[tinyvm]

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 profitable.

Who's fault is it ? Did the MongoDB community ever asked the company to go that way ? Did MongoDB presented a roadmap to the community saying that they would have to be "profitable by Month X" or they would change their licence to make more money ?

Nobody has forced those founders/companies hands to make their products open source nor to raise that much capital.

If the industry is turning that way it is essentially because those businesses have used Open Source as a mean to reach the widest possible audience in order to increase growth and show great metrics to VCs and investors to raise absolutely obscene amount of cash.

Vue.js and Laravel are two very well maintain and extremely profitable open source project.

Those projects did not asked for 150M$ in fundraising and then realized : "Ooops we won't meet our 100% YoY Growth to satisfy VCs promises".

If some companies are switching their licensing , it's mostly because they overestimated their technology value and can't show to investors the numbers they promised.

This isn't due the "AWS Problem" or because of a "wrong business model" with FOSS.

[john_moscow]

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.

[ChrisCinelli]

That most of the VCs care is making attractive the company between their investment and their exit, it is completely true.

That is also why quite often they bring in (and sometimes replace founders with) "professional" executives before the IPO. Some of these people are not usually the best people to maximize the long term trajectory of the company but they bring more confidence to IPO investors.

If you want to have a successful relationship with them, you had better know their motives and timelines and make sure your company is one in the fund that looks is going to return enough for their game.

[john_moscow]

I find it funny how the ethical side of those games is always conveniently ignored...

[metildaa]

Ethics reduce profit, thus they are ignored when there is no regulator or law enforcing them.

[yellowbuilding]

Capitalism does lend itself well to technical innovation, which is beautiful but not ethical. And with that beauty comes technical debt in it’s cultural form: decadence.

The societal accomplishments of capitalism are effectively distraction and insulation from the side effects of complexity.

[EGreg]

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

[Judgmentality]

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.

[capkutay]

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.

[sonnyblarney]

" it's VCs who want their money back times ten"

Keep in mind that this is the market speaking, not a 'specific need of some group'.

If it costs money to productize and support something, and it's risky, it's going to be VC and there will be terms that take that risk into account.

Another way of saying it is that '10x' requirement is a function of the risk of the business model of those taking the money. (Which by the way, as you point out, might involved 'over estimating the worth of something)

Most VC's are not successful and even the 'obscene' amounts of money made by some actually don't make up for losses elsewhere. [1]

Also, it's a very risky proposition for most folks to do a 'true' open source project and as you say make it 'profitable' via sponsorships or whatever.

" it's VCs who want their money back times ten"

Keep in mind that this is the market speaking, not a 'specific need of some group'.

If it costs money to productize and support something, and it's risky, it's going to be VC and there will be terms that take that risk into account.

Another way of saying it is that '10x' requirement is a function of the business model of those taking the money. (Which by the way, as you point out, might involved 'over estimating the worth of something)

Most VC's are not successful and even the 'obscene' amounts of money made by some actually don't make up for losses elsewhere. [1]

Also, it's a very risky proposition for most folks to do a 'true' open source project and as you say make it 'profitable' via sponsorships or whatever.

[1] https://techcrunch.com/2017/06/01/the-meeting-that-showed-me...

[cortesoft]

> Keep in mind that this is the market speaking, not a 'specific need of some group'.

I wonder sometimes, though, which market is being served.

I think in some ways, it is actually the VC market itself that is being served, not the customers of the company the VCs are investing in.

There is so much VC money floating around, and they are 'in the market' for investments to make with that money. The problem is sometimes there just isn't a downstream market that needs to be served by a company funded with all that money, so the VC needs to try to find one. And they often times reach pretty far to find that investment opportunity, and try to force a downstream market where there is none.

There might not BE any market for the 'productized and supported' version of the open source project that a VC wants to fund, but since they have so much money they decide to try to force it to fit that model. They put a ton of money in, grow the company, and then are forced to monetize to support that big of a company.

Maybe the community was being served just fine without that much investment, but now that the investment has happened, the company is forced to act in ways that AREN'T serving that community.

[sonnyblarney]

For every open sourced that is used, there definitely is at least some need for a slightly better version of it. The question is, at what price?

So if VC wants to over-fund products and basically give away development and services, it's not all that bad.

I'd rather see more Engineers employed and learning than less.

[jondubois]

Open source is not for VCs. VCs aren't good when it comes to creating value. The VC's job is to capitalize on hype. Hype doesn't go well with open source projects; it leads to dissillusioned customers later.