Stop saying open source nonsense

We really need to stop it with posts intended to proffer the secret to open source success (TL;DR be like Confluent). It turns out that market dynamics determine the right model for a given company. The industry wasted a decade trying to ape the Red Hat model. It didn’t work. As Peter Levine, general partner at the venture capital firm Andreessen Horowitz, wrote back in 2014, there will never be another Red Hat. If he were to write that post today, he might also argue that there will never be another Confluent.

This is not to say that there won’t be more billion-dollar open source companies. That sort of unicorn seems to be in proliferation mode these days (Databricks, Redis, GitLab, etc.). The point is simply that the right business model for a given open source company depends on various factors. There is no one true way to build a business around open source.

Blinded by the Red Hat

Even to this day, people pine for the good ol’ days of Red Hat. You know, a company that works completely in open source, that contributes back to the communities on which it depends (like Linux, like Kubernetes). I love Red Hat. I’ve always admired it. But its business model works for basically no other company (or project) on the planet. There’s a reason you’ll find few Red Hatters running other successful open source companies. It’s not that they’re not smart. No, it’s that they tasted success with a model that simply doesn’t apply beyond Red Hat’s product suite.

Don’t believe me? It’s worth listening to Red Hat’s former CTO who made this clear back in 2006: “Red Hat’s model works because of the complexity of the technology we work with. An operating platform has a lot of moving parts, and customers are willing to pay to be insulated from that complexity. I don’t think you can take one finite element—like Apache—and make a business out of it [using our model]. You need product complexity.”

Companies tried for years to be the “Red Hat of category X,” and every single one of them failed. Zero exceptions. Instead, we saw these same companies (I worked for one of them, Alfresco) start to be mostly open source, also known as “open core.” The idea was that you’d have 90% or more of your code licensed under an open source license and hold back just enough (in areas of security, management, or other things) to nudge a small percentage of your project users to become product buyers.

That model is much maligned, but it has generated billions of dollars in market returns, which helped fuel more open source innovation. As I’ve written, open source is hard work. No one is giving it away for free. If a developer or company is investing in open source, it’s because they expect a return on that investment. Given that we have finite resources, this is how life (and open source) works.

Copyright © 2021 IDG Communications, Inc.

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