Problems With Open-Source Business Models • Hacker News Board

Re: Problems With Open-Source Business Models

#51

Post by zjaffee » Fri, Jan 04, 2019, 9:18 PM UTC

niftich wrote: post #38

This post raises a lot of good points about the futility of this new wave of split-restriction licenses, but misses fairly obvious one. Entrepreneurs think they want to have an "open source business model" because they have marketshare-scaling problem: they want their software distributed to a wide audience such that it gains usage and mindshare, but not wide enough where AWS is selling their work as a managed servic…

I have to disagree with your premise. Entrepeneurs who are starting these sorts of companies were often engineers at larger employers and were on teams where originally built these platforms that had become open source and relatively successful while they still worked there. Then they realized they were able to raise funding to start their own company around the software they previously built and then decided to do so. This applies for most of the companies mentioned in the article, where open source software later released by the new companies were the mistakes they had made.

Re: Problems With Open-Source Business Models

#52

Post by MrTonyD » Fri, Jan 04, 2019, 9:24 PM UTC

tracker1 wrote: post #50

MrTonyD wrote: post #3

I've been working in Open Source for a long time now - decades. The problem I see is that so many rich and wealthy companies (and their billionaire owners) are the big beneficiaries of open source. Look at Spark, Hadoop, Linux, gnu tools and others - who uses them at a large scale? It is the wealthy companies who avoid paying salaries for the development of those tools. So I've become convinced that we should disting…

You do that and companies just switch to a comparable and freer platform... From linux to BSD, from Mongo to X... etc. In the end, a lot of these changes are to stop resellers from building a larger business on the open-source version that competes with their own open-core model. In the end, they probably should have had those provisions to begin with, but were more concerned about early growth and first to market.

Well, we live in a society. In theory, it should be possible to define any law we want in order to improve our society. Of course, the rich control the government in the entire world, so I don't expect anything like this to happen (and they also control the press, so most people are convinced of the "goodness" of greed.)

Re: Problems With Open-Source Business Models

#53

Post by spectre256 » Fri, Jan 04, 2019, 9:29 PM UTC

eruci wrote: post #49

I was pondering this very question as I just launched an open source reverse geocoding/geolocation name service API ( https://3geonames.org/api ) whose business model consists upon selling a nicely packaged server AMI on AWS. It works well both ways, in the sense that those who are capable coders may download and configure/install the software themselves. Some others will just skip the hassle and buy the Marketplace…

We talked about running a Pelias geocoder AMI back at Mapzen, and it still might make sense today. I'd be really interested to hear how it works out for you.

My personal feeling is that developers are irrationally averse to paying for someone else to set up and reliably run software for them, but that it's usually a massively good deal to pay for that service.

Even a simple software project that takes an hour a month to keep running is well worth most companies paying $100/month to not have to worry about, for example.

Re: Problems With Open-Source Business Models

#54

Post by 0xdeadbeefbabe » Fri, Jan 04, 2019, 9:34 PM UTC

eruci wrote: post #49

I was pondering this very question as I just launched an open source reverse geocoding/geolocation name service API ( https://3geonames.org/api ) whose business model consists upon selling a nicely packaged server AMI on AWS. It works well both ways, in the sense that those who are capable coders may download and configure/install the software themselves. Some others will just skip the hassle and buy the Marketplace…

Poor documentation is a strategy, and if it's poor enough you can run your own university/camp. A large complicated codebase is another strategy.

Edit: Strangely enough, I don't know anyone who did this on purpose.

Re: Problems With Open-Source Business Models

#55

Post by Judgmentality » Fri, Jan 04, 2019, 9:38 PM UTC

EGreg wrote: post #48

john_moscow wrote: post #41

Earlier quoted context omitted.

VCs don't care about profits anymore. Their bet is on getting hockey stick growth using tricks good enough not to spook the uneducated retail investor (that often involves selling dollars for cents) and then dumping the hot potato into the public market. It isn't long-term sustainable and it will result in a major correction one day, but that's the game currently.

I think this is finally a very insightful comment about a common unspoken approach in the VC industry.

Is it really unspoken? I mean VCs aren't going to advertise it, but I thought this was common knowledge.

Fun anecdote I heard from a very seasoned VC. He mentioned a trick VC funds use is to raise capital, then spend that fund before any of the companies can make a return (this varies from fund to fund, but imagine anywhere from 2-10 years, usually centering around 5-7). They then go back to their LPs saying "look how good our portfolio is doing, we just need more money to help them out!" without any truly meaningful metrics such as profitability, and essentially keep the house of cards afloat like this by cyclically raising capital before funds can show an ROI.

Also most VCs lose money, but nobody (by which I mean LPs) ever seem to care about that because they're excited about the potential without understanding the risk of the market.

Re: Problems With Open-Source Business Models

#56

Post by zwieback » Fri, Jan 04, 2019, 9:44 PM UTC

MrTonyD wrote: post #3

I've been working in Open Source for a long time now - decades. The problem I see is that so many rich and wealthy companies (and their billionaire owners) are the big beneficiaries of open source. Look at Spark, Hadoop, Linux, gnu tools and others - who uses them at a large scale? It is the wealthy companies who avoid paying salaries for the development of those tools. So I've become convinced that we should disting…

You're basically asking for a tax or some kind of goodwill payment large companies should make. Nothing wrong with that in theory but many times large companies use open source SW in areas outside of their core business, I do that every day, to solve everyday development tasks that have nothing to do with the widgets my company makes. If you look at it that way it's pure redistribution. Again, I'm not against that but this kind of proposal will have an uphill battle.

Re: Problems With Open-Source Business Models

#57

Post by eruci » Fri, Jan 04, 2019, 9:54 PM UTC

0xdeadbeefbabe wrote: post #54

eruci wrote: post #49

I was pondering this very question as I just launched an open source reverse geocoding/geolocation name service API ( https://3geonames.org/api ) whose business model consists upon selling a nicely packaged server AMI on AWS. It works well both ways, in the sense that those who are capable coders may download and configure/install the software themselves. Some others will just skip the hassle and buy the Marketplace…

Poor documentation is a strategy, and if it's poor enough you can run your own university/camp. A large complicated codebase is another strategy. Edit: Strangely enough, I don't know anyone who did this on purpose.

I don't do that on purpose, but I'm guilty on both counts.

Re: Problems With Open-Source Business Models

#58

Post by eruci » Fri, Jan 04, 2019, 10:02 PM UTC

spectre256 wrote: post #53

eruci wrote: post #49

I was pondering this very question as I just launched an open source reverse geocoding/geolocation name service API ( https://3geonames.org/api ) whose business model consists upon selling a nicely packaged server AMI on AWS. It works well both ways, in the sense that those who are capable coders may download and configure/install the software themselves. Some others will just skip the hassle and buy the Marketplace…

We talked about running a Pelias geocoder AMI back at Mapzen, and it still might make sense today. I'd be really interested to hear how it works out for you. My personal feeling is that developers are irrationally averse to paying for someone else to set up and reliably run software for them, but that it's usually a massively good deal to pay for that service. Even a simple software project that takes an hour a month…

It has worked out relatively well. (Mostly due to the fact we have no competition on geoparsing )

There are a few geocoding AMI's on AWS Marketplace. ( https://aws.amazon.com/marketplace/search/results?searchTerm... )

Some big companies on the list (Pitney Bowes, Mapbox, Here)

I've always held Mapzen in high regard as one of the best geocoding APIs to come out of the opensource camp. Mapzen would have been a nice addition to AWS for sure.

Some companies prefer having their own server rather than sharing access to an API.

Re: Problems With Open-Source Business Models

#59

Post by capkutay » Fri, Jan 04, 2019, 10:15 PM UTC

tinyvm wrote: post #34

I strongly disagree with the hypothesis raised in the article. First , most open source companies these days are Ventured Back ( Elastic , CockroachDB, MongoDB etc..) meaning the core of the issue isn't "AWS" not paying license fees or people creating tech on top of Open Source , it's VCs who want their money back times ten. Companies like MongoDB/Elastic have raised hundred of millions and yet are still not profitab…

It's worth noting that between 2012-2017 'open source' and 'enterprise software' were synonymous. I saw many examples where VCs refused to entertain any enterprise investments that weren't fully SaaS and/or on-prem apache licensed.

Explains why there was so much marketing hype behind open source; hundreds of millions of dollars of VC investment was being pushed into it.

Re: Problems With Open-Source Business Models

#60

Post by tannhaeuser » Fri, Jan 04, 2019, 10:28 PM UTC

MrTonyD wrote: post #3

I've been working in Open Source for a long time now - decades. The problem I see is that so many rich and wealthy companies (and their billionaire owners) are the big beneficiaries of open source. Look at Spark, Hadoop, Linux, gnu tools and others - who uses them at a large scale? It is the wealthy companies who avoid paying salaries for the development of those tools. So I've become convinced that we should disting…

The situation we have now -- that no ISV can make a living -- is precisely the result of decades of making software Free and Open such that it has become a commodity. The only money to be made left is in services, and that market is increasingly captured by AWS, Azure, and Google Cloud Services, leading to centralization, stagnation, and self-referential pseudo-innovation a la Docker (and increasingly, the web). I whish F/OSS purists would focus on solving today's problems rather than defending ideas of their youth.