Want to build a startup and grow like crazy? Maybe creating an open source alternative to a well-known service is a good option
I recently noticed how many new startups decided to go to a massive competitor market with an open-source alternative. Seemingly, this approach works quite well. For sure, the number of stars on Github does not represent how a startup is doing in reality, but it shows interest in developers and can demonstrate its development trajectory.
For illustrative purposes, I found several examples of this approach; it will be exciting to check how projects will grow in the near future.
Calendly → Cal.com, 9k ⭐️ achieved in 9 months
Google Analytics → Plausible ⭐️9.5k achieved in 16 months
Firebase → Supabase ⭐️25.5k achieved in 27 months
Mixpanel, Amplitude → Posthog ⭐️5.5k achieved in 24 months
Shopify → Medusa ⭐️5.6k achieved in 24 months
FullStory, LogRocket → OpenReplay ⭐️2.9k achieved in 8 months
Retool → Appsmith ⭐️10.8k achieved in 35 months
Zapier → n8n ⭐️19.3k achieved in 29 months
All these startups are quite different, but there are some similarities:
- they are all going for a huge competitor with a $3b+ valuation
- all main competitors are mature well-established startups (8+ years)
- their product is in on massive B2B market with a relatively low price point
I personally think it's a great idea to compete in a massive market using all the benefits of an open-source community. To me, it is not easy to find any disadvantages (excluding possibilities of users migrating to their servers, but it happens quite rare).
What is your take on that? Do you have another examples of this approach?
Originally posted on my Twitter https://twitter.com/AndreyNovikoov
UPD: Added additional examples from @cpursley comment
I’m the author of Fider, an open source alternative to UserVoice and a Canny that was created 5 years. Today it’s a crowded marked on this space, but it wasn’t like that until a few years ago.
To date I have done near ZERO advertising or marketing, except for some tweets which are rare. But I have a “Powered By” which links back to my website, so that means every self-hosted solution will do some “word of mouth” for free. I think that’s the biggest benefit I had by making it open source. Second pro was the community doing the translations to 10+ languages.
I thought I’d get more contribution in forms of PR, but I think developers are more keen on contributing on frameworks/tools than business products.
If I was to start all over again, I’d still make it open source, i but I’d probably try the “Open Core” and release extra feature on a “Pro” offer and a SaaS option as well, kind of like GitLab.
Nice work and congrats for it!
I don't know how much money you are doing out of Fider, but if you are certain about what you have mentioned, if you initially didn't build it with an OSS-first kind of approach, you might have been an early player in the market years ahead from current competitors, therefore today you might be already making millions per year, if not already sold the business for more, in other words, you might be 2-3 times ahead of Canny in terms of revenue and customers base.
If your goal is running a profitable business and notably improving your economic freedom, IMHO going OSS is the hard way to do it.
I disagree. I would not encourage anyone, especially as a solo-entrepreneur, to take this path unless you have the funds, time, tons of energies and human capacity to achieve something impactful and competent enough.
OSS monetization is hard, I mean, quite hard. Not even well-funded startups focused on OSS-driven business models with tons of full-time engineers are able to gain traction and generate enough profit before they run out of money.
You have to invest lots of time, effort, diligence in any OSS project you also aim people pay for it. That might even take years, if lucky. Potential customers will not only look at your front product, but also the code quality, engineering, tech stack, docs, extensibility, etc. That adds far more complexity to the equation in order to close sales. This is bad, especially for solo-founders that need to accelerate ROI before investing months or years of hard work on something.
I have been personally doing OSS part-time for about 6 years, but not anymore since 2019, and never with the plan of monetizing it, although I did generate a few thousand per year with some relatively popular projects, mostly from donations, sponsors, and a bit from consulting. I have also observed how several very talented devs (like TJ Holowaychuk) that had huge in the OSS ecosystem really struggled to live out of OSS-driven business models.
It is far easier to build any non-OSS SaaS solution taking benefit of the existing OSS packages, and potentially contributing back to the creators via donations when you have profit or also creating small OSS libraries that can help others solve similar problems to yours. That is what worked for me and many other based on what I have observed.
It is also much faster to validate the idea and test the market without going OSS and without investing all efforts creating curated, well-designed, well-enginereed, documented, and tested software, as you should typically do always, but in OSS, especially because of the high transparency and degree of technical scrutiny your product will be exposed to, this is a must since a core selling point is also the reputation and trust you can show and inspire to your potential customers.
That being said, I firmly believe OSS can be a good complementary way for established businesses in order to gain traction, reputation, visibility, attract new talent, as a marketing tool and facilitate software integrations of your own product.
Plausible is company of 2 people.
That double proves my argument. They are only 2 people, that also struggled for years to be profitable, and yet after tons of efforts and opportunity cost loss, these times they were the few lucky ones who at least were able to cover their paychecks, but that's far away from reaching consolidated economic freedom.
Let's dissipate all the romanticism and idealistism of building a business driven by OSS, it's cool and technically appealing as a software engineer, and I used to believe this firmly for years, but realistically, pragmatically speaking, it is a very hard way to do it, and success is rate significantly reduces by choosing this method, while psychological burnout, time and risk of running out of money drastically increase.
the entrepreneur in me disagrees with you but after years of struggle trying to build few companies, my brain agrees with you.
Interesting concept. There is also cal.com - a competitor to calendly.com
Nevertheless, I find that the lines of "open source" are getting blurry as those neo open source companies of course have a strong pricing offering as well in order to earn money.
I agree with this approach. As ex-competitive analysis and strategy in a large tech company, that's what we do.
Very interesting topic and something which I have been looking into for quite a few weeks for another of my venture. You create a open source version with licensing like going AGPL https://plausible.io/blog/open-source-licenses
Then you let devs use your code for free as long as they want. When they want a cloud hosted solution, they can use your product. This is true only if you offer a cloud hosted solution. Offer a pricing that is going to be too good to pass. If developers do not like your product, probably they might never pay for it. This can be a quick validation of the business model.
A few others:
Thank you, @cpursley !
Additional examples were added to the post.
What's a logic behind it?
Cal.com even has a folder "ee" which houses their "Enterprise Edition" codes. This folder is licensed. You may even pay them a fee to use this.
Yet, you get all these quality improved solutions for "free" - a la open source.
Found it. https://github.com/calendso/calendso/tree/main/ee very interesting to see licensed code.
I want to make my project open source if it leads to success.
I’d say, it’s easier to start your project this way and in my experience, the code is better than what you’d fine on Codecanyon, if the project gains some succes you can hire additional devs to make custom changes