 All right, we're gonna bring our next panel up on stage, and I'd like y'all to, this is a huge group of folks, so I'm gonna have them all come up and introduce themselves because it'll be a 10 minute monologue if I do it. So why don't we have, I think there they are, come on up, panelists. So we're gonna talk about investment startups in the open source world. Okay, welcome. And again on that flywheel that I presented on Monday, or a Tuesday we have this open source projects that we get commercial products and services, that we get value and profit, that provide for a reinvestment back into the project, better code, more products, more features, more value, more reinvestment. And these folks are the ones that are making that happen in terms of making investment decisions, in terms of being entrepreneurs, and so forth. So I'm going to start at that end, and if you could each introduce yourselves quickly and go down there. Hi folks, my name is Suresh Raghuram, I'm co-founder and CEO at Platform 9. Platform 9, I hope you're listening to what Subu just said in the previous panel, running open source at scale is hard. That's the problem Platform 9 solves, we deliver open source cloud frameworks as a service. So the idea is you get the time to value and simplicity of operations of the cloud, but while using pure play open source frameworks like OpenStack, Kubernetes, and Fission for serverless. Hi, my name is Gary Little, I'm with co-founder of Canvas Ventures. I've been in venture for about 20 years with Morgan Taylor Ventures and now Canvas, we're series A, B. Over that time I've invested in four open source related companies, Jaspersoft, Mulesoft, Sonatype, and Platform 9, and have drawn some observations from those investments. Great. Hi, I'm Dave, founder and CEO of Solio. We just started, the idea with the Solio, what we're trying to do is basically gluing the environment of monolithic microservices and serverless environment by cutting all the infrastructure for function and basically assemble application that we're calling I with app and basically give a cohesive way. And we started with just lunch and open source it the day before yesterday, so. Congratulations. Thanks. Congratulations. Thank you. I'm Rashmi Gopinath, I'm a partner with Microsoft Ventures for the corporate venturing on for Microsoft. We typically invest in cities, A through C stage companies across the board on enterprise software. So cloud infrastructure, AML, cyber security, DevOps, IoT, pretty long list. I have invested in MongoDB when I was at Intel Capital prior to this, was also partly associated with a clouded investment that Intel did, worked for an open source startup at couch base and have invested in one open source networking company at Microsoft. So have some familiarity with this space as well. Terrific. Hi, I'm Jocelyn Goldfein and happy International Women's Day everybody. Oh yeah. I'm a partner at Zeta Venture Partners which is an early stage VC firm that invest in enterprise startups that solve problems with big data and AI and we particularly like to invest in data infrastructure and see a lot of open source in that direction. Before I joined Zeta, I spent my whole career as an engineer notably with long stints both at VMware and Facebook and while those were companies that mostly built proprietary software, we also released a lot of open source and I got to be the champion for a number of those projects. Hi everyone, my name is Jake Flomenberg. I'm a partner at Excel. Excel is a global venture capital firm that does a little bit of everything in consumer and enterprise from seed through growth. We've done over a dozen open source investments over the years and I also worked at Cloudera in the very early days. Welcome. Hi, I'm Erica Brescia. I'm the co-founder and COO of a company called Bitnami that is mostly known for delivering a catalog of over 150 open source apps on all of the major cloud platforms. We're also very active in the open source community and Kubernetes in particular. I've been in and around open source since 2005. I'm also an investment partner with X Factor Ventures which is a seed fund that is investing in companies with at least one female founder that is fun out of Flybridge and I have the honor of serving as an at large director on the Linux Foundation Board. So I think I have three different ways to look at the open source investment discussion. That is very true and I can't help but say this because it's not just International Women's Day, it is also Erica's birthday. Oh, wow. Happy birthday. Yay for a panel and my birthday. Thank you, Jim. I am so flattered that you are here for this panel. So I want to start on the investor side here and ask some of the investors that are up on the panel. When the original sort of open source startup phase came in, we talked Tuesday about how it was all about commoditizing markets. And I think that over a long period of time, what you would hear is like, oh, can there ever be another red hat and are we naturally capping the sides of these firms based on just taking a big market, making it smaller and that TAM is all we're gonna get. How has the investment thesis around open source startups in your experience over time changed? What are you seeing today are effective? I think Rashmi, I'll start with you and then go over to Gary and then come over here to the folks from Excel. Sure. So we've seen it go a little bit, I would say in a wave pattern. So I would say back in 2010, 2011, there was definitely a lot of appetite for investments, which kind of dipped a little bit, I would say in 2015, 2016, and then we saw things coming back again. I mean, at least from the investors and folks that I work with, there's definitely a lot of interest in evaluating and investing in open source startups. If you look at the exit path for some of the recent exits that companies have had either in the public market or as an acquisition, it has proven to be pretty good, I would say. So Microsoft acquired Xamarin and Deus, those were pretty good multiples for those acquiring companies. Mongo, Cloudera all went IPO recently and they're doing pretty well so far on the public market too. CoreOS got bought by Red Hat at a pretty good multiple for the company. And so we're definitely seeing these exits as signs that there is good appetite for the acquirers as well as for the public markets, depending on, I mean, the value proposition that these companies have and what they have to offer. Even in terms of the investment activity, if you look at recent investments by Redis or Databricks, there's definitely good appetite from the investment community in being able to fund these companies. Yeah, yeah, Jocelyn, what are you seeing? Well, I feel like just as in the Red Hat days, there was this idea that, I mean, I think VCs are always concerned with monetization and how you're gonna monetize something that fundamentally is free. And I think that Red Hat was the only one who seemed to seriously make a go of, well, the software is free, but we'll sell support. And then I think the cloud came along and there was this idea of, okay, maybe hosting is an alternative path. The software is free, but we'll host it and make money that way. And I think we also have yet to see really big successes come there. But I think where we have seen big successes, certainly Rashmi named a bunch of good ones, but when I'll point to is GitHub, where they're killing it on the monetization side, selling an enterprise product with an enterprise feature set with a free open source version that does not in the least feel artificially crippled or constrained by its user base. And so I think to me, the GitHub model is the really exciting, inspiring one, which is, can you identify a proprietary business model on top of a foundation that's free and open source and that's not Crippleware? Yeah. Gary, I wanna go to you and then come over to Jake. Yeah, sure. So I think your question is, has the investor's view changed over time? Right. And I mentioned I made four open source related investments. And two of those that have exited, I think are good point counter points. The first one, 2002, was Jaspersoft. It got acquired 10 years later. Actually, it was 2004, we acquired Jasper Reports. It, 10 years later was sold to Tibco for $185 million. The second one was 2006. Again, two founders backed them. And 11 years later, IPO and that company has a market cap of about four and a half billion now. Both had great teams, both had really good investors, multiple rounds. And so what made them different? I think we got into both of those investments thinking, hey, with open source, we can provide 80% of the functionality for 20% of the price, take a $10 billion total market, cram it down to three billion and win the lion's share of it. I mean, that was kind of the open source thought there. Martin Miko used to say that about MySQL for the database market. I think what we found was, the people who love open source are developers. Developers don't have money. And if they have money, they don't want to spend it. But open source is great for basically, being distributed in viral growth within the developer community. What makes a better business model and GitHub is a good example, is when you're actually, even though you're getting developer adoption, you're actually monetizing at a different layer. So in the case of Jaspersoft, its market was selling to developers and their number one competitor, they became the most widely used reporting solution. Their number one competitor was indeed, the free version. It was good enough. And so that limited this opportunity. Mulesoft, which was an enterprise service bus, touched thousands of servers, thousands of applications. There's really no way you'd go live without having a relationship with the company. And not only a relationship with service, but you'd better have the bells and whistles with the management console and the reporting and everything that goes into it. Is it managing all those APIs easy? So the value is monetized at the IT ops and that layer. And they would pay good money to keep those companies up and going and have visibility when there was a problem. That kind of got them from maybe the 18K up to the six figure deals, but still six figure deal. What got them into the seven figure and eight figure per year deals was when they actually got up to the C suite. And so it went from operational at the IT ops level to strategic and then they were selling digital transformation and agility of changing business models. That's when they got up to seven figure and they announced they have, at the last earnings announcement, 45 customers paying them a million dollars per year or more. So that's been my lessons. I think open source as a business model, great for adoption, really poor for monetization unless you're monetizing at different levels. So Jake, I saved you for last because Ping Li spoke at this event last year. I would add that I saw the dais in Microsoft people talking in the corner at this event a lot last year. Then oddly right after, certainly not this way, but Jake, down to Excel, you guys have done a lot of work analyzing this concept of projects and then the transition to getting customer requirements for productization and looked at the balance sheets across pretty wide portfolio that you have. Share some of the insights that you see that you're looking for in these firms in terms of where efficiency is gained. What is open source? Sure, so I'd make one passing comment. And I sort of think success in a sense will be when we stop talking about open source business model. We don't talk about the proprietary business model. What is open source? Open source is a development model. And so we lump so many things into this bucket and maybe just a few data points. Back before circa 2005, it was two to $300 million of private venture capital going into open source companies. If you look past four or five years, over a billion pretty steadily, you could argue that maybe there's a dip, but it's just a couple of these mega pre-IPO rounds that sort of skew things. You've gone from two to three publicly traded open source companies to a steady cadence, depending on where you draw the line of what is an actual open source company, entering the IPO pipeline. So a lot more public market liquidity. And you've gone from a world where a lot of things were monolith and siloed and worked on a single node to a world in which things are inherently more distributed and therefore more complicated to operate, which is a much better, I think, substrate for building a business. You've gone to a world now where there's this sort of as-as-a-service issue and dimension to the thoughts around monetization. But I mean, like if I had to sort of summarize that is, and I don't know if this is true at the application layer yet, but certainly at the infrastructure layer, we've gone from a world where open source is the exception to open source is, is the rule. Like, I mean, there's probably at least two dozen venture firms that invest a lot in open source now. And like, I bet all those guys ourselves included would sort of ask yourself a question. If you're building another database, it's like, not why would it be open source, it's sort of, why would it? And I think that's a fundamental change over the past decade. In terms of the way we look at these startups, we break it into what we call this 3P framework, project, product, profit. And simply what that means is if you can't build a project that people care about in a truly meaningful way and deploy in a mission-critical use case, who cares, right? Like, just like, it's not relevant to us. And there's lots of wonderful open source where the goal is not necessarily that. But if you can deploy in a, you know, a big, meaningful mission-critical way, you sort of achieve that first milestone. And then the next question becomes, like, what's the product? What are the bounds of what's free? What's the bounds of what's not? There's some things that are really simple on the security and maybe authentication side where there's never been a case in the world where you throw that out to the open source community and someone raises their hand and say, hey, hey, I'd love to build that, on average, that doesn't happen. That are easy. There's other things that are much more complicated. Do you hold back the distributed version or not? Do you only do the SaaS version and not have the enterprise version? And I don't think there's a lot of good answers, but I do think that we're seeing a lot more innovative business models now than support and services, right? And support and services, just on average, won't give you the margin structure to reinvest and continually, you know, build more into the business. And open source has been a great tailwind, marketing, in a sense, for adoption. And you change from these sort of hunters to go find people to maybe farmers. How do you tease out from that open source community who is gonna be a free user, who's gonna be a $50,000 user, who has the potential to be a seven-figure user over time? And those are the sorts of things we study, you know, as we look to invest in these companies. I wanna ask you one question and then move on to the entrepreneurs here because, you know, you mentioned about, you know, where it's sort of the norm. You just look at it as a company, open source is sort of the norm at this point, but these efficiencies around marketing and culling through the big amount of interest that will come in through an open source project that sort of goes viral. Are you seeing that reflected in the actual balance sheets? Like, the entrepreneurs are listening here, like, is marketing gonna go, is it gonna be cheaper, is it gonna be more expensive, is R&D gonna go down, is R&D gonna go up? Like, what are you seeing on the balance sheet? If I had to say, I would almost argue that R&D is a little higher and marketing is a little lower on most open source companies compared to our traditional enterprise. Sometimes there are economies of having a big community participate. Sometimes there's governance challenges. Sometimes things are harder to move forward, but, you know, you go from this, there's a huge difference in qualification from someone that has never heard of your product to someone that's using it. And we sort of call this TAC. Like, what's your total addressable community and like, what's the process of converting, you know, that active community member into a paid customer? And if that activation energy isn't actually cheaper than a traditional sales cycle by some margin, you've broken something. So you have firms that are actually measuring the acquisition at the project level from a financial sense? I think, you know, I would call it in the early days aspirational, but when you get to scale, when you're on that path from, you know, 20 million ARR up to what it takes to become public, you absolutely have to measure it. And it's so, you know, these big deals can change the dynamics, but it's really a question of not holding them to a bar, maybe in that very early stage, but get an habit of measurement. Like, what is the metric that is actually meaningful and having the conversation with the entrepreneurs to define those metrics up front and say you can do whatever you want for now, but like, you know, gosh, you're gonna have to, you're gonna have to achieve these sorts of efficiencies. What are the open source metrics that you might look for as a public market investor, but also, oh, by the way, like, if you don't hit all the normal, traditional enterprise software metrics, it like, you're not gonna get, you're not gonna be rewarded by the public markets anyway. Yeah. Sorry, can I make a comment on the data point? I think I just had this conversation with a successful open source founder who exited, who I won't name, because he didn't give me permission, but we were talking about, Was it recent? Not gonna answer that there, but he just told me like, we suck at marketing, and so we put our money in R&D, and that's part of our go-to-market strategy, and they were literally looking at this trade-off, like, we're not going to invest in marketing, we're gonna invest a whole lot in the open source and building an ecosystem and a community, and using that as the driver for adoption and visibility, and it clearly worked out quite well. It's definitely counterintuitive though, because you always think of this great shared R&D effort out there, but you're telling me on your balance sheets, you're seeing actually higher R&D, the big value is in the marketing, which I think is super interesting. I want to go to the entrepreneurs now, because one thing that I do think, in addition to marketing efficiency, that I want to ask you all about, just in your fundraising experience, and in a prior life I did rounds of fundraising, and pitched a lot of venture firms in the Valley, is the open source component of your business, or the fact that you can just hang your hat on being an open source company, is at least a fundraising efficiency that you're getting out of it, is clearly on the Excel side, they don't care either way, Jake's been very clear on that, but do you see that as you're going around and pitching different firms? Eric, I'll start with you, you've raised a question. No, so, well no, we're bootstrapped, so I mean, but not in an interesting position there, but I'm also an investor, and I will tell you, no, like I do expect, like Jake said, and I think maybe Jocelyn mentioned, like almost every company has some aspect of open source in their strategy, at least in the software space now, like they're either using or building around open source, like look at the Kubernetes ecosystem, for example, where companies are investing heavily there and then building products around it and networking. But does the halo of Kubernetes help you to raise, I guess there have been a lot of announcements of Kubernetes-based startups raising some pretty big rounds, Jake there looking at you. But I would say that's not necessarily because it's open source by definition, I would say it's because it's popular and it has a ton of momentum, and it achieved that, of course, because it's open source, but somebody doesn't come at least to me and say, hey, I'm running an open source company and I'm like, holy cow, I want to invest in that company because they're in open source, right? It's because they're in a hot space with a ton of momentum that happens to have achieved that because of the nature of the open source project that the companies are being built around. Interesting, interesting. I mean, at Platform, you're writing the, you mentioned several open source projects in your introduction, at Platform of Mind, was that a useful thing for you going out and raising money, you know, the tricky thing with this question is that my investors, right? You are in the worst possible. So you're putting me on the spot. That's okay, Gary is gonna talk his book all morning. If you can tune out for a little bit. Give it, man. Yeah. I think that fundraising is like a sale and as a salesperson, the CEO is essentially, the entrepreneur is essentially trying to make a sale. And I think as a salesperson, you want to control every aspect of the conversation and the whole open source thing can really get in the way of that. We didn't start the company, by the way, this Platform Mind thing is my first thing with open source. It's my first and last startup. I don't think. We were, I was at GMR with Jocelyn. She was, I was a lowly engineer. She was a big shot, so she doesn't know me from there. But the thing is, like, we didn't come from an open source background. We wanted to make clouds easier to run. And when we started with that, we said, why would we go and retool all the stuff that OpenStack has done and all the stuff that containers are going to do? So we said, that makes no sense. We want to solve the core operational challenge, the challenge that Subbu talked about earlier, which is operating clouds is hard. And it doesn't matter whether you use closed source or open source, that operational challenge is what we do as a company. And so I think, you know, it was really interesting for me, there was this project, OpenStack, that everybody likes to believe is dead, except that everybody's running VMs everywhere you look. And the Kubernetes thing is white-heart, except that there's no one using it at scale. I mean, I'd love to see Ticketmaster stats, but I'm building to bet more than 90% of the workloads are running on VMs. So... The best part about this event is you can get that info just a little bit later. I'm gonna catch Justin after. So my point is that, like, I think it gets in the way, you know, at least my perspective is, our value proposition, yes, open source is a core part of our value proposition to the customer, but from a financing perspective, you know, timing is everything and there's winds blowing, you know, there's a crosswind on OpenStack, there's a tailwind on Kubernetes, so this is white-heart. Who wants that? Well, I happen to be a fan of Kubernetes myself, but... But Kubernetes is, sorry, my view is Kubernetes is the next OpenStack, two years from now it's gonna be, somebody's gonna be beating up on it, we'll be hard about something else. I totally agree. In fact, I was at a venture event one day and a partner came up to me and said, you know, we create value at our firm and you know, that's what we work with OpenStores. What does the Linux Foundation do? And I replied, well, we destroy value. No, I'm kidding, you know, again, I really believe in what Jake's saying, which is, if you don't have a commercial feedback loop here, these things aren't sustainable and you get an open SSL or you get an NTPD or an open business where this, you know, one person maintaining this OpenStack. Just as the investor cited that, we found platform nine when we were looking at opportunities at Kubernetes and serverless. Oh, interesting. So, I wanna go to you because you, are you sort of characterised as an open source company just because that's where the cloud is at, right? None at all. So, first of all, I'm a little bit strange because I'm in the East Coast and when you're going to invest in the East Coast and they're in their open source, they don't even understand what you're talking about. They're really kind of like, wow. And I make it more that challenging because I'm a solo founder in the East Coast than a woman, so that wasn't very, very easy for me to get there. You should move out. Beautiful out here, like we are a wine country. I know, so that's that. I mean, the reason I, first of all, that wasn't like what I'm doing right now is not my first project. I was a CEO, a CTO in the EMC cloud management division. We opened Sorcerer project that was relatively successful. Right. And then when I started this company, for my opinion, this is to be fair the only way and I will explain what I mean. I mean, there's a lot of good engineers out there. A lot. But I believe that there's not a lot of innovator. There is innovator, but not a lot. They are not that common. And I believe that once the IP is out there, then everybody can go and build it because that's not that hard, at least not for my team, for instance. I can build everything that is out there. So for me, once I'm already saying the IP, here's what I'm going to do. If I'm not going to open source, it's someone else will go and do it. And guess what? It will be more popular than me. So I don't think that I have a choice and not like other. We think that the way to make money from their opinion is actually to make up, I don't know, services. So we will not open source everything. I actually think that the way to be better is just innovate constantly. If you're looking at a company like Apple, for instance, there was just before the fire, they let Steve Jobs go. Basically, the fight there inside was that Steve Jobs was constantly wanted to continue renovated, but the other wanted to do the Apple too. So I believe in Steve, right? I believe in his way. And I think that what I'm planning to do there is just, A, we just open source a project. We already have six months ahead of it, right? And basically what we continue going to do is we're going to continue putting innovation on. We want to lead this market. We don't want to, you know, we want to come with the idea and lead the direction. And I believe that we will see what will happen. I hope to miss it. I love the way you described that because I always talk from the open source project side as, hey, these projects are simply raising the innovation bar, right? This is stuff that's sort of continually pushing things commodity, but to essentially monetize, you better get high up the bar on the investor side and then I'm going to come back to you. What are you seeing in terms of, is that innovation bar driving? But the more, as an investor, where do you look at the line there? Do you have an investment thesis on, man, if you're not adding value above this particular area, I'm not even interested in looking at you as a company. Boy, I mean, I'd love to say there's like a specific quantity or unit of measure and it's way more earth than science. But yeah, I totally agree actually with what you're saying and I also want to tie this back to something that Jake said earlier, which is that, and I think collectively the panel said earlier, which is the beauty of open source from an investor's perspective is distribution, not innovation, right? Is contribution to marketing, not to R&D? And I wish I could cite this quote, but it's, I don't know who said it, but it's so great I have to share the thought anyway, which is it's something like look, startups are in a race with big companies, startups have innovation, big companies have distribution, and you're in a race to get distribution before the big company can get innovation, right? And so I think that in open source, it gives you such a leg up on the distribution side that it's almost, it's, you know, especially on the infrastructure side, I think it is de facto mandatory. I mean, I invest in a lot of very early stage companies where we're the first institutional money in, you're talking to any infrastructure startup and one of the debates they're having early on is should we open source or should we not? And so getting back around to the question you asked me, like the debate is also what to open source, like where to draw the line on what is free and what you hold back and try to monetize? And I would say the crucial principle for me in those conversations, I'm not really wearing my investor hat, I'm kind of wearing my entrepreneur and operator hat because I'm just trying to think of what will make the business the most successful it can be. And in those conversations, to me, the crucial principle is backlash. Are you giving something crippled? Are you giving something that is like a toy that like maybe is useful to, and I think that if developers, I mean, I just think developers are not children, they're not dummies, right? And if you call something open source, but it's really trivial and the only way to get the full functionality or do anything outside of a demo with it is to pay, then I don't think gonna have the currency that nobody's gonna get wildly excited about contributing to that or sharing it or building a community around it. So I think what's crucial is that you have something that feels for all intents and purposes really full featured, really valuable, really nails my problem, especially if I'm working on my own or I'm doing research or I'm doing something as a hobbyist. And the only time it sort of feels, but that those enterprise features, then you're worried about competing with yourself, right? That the free thing is good enough. And so what's crucial is to have an enterprise feature set where if somebody's really running this at immense scale, if somebody's really making a ton of money off of it, by God, I've gotta have the features that are there in the enterprise edition. And that's, I wish there was a silver bullet, if there was like a clearly identifiable set of features, but it's just so dependent on a project-by-project basis. But the ones that find that way to thread that needle where it feels so full-featured for the hobbyist or the solo project, but so essential to pay for the enterprise edition if you want commercial scale. If you find that, I think you've got it. Eric, it seems like you do a lot of work on making that operational efficiency really provide huge value. What, bring us into some of the debates internally at Bitnami about where this line is, where's the innovation bar, what are we at? How do you think about that? So Bitnami's interesting because most of what we do at the core of Bitnami is actually not open source, right? We build value around open source and the company has bootstrapped itself to the point we're at by packaging and delivering this open source. It's kind of like almost like the red hat model for applications that we're more focused on kind of hardening and delivering something that will run out of the box. So that's been very clear, but we did just launch our first commercial product last week, which is direct to the enterprise, which is a productization of our tooling so that others can package up their apps for all of the different platforms that Bitnami supports. And there's been a lot of talk around which pieces of that will be open source and which won't. And right now, it's completely proprietary. And that's because going to what Jocelyn said, I think it is really key to provide value and we see ourselves in providing value in the assets that we generate out of Bitnami. And so we've separated kind of where we're monetizing the business from like we're delivering a ton of value in the tooling for now as proprietary. Now over time, we may open source that, but one of the things that I wanted to say is you can also go too far. Like there are plenty of companies that have given away everything and at the risk of getting tomatoes thrown at me like Docker, I think is a good example of this, right? There's a lot of things you could say about Docker, but they gave away so much initially without a clear business model. And I think now the company is starting to build a business around it, but it took a lot longer than planned. And that's because I think you need to be very thoughtful about how much you do open source. And once you go open source, it's pretty hard to go back. And I mean, look at SugarCRM having to go through that. It's not an easy process. Sure, I mean, I think it, I mean, certainly there was a lot of marketing efficiency in Docker though. We will give them full credit on that. I mean, you do a Google Trend search on Docker and it's pretty good. Oh, absolutely. Rashmi, I wanna talk to you about sort of the mindset of a strategic venture firm in Microsoft. Are you looking at specific technologies and then trying to invest around that? Like what, how do you come up with your investment thesis? Yeah, so we typically try and stay, I wanna say at least five years ahead of what the product teams are building internally. The benefit of being part of this newly founded investment team at Microsoft is we're not strategic. So we don't require a business unit approval to do a deal. Although we do check for alignment with Microsoft down the line, which may not happen immediately, but maybe down the line. When it comes to open sources, definitely I would say in the new Microsoft world, there's a ton of interest and excitement about what else can we do in the open source world. So I'm pretty stoked that Microsoft is the number one contributor in open source projects. We have about 12,000 or 15,000 open source committers. There's 24 projects across a variety of different ways all the way from Linux kernel to .NET Core to Kubernetes and Docker and a variety of different projects internally. So when we come at our investment thesis and what would be areas that would be interesting, it's really anywhere up and down all the way from infrastructure to databases to analytics to enterprise applications. So we look at the entire stack. What we're really looking for are companies that going back to what Joslyn and Jake were saying, it's companies that can really produce a differentiated offering. It's not just doing open source for the sake of doing open source, but what really can drive a lot of community engagement around it. What can you build a solid monetization model around it? And more importantly, how are you going to make sure that you don't get killed by the next AWS announcement and treatment saying they're satisfying this offering and now your company is just dead? So those would be the three key points and just like any other financial investor, we care about financial returns. But at the same time, there's a lot of value that we can provide to these companies through all of Microsoft assets and the excitement that we have internally for open source. I can't help but riff on that question. And I'm going to eat it. Do you live in fear of your company becoming a AWS feature? I mean, there is a lot of company, there's two things that I noticed. One of them is there's a lot of company who really seek to be partnership with Amazon and I just don't get it because they never bought a company. But they're doing, they're getting closer to the companies and they're basically killing them. So that's really kind of like strength strategic that I see people doing. The second thing is that I'm not because what I'm offering is always I would up, right? They will never do that, right? Their motivation is to stay in the cloud. I don't care, right? I mean, I want to go to Microsoft. I want to go to Google. I want to do this on-prem stuff and they will never will, right? So this is, will always be my advantage. And I'm always working on layer seven on the stock which means that they cannot take anything from it. You know what I mean? So they cannot block that, right? I'm a user on their input. So all of this together make me feel very, very solid. I will see. Interesting. You mentioned how they don't do, at least Amazon, you don't see a lot of M&A activity but I want to go to Gary and Jake here on, you know, you expect some outcomes here. You know, you want a liquidity event at some point. Are you seeing any particular trends in terms of more M&A activity, more public market activity, you know, relative to these open source centric type companies or are we just beyond that at this point with the firms that we see, you know, going into the public markets these days? It's a really good question. It's interesting. Once the companies get at scale, most of our CEOs don't publicly describe themselves as open source companies because they want to operate as a layer that conveys more that they're not focused on as a tool but providing value at a higher level. And they also want to be, again, not something that's cheaper but something that is future-proofed and better than what all the alternatives are in the marketplace. So I think they really are describing value and momentum and ASPs and net retention. That's what they're selling at as opposed to positioning themselves as open source companies. Yeah. Jake, it sounds like you're seeing similar things or? Yeah, I mean, and I like the fact that these companies aren't necessarily leading with this sort of development model open source, right? If you're going to go public, just lead with the metrics. And if you have 80% gross margin, you're going to get valued like a traditional enterprise software company. And if you have a 25% margin, you're going to be valued as something else. I think we've certainly seen over the past year and a half and looking forward the next year a rise in the IPOs that are fundamentally open source companies. I think we've seen a small uptick in buys of medium scale open source companies and including some pretty recent transactions. I think the rest of the world is getting more comfortable. I do think there's still some holdouts. I do think there's still some large corporate entities that are still scratching their head a little bit and they're like, wait, what are we buying? Aren't all the contributors going to leave after we buy them? And maybe they don't have the right culture or processes in place to take advantage of them and that's not gone. But that is certainly declining. And then the other mega trend that I think we're seeing is this great concern relative to the cloud vendors and no disrespect and we'll leave Linux out. But it's not the old world guys. They're not worried about, hey, is IBM going to come take our lunch? That's not what these startups are worried about. It's very specifically the big three newer cloud providers. And that's forcing a lot more thought to go into the business models of these companies a lot sooner. Interesting, interesting. One of the questions we asked earlier in the week is how can an open source project be a super good upstream to your downstream monetization models? And I'll throw this both to the investors and to the entrepreneurs in terms of what do you really look for there? Do you look for sourcing? Do you look for a huge momentous trend? Are you looking at a particular technology value? What makes for a super good upstream open source project in terms of that downstream monetization? I'll throw it to anyone, they've looked at the investment. I think that first of all, I need to look at the code and see how good it is really because that's the foundation so I have to make sure that it is solid and not all the open source projects are solid. I wanna see that the use case just makes sense to what I wanna build. And then of course trending, I mean, to be fair, I wanna piggyback on the others but it's really actually really good for me. Right. Yeah, so piggybacking on the, starts with good code, does it solve some kind of problem? That's the most important and I think by the way that open source, that's for my opinion, this is great that we're putting the project out there. And can you give me an example of something that we wanted to do in my company and one of my engineer basically offer a hack and I said to him, that will never happen. We're putting it out there. Everybody will see that it's on the door. So I think that at least for me, what is important is to put a killer, very very good code out there because that's my branding of my company. If someone will look at it, I said, this is maybe a nice idea but the implementation is not good, they will never buy it, right? So I don't know. Go look at my product. I'm very, very solid and I'm very like every line there I'm going over because they ditch my name out there, right? Yeah, Erika, how about you? I would add to that in addition to good code, like good governance and I'm obviously biased but being a part of a foundation with a very clear set of directions and goals, like I think that's part of the reason that Kubernetes has been so successful in addition to being like a very interesting and innovative technology, it's the governance around Kubernetes and the way that Google put it into the foundation and now a community has been built around it, like you don't want to build a business around something where you don't have some degree of certainty of the longevity of the project and the momentum of the project and it's really hard to get that if it's just coming out of say a company that might have all tiered emotives, right? Yeah, good point. So I'm hearing, you know, obviously it starts all with the code and the innovation there. Governance, the ecosystem, the piggybacking off of that, that big momentum trend that's sort of just starting. What else, anybody else? Go ahead, guys. Go ahead, Surya. You know, one point I'd say is also about value innovation. I think the days when open source was a way to do 20% of the price, 80% of the value, you know, Kubernetes is an example of a project which, you know, in some ways you could use it as an alternative to some existing traditional technologies but in many ways it's actually, I think Justin said this, right? They were looking at this as a way to build better software and it was not a cheapo VMware. You know, so I think that to me is... Opening up a new market. It's about creating, ultimately, all of us investors, entrepreneurs together, are we creating, are we moving the world forward, right? I view that as a key aspect of any significant open source project because ultimately it's about creating economic value for the world. The only one thing I would add is just making sure that we, or our portfolio companies, read the fine print on the licensing models because there's just so many different varieties in how the licensing models work. So, does it mean that if you use the open source project, the portion of what you are using it for kind of becomes open source too? Like, do you get to keep that IP? Is there any inherent data sharing that just becomes applicable as part of using that open source? So, it is just reading that fine print and making sure that we completely understand what we're getting into. Yeah, and I think maybe the simple observation is sort of what is your fundamental unfair advantage in terms of how you take advantage of this open source project? Like, at the end of the day, it is an open source project, right? So, anyone can have a relationship with it. Like, what is your role in the governance, in the creation of the product, in your company's stature or situation that's gonna actually allow you to be one of the one to three companies that can really draft off the project and I think it's great for various consulting practices and other types of businesses to build a publicly traded company. You have to really articulate that and there's a lot of, there's how many Kubernetes-related companies do we actually need at the end of the day? I think there's room for one to three. Do we need 30 Kubernetes companies? I don't know. Yeah, I mean, it's hard to, I mean, certainly at least a couple of those are gonna be really big is the point, right? That I think, you know, this is the riding the coattails and so forth. I wanna come back to this a little bit. Can I just start? Go ahead, Gary. I would encourage everybody to be very creative about how to monetize upstream. So certainly Open Source gives you market leadership. You can start from nothing and become a market leader pretty quickly. And I think of Open Source as a freemium business model. And it also gives you a mindset of B to C, which you have to automate everything because you don't want people calling you because they are paying you. So you actually build up some pretty good practices to make yourself operationally very efficient but then you gotta figure out how to monetize it. I'll just give you one example. We have a co-investment with Excel in a company called Sonatype. It is the Maven Open Source Project for software build management. And it has all the same issues of competing against the free version. But we recruited in a CEO that used to be the CEO of Sourcefire, he had a security background and he said, hey, all these components that are for the last panel, all these components coming into a company can be scanned and you can figure out what the pedigree is and what quality and the doubt. Also, whether there's known security flaws, we will create the equivalent of a component firewall for large banks and retail companies and the like and figure out what components are allowed in, golden mastered and what servers, what applications they are throughout the whole organization. And all of a sudden now, it is a runtime operational DevOps SecOps, but also a CSO solution that took it from the 25 KSP to a six figure and some seven figure deals. So who would have thought of monetizing it for security? So think about your projects. Are there other ways you can add value to an organization based on the real estate you have in with your product offering? Last question for the group and we just go down the line here is, consistently this week, whether it was the Home Depot folks saying, we like open source, PS we're hiring. The theme I'm hearing all week is talent is crucial. Just this is such a big deal. Does this open source trend here, how critical that is that to your talent strategy to bringing in, we did a little analysis of some open source projects. It's sort of in mid-flight right now. For a huge group of projects, two, three percent of the developers are doing 70, 80 percent of the code here. This is sort of your point. These true innovators in there are really rarefied. How does this play into your whole strategy here? Does open source move that needle? Yeah, so before our serverless project, we had only packaged existing open source projects and delivered that as a SaaS service. But with a serverless project, it was extremely well received. And we had 48, right now there's 48 active contributors, 10 percent of whom, five of whom are now employees of platform nine. And these are the only employees of platform nine who are not based out of Sunnyvale. One is based out of Taiwan. One is based out of Netherlands, was a PhD student doing workflow composition. So really good domain knowledge and expertise that's directly relevant to the project would have been impossible to fire. But they found us, there's no recruiting cost, that's so motivated. So I think that it is a fundamentally different ballgame. I think open source completely raises the bar in terms of the kind of talent you can attract, their motivation to the cause, and the capability. Yeah, big believe. Interesting. Erica, are you seeing the same thing at? Yeah, absolutely. And in Kubernetes too, we also have a serverless project, Qubeless. And we've attracted quite a bit of our talent through all of the open source projects that we have ongoing. And also, this commercial product is based on and runs on top of Kubernetes. And like Sarish, we've started hiring people all over the world. And somebody asked me, why have you gone into so many countries to hire people? Where there aren't that many people who are spectacularly good at Kubernetes yet. And it gives us a competitive advantage to be able to hire them wherever they are when some companies want you in office. So absolutely. Yeah, there are a few of them in this room. Either have a year. Yeah, so for me, again, it's different. I mean, Boston. So we have a lot of university, but people that don't like startup, they are much more kind of like solid in the view of Google of the world. So for me, this is exactly what happened. Once we start open source projects, suddenly talent come to us. But before that, they weren't feel comfortable to do that. Once projects succeed, people want to come. And it's fantastic. As I said, I see a huge advantage of being in Boston actually, even though I'm a science school. Because there is all those universities and great people. And you just need to act. I can give a little bit of the big company perspective on this, which is certainly at VMware, open source projects were one of our favorite ways to recruit because you can actually identify people by their work. And you can find people who are specialists based on the actual work that they've done. And we needed some people doing some pretty specialized things. It was pretty hard to find. And then Facebook, I would say, went even farther. And as much as there were individuals within Facebook who are absolutely passionate believers, true believers in open source and had the desire to open source what they were working on. And Facebook has contributed many great projects to the world. I have to say that the business motivation for Facebook to do it was absolutely hands down recruiting. That in releasing those projects, we were able to build our engineering brand. We were able to attract people who would not have come to a company where the only thing they would do was proprietary. And so if you think about it, Cassandra, those projects owe their existence to Facebook's bottomless desire to hire more engineers. I'll take it. Jake, I want to go to you then, Rashmi. I'll give you a last word. I think all these comments are great. I'd also point out, I think on the buy side, there's also a huge desire. A lot of people want to develop their skill set. They gravitate to working with open source projects in the vast majority of the time that's positive, maybe to say something a little inathema. At some point, some people maybe over rotate. And they're so enamored with open source. They're like, oh, wait a minute. Is this actually the best thing to solve my problems? That's more the exception than the rule, but it creates this groundswell of adoption. And then the fundamental outcome of that is to just dive back to something we talked about at the beginning, it's you walk into the CIO after these open source projects are here. And of course, I want to talk to you, because it's already deployed. All my engineers are telling me all about it. The first time you say hello to them, what proprietary software company, like you're not going to see this door, go talk to someone three layers down. And so it has a tremendous benefit on the buy side in terms of the interactions. Absolutely. Rashmi, last word. Yeah, for us as well. I mean, it's definitely the caliber of talent that we can attract as part of recruiting. So when we acquired theirs, Gabe and his entire team stayed on board. We got Brendan Burns, who was the chief architect of Kubernetes to join us. And that was a big moment of celebration for everyone in-house. But keeping and retaining those people is incredibly important as well. So I do agree that it's great from a recruiting standpoint, but I don't think that it would be cheap to continue to keep these people on board because obviously there's so many interesting projects and so many interesting companies that they can go to and how do you motivate and retain the set of people is going to be top of mind for any company, be it startup or a big company that has these people. Yeah, you heard it from Rashmi. Some of you in this room are greatly underestimating your fair market value. I want to thank all of you for coming. I really appreciate it. I want to quick do a save the date, March 12th to 14th at the Ritz-Carlton Half Moon Bay. We're going to do it again next year. Thank you all. We've got sessions throughout the afternoon. Enjoy wine country. The sun came out. Thanks for coming.