The Business of Open Source

One of the myths that swirl around the open source company ecosystem is that all open source companies started as an open source project that then suddenly got traction, and followed by the founders frantically throwing spaghetti at the wall trying to figure out a business model. In fact, this is not the story of how all open source companies came to exist. It is not at all uncommon for a company to start the open source project with the explicit goal of building a company around it, and it also isn’t uncommon for a company that started as a closed source company to open source a portion of their codebase, for a variety of reasons. This episode is about that second scenario. It’s the first in a series about how Harper went from a closed-source company to an open source company, including both the why and the how of the transition. Today I talked with Ethan Arrowood, head of open source engineering at Harper. We’ll get his perspective on the transition from closed to open source today, and another perspective next time. We talked about things like why Harper wasn’t open source from the very beginning, how Harper doesn’t fit the stereotype of an open source company in that they started with enterprise adoption, not individual developers using the platform, and the decision to go open source went hand in hand with the desire to focus on community building. We also had a conversation about the difference between being open source in name and really following the spirit of open source, and why there are business benefits to doing open source ‘right.’

This week on The Business of Open Source, I spoke with Thomas Schedler, co-founder and CEO of Sulu. Sulu is a small, bootstrapped company that spun out of an agency; Thomas was recommended by someone to me as a guest, but when I first reached out to him he was skeptical about coming on the show because he wasn’t sure he was a good fit. But there’s a bunch to learn from this episode! Spinning out from an agency —> in my experience, one of the most common ways for open source companies to be bootstrapped, or even to be go on to raise venture capital, is to start out as a web development agency that uses a lot of open source tools.They are working on moving away from services and getting more revenue from the product; and Thomas talked about the advantages that they get from providing both services and developing a product-based business strategy.The CMS market is crowded! And everyone is open source, so being an open source company doesn’t differentiate the product at all. So how does Sulu differentiate itself in the market? Thomas talked about it. I loved that Thomas talked about how important opinions and technology choices are in differentiating themselves on the market. I also loved that Thomas talked about keeping some things out of the product as a way to differentiate themselves from others. Sometimes more features can deliver less value to users. How being small can allow you to move quicker, and that gives Sulu and advantage over the huge players in the CMS market.Why differentiation and knowing your niche is so important when you’re a small company competing again large players. Do you need to differentiate yourself in a crowded market? You might want to work with me.

This week on The Business of Open Source, I spoke with Julian Coccia, CTO of ScanOSS, about selling access to data while making open source software. Of course, we also talked about being an open source company that is also deep in the open source world, helping companies understand their reliance on open source code and how open source is used in their codebase. Several things that we talked about: AI and open source code. This is a topic that’s slightly tangential to business, but very interesting to me. If you’re using an AI code generator, you are almost certainly putting verbatim copies of open source code into your codebase, but without realizing you’re doing so and without any understanding of the license requirements. This is a huge compliance risk. 2% of code generated by AI is a verbatim copy of open source code. How the biggest challenges isn’t necessarily monetizing, but getting visibility into the sales funnel. It can feel random and sudden; a company appears out of nowhere ready to sign a contract because they’ve been using the open source project for months. This is the last week to get tickets for Open Source Founders Summit, so if you want to join other leaders of open source companies May 19th and 20th in Paris, get your tickets now!

This week on The Business of Open Source I talked about Open Source Manifestos with Vincent Untz, CTO of Centreon. The entire conversation focused on this idea of open source manifestos, which Vincent is going to talk about at Open Source Founders Summit — and I had never heard of before. The idea to create an open source manifesto came about because internally there was a lot of frustration around Centreon’s relationship with open source. A lot of people, especially those who didn’t come from an engineering background, would routinely ask why the company invested so much in open source. At the same time, there was a feeling among the engineering team that the company’s commitment to open source — and the concrete development time spent on open source — was slipping. After creating the manifesto, the doubts about why open source mattered went away immediately — there hasn’t been a single conversation calling into question why open source matters since the manifesto was finished. Now conversations about open source are different. Externally, there’s been a huge change in conversations around open source. People say things like “Centreon is back in the game.” It’s hard to point to concrete financial results as a result of the manifesto, but there have been differences in relationships with partners for sure, and it has helped get more companies to contribute to the project. Want to see what the Centreon Open Source Manifesto looks like? Check it out here.

This week on the Business of Open Source I spoke with Daniel Jarjoura, an investor at Avolta who specializes in developer-facing companies, and who writes a newsletter on developer-facing startups and also collects data on investments in open source companies. We spoke about the overall state of investment for open source companies and specifically the state of investment in open source companies in Europe. Here’s what we talked about: Differences between venture funding for OSS companies in Europe and in NAHow open source companies were relatively stable in terms of getting venture funding, even as the entire venture funding ecosystem was in free-fall.How it might be true that European investors don’t understand open source companies, but on the other hand plenty of North American investors invest in European companies. Do developers trust open core companies? We had a discussion about whether or not open source companies have a trust problem…How important communication is for open source companies, something that I think is very true — a lot of the problems that open source companies run into when they either adopt an open core model or even when they do a license change. How founders can do a better job communicating with their VCs, including how to do a better job targeting appropriate investors. What do optimizing for in the VC relationship … and spoiler alert, that is for money. You might want a perfect VC who can make introductions, give you advice, give you money, be nice, etc. But the most important thing is the cash; focus on that. The second most important is the introductions. But advice isn’t something you should count on from VCs, and that really isn’t a VCs job, anyway. We finished the conversation with a discussion about M&A for open source companies. If you want good advice about your open source company, you might want to work with me. If you want an opportunity to talk with other founders about things like M&A for open source companies, communicating with VCs, and other topics specific to open source companies, you should join us at Open Source Founders Summit May 19th and 20th in Paris.

This week on The Business of Open Source, I spoke with Misha Bragin, co-founder and CEO of NetBird. This was also the first episode I recorded in 2025, which gives you an idea of how far in advance I’m recording episodes. NetBird has an interesting origin story — it came out of an original idea to make a hardware product, but as Misha and his co-founder were starting to work out the realities of manufacturing, they realized that they would be better off building a software company. Here were some of the take aways from the conversation: Sometimes your users want to pay you! Misha explained that before there was a commercial offering, some open source users proactively reached out asking for one — because they understood that in order for the company to be viable, it needed to have revenue. Just because you get crickets at first doesn’t mean your project sucks. When NetBird’s open source project was first released, it made zero splash.The reality of working in a proprietary piece of software, you can do things quick and dirty. *Obviously you shouldn’t, but let’s face it a lot of people do. But when your code is open, it is also a part of your communication strategy! If you push out code that’s not tested or that’s not well done, you risk reputation damage even if the software works exactly as it should. Misha talked about how choosing Auth0 as an authentication service was a mistake — not because it is a bad service, but because it was not appropriate for their target audience, who are self-hosting. This is a very good reminder of how sometimes choosing the best technology for the job can backfire; you also have to take into account who the target user is and if they are going to be repelled by the choice you’re making. Struggling to figure out how to balance your project development with your product development? Need to supercharge your funnel? You might want to work with me. Want to share your knowledge and learn from your peers who are open source entrepreneurs? You should join us at Open Source Founders Summit May 19th and 20th in Paris.

This week on The Business of Open Source I had a slightly different conversation: I spoke with the CFOs of two open source companies, Sysdig and Percona, to better understand what is different (and what is not) about financial management in open source companies. Karen Walker is the CFO at Sysdig, and Eileen Doody is the CFO at Percona. They both joined me to talk about the CFO role in general and the CFO role in particular at an open source company. Why did I do this episode? Many founders I’ve spoken with are a bit unclear on the role of a CFO — whereas I’ve never spoken with a founder who had trouble understanding what their CTO does. Here’s some takeaways from our conversation: Part of the CFO’s role is about thinking about open source strategically, in terms of how the open source project is going to fit into the company’s overall strategy.Because open source is so ingrained in the company, it doesn’t fit into a single budget line item; it’s impossible to break out and say ‘we spend $X on open source’ because it’s so integrated into everything the company doesHow do you measure your ROI on investment in open source? At Sysdig, two out of three prospects come to the company because of Falco, their open source project. We also talked about the ecosystem effects of having a huge footprint with your open source project; it’s hard to measure the positive influence of having massive brand awareness, but both CFOs are convinced that it is very important to the company. Eileen says that many CIOs now have mandates to look for open source solutions when possible, which was not the case a decade ago. That’s changed the dynamic for a company like Percona that’s based around open source. Another reason I did this episode is because while I usually have founders on the podcast, there are some really important perspectives from other leadership team members. Part of the the role of a CEO is to understand all the other C-level leadership position’s roles and responsibilities, and in my experience the CFO is one of the less well understood roles. In fact, we wrapped up the conversation by talking about how a CFO can be a real strategic partner that’s forward-thinking rather than just the bean-counter that some people expect a CFO to be. A couple things to mention. First of all, if you want to learn more about my consulting work with open source companies, you can do so here. Second, if you want to chance to connect with other founders of open source companies, consider joining Open Source Founders Summit this May 19th and 20th in Paris.