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sydneylai
sydneylai

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exploring business models for open-source projects

I'm on this journey to build a profitable open-source project (OSS). In my career I’ve worked as a developer advocate and helping devs navigate how to optimize their productivity with useful developer tools. I also deeply align with the vision of democratizing access to toolings to provide optionality for builders.

I’ve seen role models in OSS and am on a journey to deconstruct their business models and see how this can be applied to open-source projects. For a few years I’ve been actively contributing to community-owned projects and toolings. If we take a look at the industry leaders:

Red Hat:

  • owned by IBM
  • Est. Revenue in fiscal year 2019 (before acquired by IBM) ~ $3.4B in revenue
  • business model: enterprise solutions on LinuxOS, apps and services on OSS

MongoDB (Database):

  • OSS NoSQL database
  • business model: commercial licenses, enterprise support, and cloud-based services

Docker (Containerization):

  • tool to build, package, and distribute applications using containers
  • business model: commercial offerings (Docker Enterprise) for enterprise-grade container management

My experience having been involved in Yearn, token swaps (ie SushiSwap) and Gitcoin:

  • business model: transaction fees (requires volume and velocity), TVL portfolio growth
  • most of these OSS projects are funded by community money or Foundation grants

The next step is exploring productizing AI-enabled products that improves the pain-points for devs or technical consumers. I’ve worked at companies where AI-assisted dev tools were greatly frowned upon. The 3 leading models for me are subscription plans, enterprise edition and building out a marketplace. The marketplace will be the long-term vision as the cold start problem then really requires momentum to overcome.

Revenue models for open-source:

  • commercial licenses
  • subscription plans ←
  • enterprise edition ←
  • support and maintenance
  • consulting and professional services
  • Cloud hosting
  • marketplace ←
  • data services

If you have any suggestions or want to share your own journey building revenue-generating OSS, would love to start a conversation. My next steps are iterating on product and adoption, based on user-feedback on nascent AI developer experiences.

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