Monetizing Open Source Software
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Hosted By Matt Watson

Full Scale

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Emily Omier

Today's Guest: Emily Omier

Positioning Consultant - Emily Omier Consulting

Eugene, OR

Ep. #1134 - Monetizing Open Source Software

In today’s episode of Startup Hustle, Matt Watson and Emily Omier key in their insights on monetizing open-source software. Our guest is the positioning consultant at Emily Omier Consulting. The duo talks about what open source is, what the best business models are based on it, and the pros and cons of using it in your business.

Covered In This Episode

Are you a non-tech founder considering open-source software for business? Or want to learn more tips about it? Then Matt and Emily’s conversation is perfect for you.

Together they share incredible knowledge on open-source software. From its benefits to challenges to the business models that fit its system, wisdom and advice are never-ending.

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Highlights

  • What is open source? (01:37)
  • Examples of open-source software (04:29)
  • On monetizing open-source software (06:20)
  • How does Emily help companies? (08:58)
  • Emily got into this specialty in what way? (10:27)
  • About open-source entrepreneurship (13:20)
  • Why doing open source to get free labor and contribution is not a good strategy (16:13)
  • Open source is a huge investment of time and money (18:45)
  • The primary business models of open source (21:51)
  • Using their community as a moat (26:24)
  • What are VCs looking for from an open-source company? (28:29)
  • Leveraging open source as a business model (31:26)
  • All about Emily’s podcast (38:47)
  • Top advice: be specific with your positioning and messaging (41:27)

Key Quotes

You shouldn’t start an open-source business because you love open source. Or because open source is the ethical way to develop software. Instead, you should start open source because you have to start an open-source company. Because you have a clear idea of how having that open-source project is going to contribute to your business’s success.

– Emily Omier

Another misconception people have is that open source is free. It’s free. You don’t have to pay money for it. But often, it requires an investment of time, and people don’t really appreciate that. If you’re asking for people’s time, you really have to provide them value in return.

– Emily Omier

That’s the challenge of open source. People can do that. And even if you put the licensing in there that says you can’t do it, that doesn’t mean you can stop them.

– Matt Watson

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Rough Transcript

Following is an auto-generated text transcript of this episode. Apologies for any errors!

Matt Watson 00:00
And we’re back for another episode of Startup Hustle. This is your host today, Matt Watson. I’m very, very excited about this episode. I connected with Emily Omier a few months ago at this point when we scheduled this. She’s an expert at helping software developers and companies monetize open-source software. And so we’re going to talk about that today because it’s kind of its own type of business. And there are definitely entrepreneurs and tech entrepreneurs that have made a lot of money in this space. And I’m sure she’s gonna tell us about it. So she’s a consultant that helps people do that. So again, that’s Emily Omier and Emily Omier Consulting. So before we get started, I wanna remind everybody that today’s episode of Startup Hustle is powered by FullScale.io. Hiring software developers is difficult. Full Scale can help you build a software team quickly and affordably and has the platform to help you manage that team. Visit FullScale.io to learn more. Emily, welcome to the show.

Emily Omier 00:55
Thank you so much. Thank you for having me.

Matt Watson 00:57
So, I guess, before we get started, what the hell is open source? We got to start at the basics here. For those that are listening, what the hell does open source mean?

Emily Omier 01:12
Ooh, we got it. Alright, so that’s actually a really good question. Incidentally, the person with the most credentials or the right credentials for asking that is going to be a lawyer. Because fundamentally, if this is true, you know, whether something is or is not open source is a legal question. It’s about what license it’s published under. And there are a lot of different licenses out there. Some are what’s called permissive, which means you can basically take this software and use it in any way that you want. Some are called copyleft licenses. That copyleft license is more restrictive. Often, that means, for example, that you are welcome. You can see all of the code, but you can’t take that code and use it, for example, in your own commercial product. Some people think that copyleft licenses are not real open source. There’s controversy about that. But yeah, so fundamentally, it comes down to is this code that’s publicly available? Is it not only inspectable? But can it be altered, reused, and then potentially monetized by somebody other than the person who wrote it in the first place?

Matt Watson 02:31
So that’s some kind of legal aspect of it. But if we step back from that for a second and say, okay, generically speaking, what is open source? Why do people use it? How is it used? Like, what would you give, like, the broader definition that people have?

Emily Omier 02:47
Like, what if I was going to talk to somebody, like at a neighborhood barbecue, like, what is open source software, then I would say, you know, it’s, it’s code, it’s software that probably is on GitHub, probably available on GitHub. And it means that it’s shared with people who you do not know. And those people, without interacting with you in any way, without sending you an email and asking you to download your code, they can use it, they can make changes, they can incorporate it into their own commercial product and, and make money off of it in that way. So base, and they can also contribute back to it so that you can create a community of collaborators that have never met in person, might not know very much about each other, and maybe not even like their real names. And yeah, so that’s what I would say, sort of open source is and in general.

Matt Watson 03:49
Well, so I’ve been doing this for over 20 years, and the beginning of my career. Linux was kind of in its infancy and was not as big of a thing as it is today. Today. It’s like the gold standard for basically everything, right? So you go back 20-plus years ago, you had Unix, you had Microsoft, Server, Microsoft Windows, all that kind of stuff. But you have to really pay for all that stuff. Almost everything was paid for. Things like Microsoft technology staff were all kind of a closed ecosystem. It was not open source. Right now, you fast forward to today. 2023. Almost everything to do with software development is open source, like Linux is the primary, you know, a server technology that’s used to host all software. It’s all open source, right? All the programming languages are, for the most part, open source, including Microsoft stuff, not like the dot net framework, all that, you know, Java, PHP, Ruby, C++, no JS, JavaScript, all that kind of it’s all open source. It’s all out there, right? So almost everything we do, even if we’re building like paid commercialized software, is building on top of open source, right? But there are also companies that Build open source software like an open source CRM system, or e-commerce system, or other things like that, that then they commercialize. Right, or people, people work together. So what are some examples of open-source software products that maybe people wouldn’t know? Maybe not necessarily. You may not be actually the ones that you’ve ever worked with? Or like, like, somebody who’s listening to this that doesn’t know much about tech is a good example of like, oh, yeah, like Magento or something like that.

Emily Omier 05:30
Yeah, people didn’t know WordPress. WordPress is probably the one that I think almost everybody is going to have heard of.

Matt Watson 05:36
Is it open source top to bottom? The whole thing?

Emily Omier 05:40
Yeah, I think so. Okay, so like hosting is monetized, the company behind WordPress is called automatic. They do it primarily. It’s there. I think they’re worth, like, billion, 6 billion. Yeah, I think it’s 26 billion. I could be wrong about the exact number. It’s huge. But yes, WordPress is an open-source project. You can, and there’s, that’s part of why there’s, you know, a huge ecosystem around WordPress. But yes, you can contribute to WordPress, become a WordPress contributor, and build extensions to WordPress. So, so yeah, WordPress is a very, very good example. A lot of people have also heard of Red Hat, which was acquired by Intel, but Red Hat is a very famous, also open source company. Partially, one of the reasons that they’re very famous is because their business models are a little bit different from what would be what sort of this standard, what’s called Open Core Model before I get into business models, so I actually want to take a step back. Because, oh, when you first said, like helping software developers monetize open-source projects, that actually made me think of something else. So to clarify, there are a lot of ways you can talk about monetizing open-source software. One of them is an individual who maintains an open-source project and then starts, essentially, a consulting business around that open-source project. A toad-like that would fit the definition of monetizing an open-source project. It’s not what I do. That’s not my specialty; I work with companies that are building big businesses. Usually, the companies I work with are venture funded. But that said, even for that, like the companies that do eventually become larger, sometimes the first step is just like the one single maintainer who’s like, Alright, how do I make this my full-time job?

Matt Watson 07:49
Well, WordPress was a great example of this, right? It’s like, okay, we built a content management system, but then building all the ecosystem around it, the hosting, the consulting, all those kinds of things are the things that you primarily help somebody do, right? How do you build all these other services and business models around it? Where there might be, like, a free open source version, but then there’s like enterprise, like paid versions, or, or all those sorts of things? And that’s kind of the business model side of it. As you lose? Yeah.

Emily Omier 08:18
Yep. So what I help companies with is figuring out how to position their open source project, how to take it to market, and how to figure out what is going to be a good, correct monetization strategy. My sort of sweet spot actually is in positioning for, I would say, moderately mature, open-source companies; by mature, I just mean that they have a commercial product. So there’s always this continuum where you have, you know, an open source company that just has an open source project, and they have a lot of venture money. But they don’t have any revenue; they don’t have any way to get paid. And then those companies, I’ll help them figure out, well, how do we get more people interested in this open source project? And based on who that market is? How could we what’s the best way to monetize? But then also, once you have that commercial product, how do you position the product, the company, the project, so it all makes sense, but also, you’re not like cannibalizing too much one from the other.

Matt Watson 09:28
So do you have previous customers that you’ve worked with that you could talk about more specifically? I do not. We are all under NDA.

Emily Omier 09:38
Yeah. We’re pretty sensitive about what I do, so I don’t want to talk about it too much. I can talk about it in generalities, though.

Matt Watson 09:47
Okay. So, I guess one question I have for you is, how in the hell did you get into this specialty? There’s got to be like three people on the planet to do what you do. Like how did you get into this?

Emily Omier 09:58
That’s a really good question. Because I am not a developer, I started out as a journalist; I started out in tech journalism. That’s kind of where this started. And then, from there, I started doing a lot of marketing communications work with tech companies. And a lot of the work that I do now is like upstream marketing, communications. So the marketing communications, people will feel the pain if you haven’t figured it out. And so that’s what was happening to me as I would work with companies. And I was like, so what should we be talking about? And they were like, I don’t know. And, or, you know, I’d be working a lot in the cloud native ecosystem. And every company was saying the same thing. They were all describing their product almost identically. And it sort of realized that a lot of these companies had a bigger problem; they needed help figuring out how to position themselves, how to differentiate what it was that they were, were built from, from everything else in the ecosystem. And so that’s how I got started. But now, I focus more on open-source companies. The reason is that they’re more complicated. They have; it’s much more complicated to figure out how to talk about your product. And your project, when you have two, or you have three commercial products. Or, sorry, you have to do one or two commercial products, plus you have a project, plus you have some sort of community. Plus, you have to have some sort of narrative around your entire company. That is just, it’s much more complex than if you have a straightforward one; here’s our one commercial product.

Matt Watson 11:51
So when you’re helping them, is a big part of that still, like all of their marketing and communication, or are you more like today doing more like the strategy work?

Emily Omier 12:02
So today, what I do is more strategy. So it’s positioning strategy, which is it touches your monetization strategy, your product roadmap, your sales strategy, and your marketing strategy.

Matt Watson 12:16
So do so if somebody is listening to the podcast today. And they’re like, You know what, I built this thing. Think about just making it all open source and then trying to commercialize it that way? What would you tell them? Would you tell them? Don’t you know what you’re in for? And you may not want to do this? Or would you be like, Hey, this is a great idea? And I know exactly what to do. Like, what would there be a fair bit of warning before they jumped into this?

Emily Omier 12:40
Yeah. So this is a really interesting conversation that happens in the world of open-source entrepreneurship. Because one thing that can happen is people create an open source business because they just like open source, and they think open source is the best.

Matt Watson 13:00
They’re just developers that don’t matter.

Emily Omier 13:03
Yeah, but they’re like money, like, yeah, I don’t care about revenue. And I guess that’s fine, you know if you don’t need money, but if you’ve taken venture funding or something, or like, you have to pay rent, at some point, you may actually need to take people’s money. But the point is, you shouldn’t start an open source business because you love open source or because you think open source is the ethical way to develop software. Instead, you should start open source because you have used to start an open source company because you have a clear idea of how having that open source project is going to contribute to your business’s success. And it’s not the same. It’s not like one size fits all. Some people see their open-source project as being a development model. It’s a way to get feedback. It’s a way that sounds more like Microsoft at this point, right?

Matt Watson 14:00
It’s like, they have the dot net framework and C sharp, the programming languages, all that stuff. It’s sort of like them; they’re just developing it for transparency. People can contribute all that kind of stuff. But they’re not necessarily really trying to monetize it, probably right. And then, on the other side, you’ve got companies like Elasticsearch or MongoDB, or Redis, or all these other things that they’re trying to monetize on top of it by how they host or they do all these other things. Does that make sense? Is that a fair statement?

Emily Omier 14:31
Yeah. So incidentally, ElasticSearch and Mongo are two of the companies that did they change their licenses to be less permissive to be more copyleft, causing a bunch of a fair amount of controversy that they did that because they were struggling to make enough revenue with their previous model.

Matt Watson 14:51
AWS forked their code and said screw you.

Emily Omier 14:55
Yes. I mean, fearing that Open Source companies worry a lot about AWS fucking them over. So, yeah, yeah, that’s a real worry. I think it probably depends. I mean, I can’t happen to fork them over Exactly.

Matt Watson 15:18
Yeah.

Emily Omier 15:21
But for what . . .

Matt Watson 15:22
But your point is, you know, people that are doing open source for they’re like, Oh, we just do open source because we want people to contribute, right? That’s not really their business model. It’s just like we just want people to contribute.

Emily Omier 15:33
So usually, doing open source because you want people to contribute is not a good strategy. Because it’s actually hard to get people to contribute, like, certainly doing open source because you want free labor of people contributing, that’s a losing strategy. I tried that. Yeah, yeah. Whether you’re an open source startup, or you’re like, you know, a big business who has an open source project, and that you’re hoping that you’re gonna get a bunch of outside contributors unless you have, the way that sometimes works is you have like, big business, A, B, and C, and they are all competitors. But there’s something like, an example might be some security framework, some security software that they all want to work on together, that would be a situation where like, yes, it makes sense for these, all these competitors to build the software together, make it open source. But generally, you’re not going to get free labor, but you might get feedback from people, which can be really valuable. Some people think of their open source project as like lead gen; I do not think that’s an excellent way to think of your open source project. But it’s definitely, definitely a mentality out there. And the key is, you know, you have to know what you’re getting out of your open-source project. Let’s see, another good reason to have an open-source project as a company is you expect that your technology is going to become the de facto standard. So you really want in the short term to have, you know, every single person, every single developer in whatever niche you’re in using your technology. If that’s your play, then yes, having an open source is probably a good idea.

Matt Watson 17:28
See, I tried using it; it’s Taxify for, like, we had logging libraries. So software developers could report their logs and stuff. And it was all open source because they had to reference it in their code and everything. And sometimes people would come to us like, this doesn’t work. And we’re like, alright, it’s on GitHub, you can go debug it, and they’re like, they don’t like that. You know, you have to some degree, like an open source with your open source, you can tell people like, well, you can unfuck your own code, go figure it out. Right, but they don’t really like that. They explicitly expect you to fix all their shit for him.

Emily Omier 18:05
Or at least to engage in it. And this is actually, like, open source is a huge investment of time and, and money, right for the business. And you have to be pretty sure you’re gonna get something out of it if you’re gonna go that route.

Matt Watson 18:21
And So, in my last company two, we used a project called Electron, which is super popular, but most people don’t know what it is. But like Slack on the desktop, I used electrons. Visual Studio code uses electron-like; there are a lot of things that use Electron that basically enable you to run like a web app on your desktop, okay. And my company was trying to use something called an electron or whatever. It was like a dot net, like a Microsoft dot net wrapper around an electron. And funny enough, Microsoft Teams uses the same exact thing. Microsoft Teams is built on this. Anyways, we found problems with it. And my team debugged all of it, found all the problems, and submitted a pull request back to the maintainer. And because we were so invested in it, we were invested in trying to fix it because we were trying to build on top of it, right. So, you know, sometimes you do get contributors like us that just like we need to make this thing work, but we invested a shitload of time and trying to use it, troubleshoot it, debug it. I mean, it was a time suck for us, too. But there are contributors to these things. And that’s what I’ve done in the past. It’s like, I did it before with, like, some kind of percentile calculation plugin for Postgres, and I found a bug in it. And I was able to go through the code because it was open source, and then tell me I didn’t actually fix the code. In that case, I didn’t like to submit a pull request, but I was able to go back to them and tell them, “This is the problem because I could see the code. And so you know, there are definitely benefits to all this. But to your point about finding free labor. It’s hard to get people to do that. Most people would just like Screw this thing; I’m gonna use something else.

Emily Omier 20:02
And actually, if you are getting people who like submitting pull requests or are submitting, honestly, even if they’re just interacting and giving you feedback at all, that’s a really good sign that people care about this project and that there’s something special about it. So yeah, that that is like a, it’s, it’s a metric that you want to look for. And see, like, Are people using this project, even though there’s something that doesn’t work, even though there’s stuff that doesn’t work? Are they willing to live with it anyway and take the time to fix it? I mean, another thing that I think about in terms of, you know, going to market for an open source project, I think, another misconception people have is, you know, open source is free. It’s free, right? You don’t have to pay money for it. But often, it requires an investment of time. And people don’t really appreciate that if you’re asking for people’s time, you really have to provide them value in return. So if your project is doing that, that’s a sign that people you know it does provide value, right?

Matt Watson 21:11
Yep. Do I remind everybody that finding expert software developers doesn’t have to be difficult, especially when you visit FullScale.io, where you can build a software team quickly and affordably, use the Full Scale platform to define your technical needs, and then see what developers are available today to join your team visit FullScale.io to learn more? So going, going back to the business model side of this, okay, so we talked about contributors and how that kind of plays into open source. I’ve been a contributor. I’ve tried to get contributors on that side of it. So on the other side, how do people usually monetize this? Is it like, A? They have a free version. So you have something like Redis, and some of these things like, oh, it’s free. But if you want, like, these features, clustering, security, these enterprise features, which usually everybody needs, and then they want to pay, then you have to pay for those, or it’s like hosting, it’s like, oh, there’s a hosted version of elastic search, or whatever. And they charge like a fortune for it. Like, what other kinds of business models do you see that way? So yeah, so you hit on the suit, two sorts of primary ones.

Emily Omier 22:11
And often those are grouped in they’re called Open core, you have some sort of core that’s open. And then you have the Enterprise Edition. It’s so funny because, like, the names are all the same; it just feels like total buzzwords. But anyway. So then you have an enterprise edition, and then you have a cloud-hosted edition, and you charge money for the Enterprise Edition and the cloud-hosted edition. I just want to point out that one of the challenges that a lot of open-source companies have is that the market for those two products is different. I think that’s one of the misconceptions, like the type of company that is going to pay, you know, swipe their credit card and pay $9 a month for like per person is different from the customer who needs a bunch of enterprise features and wants to run it themselves in their own data center. Those are different customers. But that’s open-core, totally valid, and probably one of the most profitable. We’re considered the most profitable of the open source models because it gets you closest to sort of like a traditional software company type of situation. Another one is services. And, you know, services generally are less profitable. But, you know, you’ll get more bootstrapped companies that are services-based companies; they’re also, you know if we want to talk about open source purists, a lot of the companies that are run by people, you might call like real, real open source, purists are going to be service based because they don’t want to have any enterprise only in any paid features. They don’t want to be in the business of selling software. They think the software should be free. So Percona is an example that’s been pretty successful. To a certain extent, Red Hat was an example of a service company. All those Red Hat also did a lot of packaging. So they bundled together, or do I shouldn’t say I did, they bundled together open source projects. And you know, the services were around, like keeping them updated and fixing bugs within a certain amount of time. So you, as a consumer, didn’t have to worry about those things. Yeah, and then there’s also the business model that we can debate about whether or not it’s an open-source model or not, which is called multi-licensing. That’s what Mongo and Elasticsearch do now; where it’s open source, you can look at it as long as you’re not using it as part of your commercial product, in which case, you need to fork over some money.

Matt Watson 25:01
Well, and that’s the biggest challenge that these companies have, like you mentioned with Amazon Web Services, took ElasticSearch and forked it and said, Hey, you guys built a great product, probably not even sure you really need to improve it any more. So we’re just gonna take a copy of it and just keep on it. And we’ll slowly make changes and copy the changes you make. Right? Like, yep. And that’s the challenge of open source, too, is people can do that. And even if you put the licensing in there that says you can’t do it, that doesn’t mean that you can stop them. Or even though they’re doing it, right, as they would know, Amazon Web Services is doing it. But, like, if I just download and fork the repo and, like, run it on my little server in my closet, they sure as hell aren’t gonna know.

Emily Omier 25:44
Yeah, not at all. Yeah, I mean, that’s only one of the challenges. But certainly, I think the way that a lot of open-source companies try to get around that is by using their community as a moat. So also thinking about ways in which they deliver value that you can fundamentally not get if you’re using an AWS service. So one of the things that a lot of open-source companies will talk about is like avoiding vendor lock-in. And if that is something that you care about, then you just fundamentally can’t go use the AWS service; it’s just not, it’s not going to be really competitive to the thing that allows you to be independent of AWS. But there’s also the idea of using your community as a moat. So if you really invest in building a community of people that are invested in your project and your company, those people are not going to get the same; they’re not going to move over to AWS. And the other part is that it is possible that, you know, AWS rips you off, and you lose a couple of customers. If you’ve built a strong enough community, you can afford to lose some people. And you just have to say, you know, those people who don’t care about this community, or I don’t care about not being locked into AWS or whatever, like, they’re just not our customer.

Matt Watson 27:14
But I think the biggest use cases of open source, like potentially for our listeners, are going to be things more like content management systems, or e-commerce systems, and all these kinds of things that get built. And most of the time, they’re providing a lot of professional services around them, right? Like that’s their primary business model is like, Okay, you use Magento, Orchard CMS, or whatever it is. They build something like that. But then they charge people a whole bunch of money to customize it and build it and do whatever they want to do. Is that predominantly what you see from the people you see? Model?

Emily Omier 27:49
No, because I work with me well, I mostly work with venture-funded companies. And I think there are a lot lower scaling possibilities with that model. So sort Sir, I actually don’t work with any companies that service model a totally valid model totally. You can build a profitable company, but it’s probably not going to get venture funding because it doesn’t have that same scale possibility that a lot of VCs are looking for. But yeah, it’s not that it’s not valid business totally is.

Matt Watson 28:23
So the ones that have scale. Are they almost all like software development, like infrastructure-related stuff? Are there examples like other categories that also kind of scale?

Emily Omier 28:36
We talked about WordPress. Yeah, Drupal, which is a WordPress competitor, is not as big as WordPress, but the company behind that is called Acquia. They’re also pretty big. And yeah, so there’s, there’s definitely other companies. Oh, do, which is a Belgian company that also does some things like CRM and a business suite; they’re also an open-source company. That’s not in the developer infrastructure space either. So yeah, there’s, and they’re a big company. I don’t remember exactly their valuation. Not as big as WordPress, but big. Yeah, there, you can definitely build companies that are not, you know, TerraForm scripts. Okay. It doesn’t have to be Hashey Corp.

Matt Watson 29:30
Yeah, a lot of open source stuff is all like usually a developer, you know, there like developer tools, infrastructure, all that kind of stuff. But there definitely has to be industry. Not probably industry-specific things. But I think, like the content management system, CRM, a lot of stuff like that, that’s cross-industry. And there’s got to be a lot of them out there, but people just don’t know they exist.

Emily Omier 29:53
I think they get a lot less attention because they’re not as exciting to them. It’s like that. In the open source ecosystem, the open source sort of business ecosystem is sort of an echo chamber. And it’s made up mostly of software engineers. And so they ended up talking a lot about other things, like engineering tools. But I know you wrote a blog post or LinkedIn post about boring companies. And I think this is also true in the open source space that there’s a lot of like, really boring, open source projects that are like, you know, there’s an open source project to, you know, make it easier to integrate with supply, like shipping providers or something like that super boring stuff. But amazing potential.

Matt Watson 30:46
So what other advice would you have for somebody that’s listening today? That would be like, Hey, um, you know, should I start? And should I leverage open source for my business model? Like, what other kinds of tips do you have for that?

Emily Omier 31:00
So here’s a couple of tips. So first of all, okay, go ahead.

Matt Watson 31:09
I was gonna say, or maybe like, what, you know, what kind of product, you know, or, you know, type of product or service they offer, they would even be a good candidate for it or whatever. Go ahead.

Emily Omier 31:20
Yeah. Okay. So, first of all, know why you want to have an open-source project as part of your business. I didn’t mention this. But a lot of times, what happens, the way that an open source business comes about is it starts as a project, and then it sort of snowballs, it becomes more and more popular, and then the person decides to create the business. So that’s a different path than thinking, Okay, I’m going to create a business. Am I going to have an open-source project as part of this or not? So, you know what it is? What does it contribute to the business? Are you working in an industry where it’s considered table stakes? I think this is the reason that you see so many, like developer tools and companies, that our open source is because everyone just expects that they are going to be, and if they aren’t, it’s like a challenge to them. So nobody’s gonna pay for it. Ya know, like, they’re not going to get any adoption; if they’re, they don’t have the open source, or they’ll just be dismissed outright. So if you are operating in a niche where that’s the case, well, then take that into account; maybe you have, but you don’t really have a choice. Be clear, like, be clear on who you’re marketing to. I talk to a lot of people who are like our market as developers. And even you know, if you do have a developer tool, and that’s your market, that’s not specific enough. There are a lot of developers that do a lot of different stuff. Be really clear on exactly what problem you’re solving. Another thing is open-source adoption does not necessarily translate into revenue. There are a lot of really cool open-source projects that are never going to be monetizable. If you have a really cool, open-source project that makes the text rainbow or something like that, this is not a good candidate for monetization. Doesn’t it matter how many downloads you have? So think about that. Like, is this software going to be in the critical path? Is it solving a really expensive problem for people in general? Another thing is, just remember that not everybody cares about open source. So when you actually start thinking about selling your product, you might have to de-emphasize the open source component because, well, maybe people who are adopting, who are just developers, might care about open source because they want to just fiddle around with it. But once you’re talking about people who have, like, a revenue-producing application that’s running in production, and like this, your project is allowing them to process credit cards or something like that. They do not give a damn whether it’s open source or not. They need it to work. And they will pay you money. But the fact that it works, and it works reliably, is the thing that’s going to matter a lot more than the fact that there’s an open-source project out there. So basically, don’t overestimate how important being open source is, especially as you start actually selling your product.

Matt Watson 34:41
Yeah, it’s like you gotta buy WordPress; it’s like, I don’t really care if it’s open source; I just want to host my website. So telling me it’s open-source might just add a lot of confusion. It’s like, okay, well, yeah.

Emily Omier 34:51
In fact, that brings up the other thing, which is that the connotations around open source are not universally positive. So that’s another thing to be careful of when you talk about building an open source business and really put the emphasis on this is open source. It could, to some people, means it’s like it’s transparent. Some people think open source is more secure. Whatever sounds like words to me. Yes. So then the flip side is, like, work is there like, oh, open source is like the place where I can’t get anybody to answer my questions. When I asked them, you know, when I told them about a bug, they told me to go to hell. It’s like, it’s free. Some, you know, sometimes people think Free is good. Other times people think like free means that it’s shit. And, you know, so that’s also why I tell people, like, don’t talk too much about the fact that your thing is free. Because, like, that means it doesn’t have any value.

Matt Watson 35:54
Yeah, it’s like if somebody came to me and said, Hey, Matt, we should use whatever open source CRM system, I immediately think, oh, it’s got to be a piece of shit. And I’ve spent a bunch of time customizing the damn thing. I don’t want to do this. That’s the first thing.

Emily Omier 36:10
Yeah, and, and you are not the only person who would have that immediate reaction. So be aware of that, if you’re building an open source company that, you know, maybe you don’t want to lead with, with open source, or you want to lead with whatever people get out of it is open source, not just open source in and of itself.

Matt Watson 36:27
But it could also be really valuable, right? Because so for example, you could use Shopify for e-commerce, but at some point in time, you’re like, oh, I want to do something special or different, or whatever. And then you go look at open source, open source e-commerce systems, there’s a bunch of them, there’s simple-commerce, there’s Magento, there are all these different things. And going into those, you know, you’re gonna have to customize, you’re gonna have to do some work, right? You hire some developers, and they take in, like, 90% of it is going to work out of the box, but you’re gonna have to customize it to do whatever you want to do, or, like, systems integration kind of work to configure it. But that’s also the value, and it’s like I can now I can customize it to do whatever these things or this weird, wild stuff that Shopify wouldn’t do. But that’s also the advantage. That’s also the power in it. But if you’re like me, I just want the simple thing. Like you probably want Shopify, you don’t want the open source thing.

Emily Omier 37:19
Yeah. And that’s also it’s important to note those open-source e-commerce projects are not really directly competitive with Shopify because the type of person who wants to just use Shopify is probably not a super great fit for that open-source project. Because you would use that open source because you like precisely because you need the customization. But you’re not, you know, you don’t have like 10,000 employees, you don’t, you don’t want to build it from scratch yourself.

Matt Watson 37:48
Or you don’t want to pay Shopify a bunch of money anymore because you’re doing millions of dollars a month in transactions or something like you just outgrow it that way.

Emily Omier 37:55
Yep. Exactly. Well, tell us a little more about your podcast; I failed to mention that earlier.

Matt Watson 38:00
You have your own great podcast about open source.

Emily Omier 38:07
Yeah. So my podcast is about building open-source businesses. I have mostly founders but also other people in the industry. Such people like me, who are consultants who work with open source companies, people who work in sales and marketing, and product investors in open source companies, talk about, like, what are the challenges and opportunities in building open source companies? And how is it different? I mean, the thing that always interests me is like, you know, what do you get in building an open source company? Or what information do you need and building an open-source company that you wouldn’t get from, like, a standard startup book?

Matt Watson 38:53
is definitely a niche. Right. And so you’re an expert in this. And if somebody’s interested, I would definitely have listened to your podcast and talked to you for sure.

Emily Omier 39:01
Yeah, definitely.

Matt Watson 39:03
Don’t talk to me. I don’t know shit about it.

Emily Omier 39:08
I mean, one of the other things I think is really interesting is if you have an open source company, especially a venture-funded one, there are all these metrics that you want to look at to see, like, Are you being successful, they have to do about community growth, like community engagement, all these things. And in fact, it’s not necessarily going to be the same metrics for every company. If you have just like a regular software company, you’re going to be like, Alright, what’s my revenue number? Am I profitable? And that’s a little bit simplistic, but it is a lot simpler than when you’re looking at an open-source company. And there’s so there’s all these other variables. Certainly, when you’re looking at the success of an open source project, that’s where it’s like completely different, you know, there’s no revenue number, there’s no profit number to say like yes was a success.

Matt Watson 40:01
No. At the bench, the KPIs are different. Yeah, exactly. Very different. Well, if you need to hire software engineers, testers, or leaders, Full Scale can help. We have a platform, we have the platform and the people to help you build and manage a team of experts. When you visit FullScale.io. All you need to do is answer a few questions and let our platform match you up with our fully vetted, highly experienced team of software engineers. At Full Scale, we specialize in building a long-term team that only works for you to learn more when you visit FullScale.io. Well, this has been an awesome conversation today. And as we wrap up the show, do you have any other final tips for budding open-source entrepreneurs out there? I’m putting you on the spot.

Emily Omier 40:47
Final tips. All right, I’m gonna, I’m gonna lean back on the thing that I really specialize in, which is positioning and messaging, be more specific about what you do. One of the biggest mistakes I see with a lot of founders making a lot of maintainers is this. This also applies if you just have an open-source project and you don’t care about monetization. Be specific about what it does. And if you’re like, writing a readme, for example, be very specific about, you know, what is this do? Why should anybody care about it? Think really critically about how each feature provides a benefit to somebody who uses it. The example I like to give here is that you’ll get a lot of projects that are described like this, this is a cloud security tool or something like that. And that’s like giving almost zero information about what circumstances it’s useful in or not. So be as specific as possible. And, you know, if people don’t understand what your project is about, they’re not going to use it.

Matt Watson 41:57
So what you’re saying is software developers are terrible at marketing.

Emily Omier 42:04
You know, incidentally, marketing is such a dirty word. I feel like a lot of software developers would proudly agree with that. But yeah, so marketing that’s done well benefits everyone, and bad marketing. And bad communication in the open source ecosystem is bad for everyone to include in your potential users because they like they can’t understand that your project would help them.

Matt Watson 42:33
They got to be able to self-select.

Emily Omier 42:36
Exactly and out.

Matt Watson 42:37
Yes and no. Yes. All right. Well, thank you so much for being on the show. Again, this was Emily Omier, and her website is EmilyOmier.com. You can also find her on LinkedIn and her podcast, The Business of Open Source. And Emily, thank you so much for being on the show today.

Emily Omier 42:38
Thank you.