death of open source companies

#137

Post by jandrewrogers »

jraph wrote: post #121
skeeter2020 wrote: post #118

Earlier quoted context omitted.

IME when you dig into the project and financials for companies like yours they're not software companies but service companies. This is not an insult; the economics are much different, and typically don't get the scalability that made software so ridiculously profitable.

Can you develop on this? I'm interested by what you mean by this. Income is mostly from support and consulting. These two things still pretty much rely on the actively developed product, so a big part of the company is dedicated to this. I'd say we are both a software and service company. I believe this is one nice way of developing open source software. No insult taken :-)

In a consulting and support business, the economics usually require a relatively low fixed overhead cost. You can build such a business around any existing piece of software. That you develop the software in-house doesn't change the nature of the business but it does make for a poor implementation of this business model.

Deliberately incurring a high fixed overhead (product development) in a well-understood business model where profitability is highly dependent on minimizing fixed costs is creating the conditions for failure. To make this work you can no longer survive by being merely average at executing the revenue side, you have to be exceptional at the revenue side and most people are not exceptional.

Success in this model requires two separate miracles instead of one. Good startup opportunities are single miracle companies, and you focus all of your attention on creating that miracle. Companies that require two miracles to be successful are poor investments because you now have to solve two hard problems that split focus.

Re: The life and death of open source companies

#138

Post by oblio »

jraph wrote: post #104
rmbyrro wrote: post #90

Earlier quoted context omitted.

The point is that Open Source, by design, drammatically increases the likelihood of failure. It's already hard to build a successful business. Odds are already thin for you to succeed. Why choose a model that worsens it? Open Source was not created as a funding source to for-profit ventures. That's what these businesses are doing: raising labour funds for free to fund a profitable product. That's not the spirit and t…

> That's what these businesses are doing: raising labour funds for free to fund a profitable product. That's not the spirit and the purpose of Open Source. You are misguided. Here's what the company that employs me does: - develop an open source product. Open to contributions, but most of the dev is done by employees. - sell support and consulting on this product - sell pre-packaged open source extensions to this pro…

Regarding your company:

At some point the incentives become misaligned, though, we've seen this happen over and over.

Someone proposes and sends a PR making huge quality of life improvements, it's shot down because it would reduce consulting revenue (the rejection reason is officially not this or not even stated at all).

Someone proposes and sends a PR implementing advanced functionality that the core company sells as part of a paid extension, the PR is rejected (for obvious but not mentioned reasons).

A cloud provider starts offering a service based on the software, the license is changed to non open source.

Plus, these kinds of businesses generally only scale to mom and pop store or maybe 100 consultants.

Re: The life and death of open source companies

#139

Post by Capricorn2481 »

bruce511 wrote: post #6

I feel like the problem is defined in the title. Open Source. Company. These are two pretty distinct concepts, and the (traditional) motives for those two things don't merge terribly well. Over and over we see the same story playing out. Companies need to make revenues to sustain the employees. Open Source makes "competing" with an existing company trivial, but with none of the invested costs. So the first mover, the…

A lot of open source projects would die if it wasn't for the companies backing them.

Re: The life and death of open source companies

#140

Post by nocombination »

bruce511 wrote: post #6

I feel like the problem is defined in the title. Open Source. Company. These are two pretty distinct concepts, and the (traditional) motives for those two things don't merge terribly well. Over and over we see the same story playing out. Companies need to make revenues to sustain the employees. Open Source makes "competing" with an existing company trivial, but with none of the invested costs. So the first mover, the…

> My recommendation is this - decide if you want to make a company, or if you want to make Open Source. The number if places that have succeeded in both is vanishingly small.

The issue at hand is more about deciding how OTHER people/companies may or may not use your source-code to suit their own needs. If you decide Open Source, someone else can easily decide: actually, Company (and free labor to boot).

But to your point, in the long term, Open Source is a better prospect (for the people not the companies). Think of all the problems with crappy IoT devices and bad security practices. Many devices _could_ have decades of life left in them, only to be bricked because the companies want to sell newer crap instead (for the companies not the people). And on-and-on.

I think the whole idea of a new licensing model is a good starting point—like a forced NDA to keep a head-start. However, the same problem holds: nothing will prevent someone from stealing the source code either way—one license or otherwise—if it is freely available. But if there is a large community of contributors, the value prospect for everyone is huge.

And, to top it off: now with AI—how can we prevent an AI from rewriting the sources in a way that appears "nothing like the original"?

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