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Discussion on: I'm Vivek Saraswat, investor in Dev Tools + Infra startups @ Mayfield and former product leader @ Docker/VMware/AWS. AMA!

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rhymes profile image
rhymes

Hi Vivek, thanks for doing this!

The first time I heard about what an "open source company" was, it was ages ago with Canonical, and thought "cool, didn't know one could make a company on top of opensource!", so my question is: what are the most exemplary successful open source companies? What did they do right or better than others?

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vsaraswat profile image
Vivek Saraswat

Hi rhymes! Really great question. I would be remiss if I didn't point out @asynchio 's excellent spreadsheet of Commercial Open-Source companies with successful exits. If you look at these companies as well as the largest private COSS companies today, I believe there are a few key elements they have all gotten right:

  • Critical path value propositions: Each of these companies has an open-source project which is fundamentally critical to their core users. Examples include Red Hat (Linux -- operating system), Elastic (ELK -- logging), Github (Git -- source code version control), Hashicorp (Vault -- secrets management, Terraform -- infrastructure provisioning), Confluent (Kafka -- event streaming). And importantly, these are things that their enterprise buyers who support those users cannot afford NOT to pay for.
  • Ecosystem: Each of these players has built a thriving ecosystem which includes integrations across numerous open-source tools, commercial vendors, and cloud providers. This is crucial. The ecosystem both increases cooperation and helps provide a moat against other players. To become a large scale company, you simply cannot be an island.
  • GTM: This is more for the newer private companies--the successful ones were all built with a primarily inside sales process, as opposed to a top-down direct sales process. This is more capital efficient and takes advantage of the bottoms-up nature of open-source. The large public companies have both inside and direct sales teams because they can afford to, but startups have to focus.
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rhymes

Thank you for the thorough answer. I'll definitely take a look at the spreadsheet 🙂