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Nevo David

losing deals to the open-source

June 1, 2024

Nevo David

I have seen some tremendous open-source repositories. Many of them have a great product. The problem is that the product is too good.

Many open-source founders don’t think about monetization when they start. They want to build a great product.

So they bombard their open source with all the best features and start working on their enterprise offering later.

The main problem is that the Enterprise offering is not attractive enough.

Later, they changed their open-source license because they felt they couldn’t monetize their offering.

And, of course, get backlashed by the community (known stories like Docker / Elastic Search)

Assuming

We assume that Enterprise support / fully managed service / SSO would be enough to sell. But it’s not (in most products.)

Lately, I have seen many investors saying that open-source doesn’t convert. I am starting to see why.

Many of the people I am talking to offer mainly enhancements.

Enhancements are additional features not part of their main product: Templates, Editors, and some additional plugins.

A good enterprise offering should be things of the core product, not additional ones.

Good offering

One good example is Fingerprint.js, a classic open-source repository. It offers client-only fingerprinting for its repository, and its managed cloud provides robust fingerprinting over the server (the actual use case). Let’s admit it: JS is nice to have.

Their open-source repository is 100% different from the cloud (they still have 21k stars.) Lately, they have also changed their license from MIT to BSL, probably pushing for sales and dropping the community.

Make more customer discovery calls.

One of my clients added clustering and a more scalable database for their enterprise offering.

When I asked for their old enterprise clients, I realized they don’t need scalability because the data they get is already aggregated (it’s running on SQLite)

Talk to your customers and ask them what they need the most.
Even though it is tempting to put it in open-source, add it to the enterprise.

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