[bruce511]

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 program author, is always at a strategic disadvantage.

This is not an accident- it is baked into the very point of open source. There's a reason that very few people in the bazaar actually make decent money. There's a reason the cathedral has treasures.

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.

[jraph]

> 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.

I would suggest the contrary: if you want to build a company and believe open source is the right way to do it, please do try! We don't have enough open source companies, we need more successful examples of this.

It's hard and there are traps one needs to not fall into. I personally think VC money is one of the biggest traps, it's absolutely critical you keep control of where and how the companies is going. If you don't have investors to feed, you may make enough money to pay the employees with a good strategy. You can even manage without open core, which incentivizes pushing the useful features outside the open core.

[radiator]

> please do try!

This is not very convincing as a reply to the risks pointed out in the previous post. The choice of the word "try" seemingly recognizes the risk of failure, but you seem to ignore the serious consequences of such a failure for founder and employees. I mean, this is not a game.

[sh79]

Building a company inherently carries a risk of failure with it. You seem to be taking it the wrong way, you really shouldn't be building your company based on a few opinions of HN comments, nor it's their responsibility to outline the full extent of risks involved.

[rmbyrro]

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 the purpose of Open Source.

[jraph]

> 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 product, with support

Totally withing the free software / open source spirit. The world gets great open source software for free (not open core: truly and completely open source), and the business behind it is sustainable as well. We also donate to some open source projects that we use, chosen by employees.

At some point, if you want open source to take over, you need it to grow and strive, and having it supported by business is a great way of getting this. The world probably cannot be run only by side projects.

Not saying that all open source companies behave this well, but it's not an impossible outcome.

[bombcar]

I think for many “open source companies” there’s some underpants gnomes business planning going on:

1. Open source product

2. ???

3. Profit!

Open source isn’t a magical bandaid though it may get you some early traction, the same you can get by having a free plan.

If you develop it appropriately and plan it out, it CAN be successful. But you have to think it out and choose an appropriate license, etc.

Most successful open source companies would have been successful as closed-source; and you rarely can take a closed-source product and make it successful by going open source.

[oblio]

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.

[skeeter2020]

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.

[Geezus_42]

I wish I could work at a place like that.

[rmbyrro]

I'm not saying it's bad or impossible, just that Open Source was not designed with your employer use case in mind. If you want to use it that way and it works for you, great.

The thing is that support services aren't scalable. Many software businesses want a scalable source of revenue, that's why they go for cloud services.

They don't want to compete with copy cats, though, because they want monopoly-level margins.

Then they complain that Open Source won't let them have those astounding margins.

This is not an issue with Open Source licenses.

[akoboldfrying]

You're right that it's no one on HN's responsibility to outline the full risks of starting a business, but no one is claiming otherwise.

Presumably jraph's goal in writing their comment is to convince us that starting an Open Source company is a good idea -- but they haven't succeeded, for the reasons mentioned. If they want to convince more people, then they should come up with counterarguments to the top level post's arguments (and if they don't want to convince more people, that's fine too).

[jraph]

> but they haven't succeeded, for the reasons mentioned

No, I haven't succeeded because I haven't tried yet. However, I am surrounded by open source companies that succeeded.

The comment I responded to obviously reasons theoretically, and confuses some things. I will answer two aspects of it:

> Open Source makes "competing" with an existing company trivial, but with none of the invested costs. So the first mover, the program author, is always at a strategic disadvantage

That's not true. You can't just take some open source program developed by someone else and make money out of it. Let's say I develop open source product P. I offer support and consulting. Let's say you want to compete with me on P. You initially lack the expertise and the notoriety. If Alice and Bob want to get support or consulting for product P, they'd better turn to P experts, which is the company that builds P, me. For you to get customers, you need to prove the world that you are an expert. It takes spending time with the code, and also on marketing. But while you are spending time on this, I am too. You will also fatally need to contribute improvements to the product you are selling to make your customers happy. Actually, if you start contributing, it's a win for both of us and our companies can even be friends.

I'm not making this up. That's actually where I work.

> This is not an accident- it is baked into the very point of open source

So we just countered this. I'm not saying there's no risk. but that's not "by construction".

> There's a reason that very few people in the bazaar actually make decent money. There's a reason the cathedral has treasures.

And now we are confusing development methods, not "open source vs not open source". You don't need to be organized in "bazaar" to build free software. Look how, for instance, SQLite, as open as you could dream, manages very well with their non contribution policy. They are profitable. They have a "first mover advantage".

> These are two pretty distinct concepts, and the (traditional) motives for those two things don't merge terribly well.

Well, they can.

But my biggest argument is that you don't need to believe me. Many "actually open source" companies have succeeded. So, what gives?

I don't need to actually build an open source company to prove my point. Others have been doing well. Maybe me in the future, that's not completely excluded. Thing is, being employed also has advantages.

[akoboldfrying]

Thanks for responding.

>For you to get customers, you need to prove the world that you are an expert. It takes spending time with the code, and also on marketing.

I agree with this, and that the makers of P likely enjoy a big (and genuine) advantage in being considered the authority in all matters P. But for a competitor (me, in your example), spending time with your existing, working code is much less time and effort than writing brand new code, and that difference in my effort levels is the disadvantage, for you, of going Open Source vs. closed-source.

>SQLite, as open as you could dream, manages very well with their non contribution policy

I wasn't aware that SQLite was a profitable enterprise. I have to admit that this is a very strong example for your case, given the competition in this area from other FOSS software (PostgreSQL, MySQL).

[skeeter2020]

Yes, but the response of "just try" is basically saying "do something the extra-hard way".

[jraph]

> do something the extra-hard way

indeed

> just try

I did say "please" try, the nuance is quite important :-)

You know, I think the views differ because we have two problems:

1. How can I create a profitable company

2. How can I make my open source work sustainable

If you only target 1, open source might not be the more immediately easy solution.

I'm aiming at 2, and 1 is one way to do it: given I want to live from open source work (because of my convictions), can I do it by building a company?

The answer is: it might be harder, but yes.

If you don't care about open source, my comments here are just mostly annoying.

[bruce511]

Oh, making a profitable company, of any kind, isn't easy :) . Most businesses fail. (90% within 5 years, something like 1% make it to 10.)

Of course there are successful examples of just about every model under the sun. If you can find a model, and a business which allows externalities like Open Source then that's fantastic.

And yo be clear I'm not saying companies fail because they are Open Source. Mostly they'll fail for the same reasons every other model folks- they don't generate enough cash to pay the bills.

Indeed Open Source can be an attractive start. There's at least a chance of free labor. There's some marketing milage.

The problem is not the start. The problem is when the money starts flowing. When you're "surviving" no-one is really incentived to muscle in. When you start "thriving" then suddenly your space looks really interesting to others.

[subtra3t]

> risk of failure with it

And licensing one's product seems to amplify that risk.

> based on a few opinions of HN comments

What if someone does do that? As a HN commenter I can't bypass the possibility that somebody takes my comment at face value without conducting proper research and analysis.

HN comments (and really all content on the Internet in general) should be written responsibly. I am not saying that GP didn't write their comment responsibly.

> nor it's their responsibility to outline the full extent of risks involved

But then you can't raise complaints when somebody does outline the full extent of risks involved.

[jraph]

> I can't bypass the possibility that somebody takes my comment at face value without conducting proper research and analysis

Someone not conducting proper research is doomed to fail at building a company anyway.

You should be careful in writing HN comments but you should not feel responsible for a business failing. Someone reading should also read comments from anyone, one's writing does not go unchecked for long on HN.

[wavemode]

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 the only models that can really work are models where you genuinely don't care about other companies taking your code and using it for their own purposes. (This shouldn't be surprising - that's literally the whole point of open source!)

When I see companies trying something other than these four business models (usually because they desire more money than being a non-profit can offer) I inevitably see companies that might as well just not be open-source companies, because their licensing has to be restrictive for them to compete.

[JW_00000]

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 hardware (and in theory should allow them to sell more hardware).

In theory, I'd expect a printer manufacturer to be able to open source their software, because their product is the printer not the software. In fact, I don't get why open sourcing 3D printer software should be a disadvantage, and the article doesn't explain this.

[fragmede]

> 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.

[bruce511]

Their product is the hardware but clearly without software the product has little value.

So they invest resources in building the software.

Another hardware company comes along. Their product I'd also hardware. The software they get with no investment at all.

The second company has a strategic advantage. Far fewer software development staff. No carried software investment to cover. Hence lower costs. Hence cheaper product.

In theory company 2 sells nothing because the buying public understand the models, and are prepared to pay a lot more for the same or lessor product.

In practice the buying public doesn't know about Open Source, and the tiny fraction that do, don't care enough to matter. Hence the success of iPhone and the lack of traction for the latest "OSS Phone".

[wavemode]

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.

[nojvek]

There’s a 5th one. While not fully open source companies, they have a whole bundle of open source libraries and packages that don’t threaten their core business.

Meta does OS well for their scale. React, Llama, PyTorch come to mind.

For MS: Typescript, vscode, .net come to mind.

[jraph]

> Llama

This is not open source. (but this does not take out the essence of your comment)

The huge caveat with this is that we often get nice open source developer tools out of these companies, but never good software targeted to end users. So others still need to work to provide open source software to actual users.

[jraph]

Consulting on the product is another important income, possibly higher than support. It can be:

- developing features or bug fixes in the open source product or an extension that are needed now by the customer

- developing a custom project (not in the open, or actually sometimes in the open) on top of your open source product for the customer

- supporting the customer for some integration with your open source product.

You can also try to sell paid extensions (that are still open source). That would be the case for XWiki Pro apps, or many WordPress extensions.

There's another way to do it, is develop your open source and sell your developer expertise for unrelated customer projects. I've worked somewhere working like this, but don't really believe it works well because you are not actually spending time in your project when you are doing this, and you are not incentivized to develop your own product when you do this. You are basically a consulting company. But you can still decide to do a bit of this.

Consulting and support can work for solo developers, but that might push quite some pressure and make it difficult to disconnect depending on the way you do this.

[konschubert]

Your recommendation is based on what you want for yourself, not based on what’s good for the person starting the company.

[jraph]

I suggested, I didn't recommend. I chose my words carefully. Under the condition that the person believes open source is the right thing to do.

You need to believe in what you do when you start a company.

I also suggest based on the fact that I do work for such a company, which has been successful. Next year is its 20th anniversary. It's an amazing place to work at. You can create amazing work environments out of open source. And while it's quite rare, it's also far from being the only one.

Another commenter says that I seem to ignore the consequences of a failure. I don't. However, I'm surrounded by open source companies and they all seem to be great places to work at. Join us!

When you believe in open source, being able to work in agreement with these values is amazing. I can't imagine how stronger that must be for the one would indeed founded a whole business like this.

It's time people stopped spreading this belief that open source and sustainable business cannot go together.

[Arch-TK]

Where do I find these open source companies? In the UK it seems like they don't exist. But maybe I am looking in the wrong places.

[jraph]

I believe New Vector Ltd, which builds Element [1], is in the UK. You also have Collabora [2] and probably others as well.

If you are willing to work from home, you could join one from France or Germany where many of them are established, the time difference is small. You get to work in an international setting which is also relatively small size.

When I was looking for a job, I actually listed open source software I may enjoy working on and find who was behind. I ended up running into my current company at an open source event, so you might also want to go to one of these.

[1] https://element.io/

[2] https://collabora.com/

[silisili]

Very few companies compete on code alone. Those that do I understand the model a bit more, but still usually have the velocity to run away from copycats.

Uber, Yahoo, Google, FB, you name it, all provide a ton of work open source. They don't compete on code alone.

[amadeuspagel]

None of these companies open source everything, or even the most valuable parts.

[silisili]

Picking on Google here, their most valuable part by far is injecting ads into search. Most agree their search is nothing special, getting worse even. We've seen tens of companies write good enough search engines. You could write one 10x better tomorrow and still likely fail. Their code is not the secret sauce - their user lock in is.

A lot of the same could be said for FB.

[konschubert]

If google’s search is nothing special, why are all other search engines worse, including yours?

[subtra3t]

I agree with you but at the same time I can see why you were downvoted. No need to be so rude.

But I feel that it's incorrect to dismiss Google as being a bad search engine. DDG and Brave both provide !bangs for google and many other search engines that a significant part of their userbase use regularly. I myself use google often when I'm searching for something extremely specific, something that Google may give me 2-3 relevant search results for. Other search engines would often not give me anything relevant at all.

[marginalia_nu]

A big part is that they have access to an enormous amount of click data and user data. This not only from being the dominant search engine, but also from sources like Chrome.

[nrabulinski]

At least a few search engines are either equally good or better. Kagi immediately comes to mind, but there have been others posted on HN over the years as well

[amadeuspagel]

This post has nothing to do with my comment or the broader discussion.

[ChatGTP]

Can you tell me where I can see the source code for the Google maps APIs please?

[JW_00000]

Isn't that exactly his point? They open source "a ton of work", but not everything; thereby "not competing on code alone". The code of, say, Android or Google Web Toolkit is open source, but the products they build on top (App Store, Gmail/Maps/...) is closed. It only makes sense to open source the parts on which you're not competing.

[ChatGTP]

Uber open sourcing a bunch of periphery services while having benefited from a huge amount of existing open source libraries to build said service is not even slightly the same thing.

There is absolutely nothing here about open sourcing the bits of code that make them the real money. The business logic implementations, that's what I'd be interested in seeing. That's what we're talking about.

Most of these companies open source because they're great strategies for recruitment anyway. Ie, they get something out of open sourcing these periphery services.

[akoboldfrying]

"a ton of" does not imply "all".

[EMIRELADERO]

Even if they end up not succeeding, OSS companies are a good thing for another reason: they shift the Overton window.

Some companies are getting boo'd on HN and elsewhere for changing their license from OSI-style to source-available, whereas 10 years ago there would be no source available to the public at all. This is, overall, a positive development.

[bayindirh]

Well, there's no harm to them if they stop sharing their source X months after switching to source-available model.

It'll even be a net benefit since CoPilot will not devour their code, strip its license out and spit (sorry, emit) to anyone who asks the right questions.

An OSI approved license allows building upon that work, more importantly GPL prevents these improvements to go private.

Source-available provides "for your eyes only" view to the code, and is just window dressing when compared to other models.

I fail to see a net benefit, just a staggered backtrack.

[mbesto]

Actually what you're referring to is specifically FOSS - free and open source which is used synonymously with 'open source'. Furthermore there is free as in gratis versus libre.

https://en.wikipedia.org/wiki/Gratis_versus_libre#%22Free_be...

> and the (traditional) motives for those two things don't merge terribly well.

So depending on whether your source is free as in beer or free as in speech, dictates what business strategy you might have.

[PeterZaitsev]

Well there is Open Source and Free Software, which are quite similar. There is also "Freeware" and "Freemium" terms which use "Free as in Beer"

[Voultapher]

> So the first mover, the program author, is always at a strategic disadvantage.

I disagree with that part. You have the people who know and understand the code, that's worth a tremendous amount. This also applies for new features, who else is gonna be as proficient as your people at building on top of it? Also a lot of enterprise contracts are all about assured support, who is placed better than you to provide it? You have the people that have the best understanding of the code.

[bruce511]

You cant "have" people.

Yes, today a bunch of highly skilled, highly trained people happen to work for you.

Tomorrow those same people get hired by your customers, strike out on their own, or join the competition.

All the points you raise are true. But the company doesn't "own" the people, it can only exploit them for as long as they hang around.

[abetusk]

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

[Ologn]

> 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.

Google releases Android source code. While people would like even more of it released, I can and have compiled LineageOS and put it on an Android device.

I could even go more in and get a Pinephone (I do not have one, but have a Pine watch). From another open source company.

Google released Angular and more OSS. Facebook released React.

Red Hat built a giant OSS business before being swallowed up by IBM - b2b companies to get swallowed up by big b2b companies.

On a smaller scale, Health Market Science released a generic database Java library I used. They needed to write some generic software to use, then open sourced it if anyone found it useful. Doing so did not threaten their business, LexisNexis acquired HMS.

Open source is released within and without companies. Lots of successful companies release open source. Most of what I use is open source - from my System76 laptop and desktop, to my Android and LineageOS phones, to my Pinetime watch. I suppose for people who don't program it the appeal level is different, but I do program.

[chii]

> decide if you want to make a company, or if you want to make Open Source.

these companies decided that they can leverage the marketing that is "open source" in order to gain mind share and traction, after which they start looking to charge.

That is what i associate with any open source company.

[jraph]

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 think about WordPress, XWiki, Nextcloud, Passbolt, Univention, LinPhone, Element, Igalia for instance?

I don't know the internals of each of these, but I believe they all manage to make money from open source by keeping the free software / open source spirit.

[usrusr]

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 to say. Yes, there are companies that can be considered "true to the idea of open source" (sqlite! Even though technically neither a company nor open source), but there's a clear cutoff.

[jraph]

> 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

[usrusr]

You are right, sqlite is public domain and I fell victim to some echoes in my mind from the early days of the open source licencing theorizing when "pubic domain is not" was an important talking point, but I guess the thing public domain was not is compyleft (or one of its mostly overlapping siblings), not open source, the superset of everything not closed.

[the_mitsuhiko]

I’m not convinced that Open Source is a marketing terms that matters much for many industries (SaaS, hardware, probably others). If anything the continued push back against people trying to stay aligned with the Open Source community and have commercial enterprises tells me that in many ways you’re probably better off not trying in the first place. I personally don’t think that’s the right message.

It is hard to be open licensed but find other players in the space who just want to commercialize other’s contributions without giving back. And I have not seen any practical proposals for how to deal with this without changing license terms away from the OSI definition.

[cuu508]

> It is hard to be open licensed but find other players in the space who just want to commercialize other’s contributions without giving back. And I have not seen any practical proposals for how to deal with this without changing license terms away from the OSI definition.

Proposal: SaaS. Offer your product as a paid hosted service. Sure, other players can take your shiny awesome product, and launch a competing service. Compete with them! As the original author of the product you have the name recognition, and you have the best specialists for offering customer support. You will always be one step ahead in rolling out new features and bug fixes.

[the_mitsuhiko]

A closed source SaaS is the worst for customers in terms of risk. An open source SaaS runs into the freeloader problem:

> As the original author of the product you have the name recognition, and you have the best specialists for offering customer support. You will always be one step ahead in rolling out new features and bug fixes.

That is somewhat true but in many ways it turns out that customers treat the open source version as what it is: open source. This means that they do not shame, reject or decline the offer of some other company to provide bespoke deployments of open source SaaS. It’s not even just Amazon, there are also smaller companies who are interested in self hoisting Open Source software for their own customers. The time advantage does not appear to matter there.

[cuu508]

> That is somewhat true but in many ways it turns out that customers treat the open source version as what it is: open source. This means that they do not shame, reject or decline the offer of some other company to provide bespoke deployments of open source SaaS.

Sure, but that's the thing! If you want to call your product open source, you have to be OK with users taking your product, and running it themselves, and giving nothing back. They are not "freeloaders", they are normal users of your open source code.

> It’s not even just Amazon, there are also smaller companies who are interested in self hoisting Open Source software for their own customers.

Compete with them!

PS and BTW you do get something back even from your free users: free marketing and user training.

[the_mitsuhiko]

> If you want to call your product open source, you have to be OK with users taking your product, and running it themselves, and giving nothing back. They are not "freeloaders", they are normal users of your open source code.

The issue for me is that there is no term for what we do with the FSL. It’s much closer to open source than source available as it literally upgrades to open source after two years.

On the user definition: open source doesn’t draw a line between an end user and a competitor. That’s part of the challenge here.

> Compete with them!

Personally I rather compete in a level playing field.

[ayuhito]

> You will always be one step ahead in rolling out new features and bug fixes.

You may also be one step behind when it comes to infrastructure related bugs or support if you want to focus on providing the best product. Competitors who host your product have a much smaller scope to worry about which may lead them to have a better infrastructure and support structure that customers flock to. E.g. Elastic vs AWS

Except infrastructure and support may also be the only revenue stream for the original developers too.

Some may say that’s exactly how it should be in the free market and I agree (since you chose the OSS license model over something else like FSL), but it does highlight how the original developers may feel this is an unfair situation.

[graemep]

There are lots of successful open source companies. How much did IBM buy Red Hat for? How profitable was it? There are businesses making money out of every major open source project and contributing to it.

The business model fails for reasons other than it just being open source:

1. trying to sell open source as a product rather than as a way to sell something else - services, hardware, whatever. 2. being the main developer - and therefore losing the benefit of sharing development costs. How is it a bazaar if there is only one organization developing it?

[the_mitsuhiko]

Red Hat is also highly criticized for their present day questionable reinterpretation of what the GPL allows them to do.

[ThrowawayR2]

> "...Red Hat..."

Successful tech companies don't sell themselves, particularly to has-beens like IBM.

[growse]

IBM pulled in $60b last year.

For many tech companies (and especially their investors), selling out and realising a return is the very definition of success.

[nocombination]

> 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"?

[davidw]

A successful company needs to sell something scarce. Open source software is by definition not really a scarce good, so you need to find something adjacent to it that is, and that can be a lot trickier.

https://journal.dedasys.com/2007/02/03/in-thrall-to-scarcity...

[thayne]

Proprietary software isn't exactly scarce either. It relies on copyright and patent law to enforce a monopoly.

[davidw]

> relies on copyright and patent law to enforce a monopoly

Correct. As well as SaaS business models which make that even easier and less dependent on sometimes difficult to enforce rules to make the product scarce.

[filleduchaos]

So...it's scarce?

I genuinely don't understand what the point of bringing up copyright here is. Apart from a tiny handful of materials, even physical products rely on legal protections against counterfeits and knockoffs to be scarce. Why do we talk about software as if it's the first and only thing to be artificially scarce?

[thayne]

No it isn't scarce. There isn't a limited supply. There is no point at which the software company would say "sorry, we're out of stock". Unless maybe you are selling physical media with the software on it. With SaaS, possibly you are constrained by the capacity of your infrastructure, but that isn't usually a practical concern unless you have incredibly unexpected growth.

[bruce511]

Well, for closed-source software there's a scarcity of suppliers, not supply.

The value is not in "a copy of windows" it's that all copies of windows come from one supplier.

Yes there can be competing products, that achieve the same goals, or there may be scarcity there too.

Of course, even when achieving the same goals, some products are more desirable than others. There's no scarcity of OS options, but some would seem to be more popular.

[thayne]

"a copy of windows" is what you pay for (well, what you pay for a license to use). And there isn't a scarcity of copies of windows.

[davidw]

It has had artificial scarcity introduced to provide an incentive to create it. It's certainly an imperfect system in many ways, but it kinda sort does create scarcity that drives revenue which pays programmers to keep working on the software.

[thayne]

I don't thing that is necessarily the case. If your model is to sell the software as a SaaS, then yes it gives you a disadvantage, because someone else can just take it and sell the same thing without paying for development. Same thing if you sell a packaged product. If you sell support, you have a slight advantage, because you have more expertise in your product since you created it, and can make changes directly to it. But then it can be hard to find customers willing to pay, and you have an incentive to make the product difficult to use so more users require support.

I think the ideal situation would be where you are paid for the development itself, rather than selling the resuling software. Maybe with a pool that interested parties can invest in for initial development, new features or continued maintenance, like kickstarter or bug bounties. But that probably wouldn't have the high margins that the software industry has become accustomed to.

[bruce511]

Actually this is exactly how many, if not most, software companies are set up today.

The interested parties in this case are users. They pay a small subscription each month. That subscription pays for development, support, hosting, and so on.

Its the very definition of sustainable because it doesn't rely on "new sales" to fund existing customers. The overall cost is spread very thinly across the ones who are benefiting.

[PeterZaitsev]

I think this applies to Product Companies. If you look at Europe there is very large number of Service Companies developing Open Source and they are doing very well.

The key is - they are Not relying on having some form of monopoly in regards to such software for their success

[seba_dos1]

> This is not an accident- it is baked into the very point of open source. There's a reason that very few people in the bazaar actually make decent money. There's a reason the cathedral has treasures.

Then it's good that "bazaar" vs. "cathedral" is completely orthogonal to "free software/open source" vs. "non-free".

[hutzlibu]

"My recommendation is this - decide if you want to make a company, or if you want to make Open Source"

I don't think this is true in general, but maybe indeed in many cases. And a non profit organisation would be a better fit(tax reductible donations!), but those are not exactly easy to set up and a project in itself.

[mistrial9]

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.

[xtiansimon]

“…the (traditional) _motives_ for those two things don't merge terribly well.” (My emphasis)

Companies also hold their cards close tending to not share their insights, information, and plans.

[PoutCo]

I think you are missing an important point here.

1. Open source is about the code belonging to the community

2. Open source projects can not survive without funding - as you develop

3. So, both (open source and company) can be compatible if and only if funding belong to the community. In other world, if the open source company is decentralised and democratic. And that is what we need to fight for.

[wslh]

The current code is perpetually licensed to the community, not owned by the community.

[CaptainFever]

That's the legal reality of it, but I think what the GP meant was that the idea is that code effectively belongs to the communes (of course, credit is still due). It doesn't matter if this is done by licensing or releasing into the public domain. That's just the means to an end.

[prmoustache]

This is overly simplified.

You could have said "company" and "made in EU" and it wouldn't have been more or less true.

Open source itself is not necessarily a problem but one over many factors that have there pros and cons. And for one struggling company doing open source there are hundred or thousands of struggling companies not doing anything opensource or benefiting from opensource without contributing.

[Capricorn2481]

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

[plumeria]

Or try to make a company and if it doesn’t work open source it? Blender comes to mind.