 All right, so let's talk about open source licensing and go to market for startups Brief introduction to myself. I'm a former developer who for the past 15 years has been doing sales and marketing for early stage developer focus startups and I've had a variety each of these companies that a variety of relationships with open source at Circle CI We were a completely closed-source company, but our two primary competitors Jenkins and Travis CI were open source Then I was at a company called serverless where we were in MIT licensed completely open source product called the serverless framework then courier where We had open source libraries SDKs We maintained the core product was closed and now I'm at a company called dragonfly where we are a business source license Also known as source available, so I'm going to talk about kind of these different Relationships with open sources strategies setbacks to these various approaches And I actually need a look up here a little bit because I don't can't sit on my computer But just a brief history. I'm a huge history fan love to kind of start with understanding the historical context of any topic story so software kind of began as a concept in the 50s and 60s and Initially, it was really part of academia and it was treated like any other academic research just like if you published a paper on Biology or sociology or history? It was open for anyone to analyze Utilize in their own research. That's kind of the place that that software started from and It was typically bundled with hardware. You would you'd get an IBM mainframe You get some sort of computer. It had software attached to it. And that's how you got access to the software in 1969 there was a landmark case US versus IBM which essentially said hey Packaging software with hardware is is anti competitive You need to let developers let engineers let end users put their own software on on the computers if they want And that's really what set the stage for there to be a commercial software industry for us as developers to be able to build Software sell it Microsoft was founded shortly after that in 1975 You kind of consider them the first software startup the original software startup And as a reaction to that in the 80s There was the GNU project as well as the free software foundation And this was kind of a pushback to say hey We want to have some safeguards some safe place for there still to be this free and open-source software We don't all software to be commercial And then you had the internet era in the late 90s where the amount of software being built Exploded the cost to build that software increased dramatically and you know on the commercial side You kind of had Oracle and a couple of closed systems And then you had what was like the lamp stack and then a few other CMSs and web frameworks based on those That developers really started flocking to that to say hey These are open frameworks that I can just grab off the shelf and start building really quickly and easily and I think That internet explosion and lamp stack was kind of the birth of of the open-source ecosystems as we think of them today Now to talk about commercial open-source specifically so businesses built around open-source That that really started in 1999 when red hat IPO that was the first Sign that hey, there's an industry Behind open source we can build businesses with open source at the core and red hat showed that that can be done with a dual Licensing model which dual licensing is basically saying hey we have one version of the product that is open-source license You can take it do whatever you want with it is free and open-source software And then we have a second product that has a commercial license You can pay us as the company behind it to install it on your own hardware And and run that for your business and you're going to get additional features security You know a variety of things that can be added into that second part of the product and This opened this opened a whole new set of investors coming on the scene after red hat saying hey We want to fund the next red hat, so roughly from 1999 through 2009 there was hundreds dozens if not hundreds of startups founded and Funded pursuing you know trying to be the next red hat Most of them fail like there's not a lot of successful open-source startups that came out of this period They're still trying to figure a lot of things out, but starting around 2009. You had MongoDB then Hashi corp elastic data bricks Confluent you started to have these startups founded that were able to repeat that dual licensing model that red hat was successful with and And and build really success successful sustainable businesses all all these companies up here I believe except for data bricks is not IPO'd yet all the other ones have IPO'd So then then comes the cloud platforms and this this changed the the equation of building an open source commercial startup quite a bit AWS launched in 2006, you know by the mid to 2014 2015 They had built a very lucrative business on taking open-source software Built by other venture funded commercial companies and offering them on on their global hardware, right? There's a variety of services listed up here that do that. This is not an exhaustive list And if you're AWS, this is great, right? You don't have to necessarily invest in all the R&D to build this software You can put it on on your infrastructure, which is larger scale than anyone else and you're not breaking any laws that the Licensing says you can do this and for for the companies that invested often hundreds of millions of dollars to develop this very Complex very powerful software it showed them two interesting things for the most part these companies were still Building their business with with a licensing model that said hey the dual licensing model, right? Their customers were still deploying their product on-premise on their own infrastructure AWS showed that hey the cloud distribution model is More effective quicker time to market higher margins that that's a that's a real model You should be pursuing But it also showed these open-source startups that hey, you're now competing against us with your own product We're taking your own product. We're competing against you and That's when the licensing story really changed for these companies. They decided hey the permissive open-source licensees We've been pursuing are no longer sustainable and that was when a new licensing model That's often referred to as source available emerged So what what is source available right? This is this is a topic that It's very heated on on hacker news is on github on Twitter Essentially what source available means is that the code is open and available just like with traditional open source You can go to github. You can look at the code. It's there It also still has the same frictionless developer adoption experience. You can download it You can run it on your own machine. You don't need to sign up. You don't need to opt into any terms of service It's it's it's frictionless to use But there are restrictions on on some usage Typically the restriction says you cannot take this software and run it as a cloud hosted service to compete with us You can put it in your SaaS product and sell another service that it's a component of but you cannot compete directly as us It's the company that's developing that software so What why did these emerge right we talked a little bit about the clouds coming and AWS in particular that was a primary reason the competitive threats there but But that the this this millions of dollars that was being invested from venture-backed Companies into developing the software simply was not going to continue to flow in less a new licensing model was figured out You're not you were no longer able to go raise money from VC saying hey And I experienced this in 2015 2014 with when I was at serverless We would get term sheets from VC saying hey You have an MIT licensed Piece of software take this money and just go get as much developer adoption as possible We'll figure out the monetization later. That was no longer really an option Because the competitive threat from the big clouds was simply too great So if you wanted to go and continue to raise money to to build this software You needed to come up with a different licensing model and I apologize to keep needing to look up I don't have the same thing on my computer Oh, and then yeah, finally The alternative was founders could just go build closed-source software right they could just say hey We're giving up on the whole open-source thing. We're just not going to have that But there's still a really strong desire from engineers and from developers to have their source code open So this business source license let them do that while protecting their business And and I really like this well analogy. I didn't I didn't invent this I've seen this other places, but you can kind of think of software as a well You can think of open-source developers as well diggers and you know Some wells have have really great fresh water at the bottom some have water that's that's not so tasty not so valuable and You know traditional permissive open source as hey We want any anyone can come drink this water and anyone can come package it and sell it We want full access for any use to this well Whereas business source essentially says hey you can come and drink the water But you can't bottle it and sell it and I think that's a really good way to think about the difference and mongo mongo Db was one of the first companies to adopt this license and I think you know every All the companies that have adopted this license have put out their own statements to say hey This is why we did it. I think mongo's is especially good You know they say the market is quickly trying to is is quickly moving to consume most software as a service This is a time of incredible opportunity for open-source projects with the potential to foster a new wave of great open-source server-side software the reality However, is that once an open-source project becomes interesting It is too easy for large cloud developers to capture all the value but contribute nothing back to the community Given the risk small companies are unwilling to make that bet bet so most software being written is closed sourced The community needs a new license that builds on the spirit of the APG a GPL But makes explicit the conditions for providing the software as a service and this is the same Minds that same thought process that most of those companies I listed earlier went through and This licensing change has evolved with the go-to-market which is to deliver Software via the cloud and you can look at these are the four four companies I was referencing earlier that have evolved IPO so was able to pull all this data from Quarterly reports and you can see you know when when they all started offering their cloud services, you know between 2016 and 2019 prior to that it was all on on premise installs When you know they adopted that their source available licenses, which for the most part was within a few years after that and Then I think what's really interesting to see is how Along with this their their revenue models are shifting to cloud services You can see, you know, Mongo in the last couple years went from 50% of their revenue on cloud to 70 elastic from 35 to 40 Confluent from 30 to 50 as Companies are shifting their distribution out of the cloud. They're having to evolve that licensing model as well So so for the next generation of open-source founders for the next set of companies, how should how should you think about? You know open-source and go-to-market, so I believe that traditional kind of open-source as a commercial strategy is really obsolete Especially if you're going to deliver via the cloud that's going to be your distribution model You need to figure out a model that fits that business if you want your source code to be open That probably means some some version of business source model of business source license the the the reason you're building a business is Is not to to fit the strict definitions of open source. It's not to make Anyone happy other than your customers right the purpose of building a business is to deliver value for your customers and you should choose the model that's going to accomplish that best and I think you know as you think about The essential pieces of go-to-market, which is your product your promotion your distribution and your price Each of those each of those should be thought through as you think for your licensing and they should they should make sense together And finally As I was mentioning earlier your licensing Strategy is going to have to be an essential part of your fundraising model when you if you have an open if you're lucky enough to have a Popular open-source project and you go to the venture community you go to investors to say hey I want to build a business around this They're going to ask you okay. What what why did you select this license? How is that going to impact your ability to monetize your product and build a business? Which surprisingly wasn't really the case, you know five seven years ago. They didn't ask these hard questions They just said hey you have an open-source project. That's popular developers. That's great. Here's a check Things have changed and you really are gonna have to have great answers to these questions So a few predictions that that I believe are going to play out as as we kind of evolve as as a commercial open-source industry I do think that source available is going to be the default license. I think it's the best thing available to us today Doesn't mean it will be forever I think that making code open is going to be an essential part of go-to-market It's going to be an essential part of getting developer adoption It's going to be essential a part of building trust and security and when you're selling to enterprise customers having them easily be able to review your code, but I think it's going to be less essential for most companies as a Ability as a way to develop their product, right? And I think you're already seeing that a lot of the popular business source licenses today They're not taking tons of external contributions. They're not even soliciting tons of external contributions. That's not the primary reason They're making their source code available I think components of the ecosystem I think you'll see companies where big components of the ecosystem are available and you're you're seeing this trend today with AI companies a Lot they might you know make some of their training data public Open source they might make some of the libraries and frameworks But the core product that they're selling they're keeping close and I think that's a trend You're gonna gonna start seeing a lot more and I think we'll continue to see innovation and licensing to figure out a better the best balance of Giving developers free and open access while protecting the business right because if we we can't figure that out What's going to happen is? VC money is gonna dry up from going into investing in open source We're gonna see a dramatic decline in the innovation that happens in the space and then finally today cloud is The primary distribution or the hottest distribution channel for software Whatever distribution model comes next is going to change the licensing story. It's gonna change the go-to-market story Everything here is going to be different. Whatever that next distribution model is so I'd love to Leave like have some some time for anyone here to ask questions have a discussion about this I know it can be a touchy touchy topic for some controversial You know, there's the religion wars on on Twitter and hacker news where people say hey, this isn't real open source We we don't recognize that as real open source But if there's any questions around the commercial aspect building a real a business around this Yeah, feel free to ask away Yeah, great question for anyone that couldn't hear his question was what happens in practice if somebody breaks your license It actually does build a competing service in practice the only companies that People are concerned with with those licenses for the most part is AWS and maybe Google and Azure and those companies are extremely conservative from a legal standpoint and They actually have rules where their developers are not even allowed to look at BSL licensed code. So I think it I'm not basically nothing's gone to trial that I know of there's never been any litigation around it It's basically a way to prevent those Hyperscale cloud providers from competing and I don't think there's actually been any any litigation that I'm aware of on that Any other questions? Yep. Oh, thanks That's dragonfly always been dual license or did you start fully open then transition into one of those like business? Licenses yeah, so dragonfly is a We just started the project under two years ago So it's up still are just about two years ago now So we started with BSL business source license from the very beginning And we had the luxury of hindsight and seeing what had happened with a lot of these other companies and be able to make that decision from the Beginning but obviously, you know mongo conflu and Hashi they these business force license didn't really exist when they were founded So they had to go through I think what you could label a pretty painful transition Period and changing that license, but for us we were always from the beginning of business source license Yeah, hi Are there boilerplate source available licenses like one around Apache and one around? GPL or whatever. Yeah, I find those. Yeah. Yeah, there are I think confluent cockroach Mongo, they've all shared theirs is kind of boilerplate in the two the two you see most common our business source which Basically says what I described and it it also has a provision in it You can set the amount of years, but after a certain amount of years the code does become open So like the version that's released today, for example will be fully open in four years And then there's the the other popular one is server-side public license Which basically says you actually can release a cloud service on it But you must open source every component API piece of that and again, you can basically call it like an anti AWS or Google because they will never do that, but those are the two main flavors And yeah, they there are templates you can you can find online for that Hi, I have a question on the legal implications of Open source available or source open I heard a lot of these things that companies especially large enterprises are not willing to implement source available software because They're just running the risk of going into some legal problems. And so the legal departments don't sign off the software and Especially I think one of the big stories of last year was hashy cop when they Decided to change the license and it kick starts the whole thing around open-to-full and everything. I just want to hear your Your opinion on this like where will this go? What's the current state around the acceptance of these licenses and enterprises? Yeah, yeah, great question So the question was around the hesitancy of certain enterprises to adopt source available licenses I can't speak for hashy corp and they're they're a bit different than than a lot of the other companies I've been talking about and that they're not a database or critical infrastructure. They're kind of a set of DevOps tools I can't speak for the customers that that I deal with at at dragonfly I've never had and you know We're our open-source version is implemented in dozens of fortune 500 companies and I've never had a company Not implemented because of that there has been some requests for more information and them wanting to learn about it It is relatively new, but once they understand what the implications of the license are I've never had that be a point of friction for adoption Yeah do you see any challenges regarding Community work or with partnerships in and selecting That type of license. Yeah Personally, I don't think so. I think the the one I think it actually opens up some opportunities for partnerships because So so I mentioned that the typical restriction is that you cannot launch a competing cloud service without permission. So a partnership Avenue or channel it does open is to say hey We would love like a company can come to dragonfly and say hey We would love to offer dragonfly as a cloud hosted service on our platform And then we're now we're discussing a licensing conversation Whereas you know you've heard several talks today of people saying oh all of a sudden I see somebody is using my open source as their own product or all of a sudden it's being used There has to be a licensing discussion there, but if they're not Wanting to offer it as a cloud solution. There's really no other restrictions on it. So I Personally haven't seen it block anything other than that and then it becomes a Partnership conversation with with a revenue share typically is typically how they're structured. I think we have time for one more question Hey, is it a provision for? Licensing certain features in an open source product Sorry, could you repeat that one more time? Yeah, is there a provision for licensing certain features in an open source product? Is it possible to open source certain features? No, is it possible to license certain features on an open source product? Possibly is it possible? Yeah, I mean that's that's typically the dual license model Where you have a subset of the product that is open source and available and then you sell Licensing for for additional features. So I think this is actually like probably one of the oldest models is to say Hey, here's here's some features you get an open source. Here's others The the typical model with these source available licenses is to say hey It's all open source and then us is the commercial company behind it. We are offering it as a cloud service Typically you we we don't hold back any features. It's just the control plane. It's just the cloud Platform that's offered on top of it Awesome. Well, yeah, if you have any additional questions loved it I love to talk about this stuff come visit the dragonfly booth L32 shoot me an email. Happy to chat more All right big round of applause