Open Source Internal Startups with Saurav Pathak

06/05/24 • 38 min

This week on The Business of Open Source I spoke with Saurav Pathak, chief product officier at Bagisto, about a very different kind of business relationship with open source — and open source software incubated in a larger company. There were tons of interesting nuggets in this episode, but some things I wanted to call out are:

For open source projects, the tech stack that the project is built with can in fact be a differentiating feature. This is unique to open source (and has come up before, both in my consulting work and in podcast interviews). Users might want to choose a project because it’s written in the language they are familiar with, even if the functionality is exactly the same as a competing project
The difference in needs between the merchants (who just want to get their ecommerce store up and running) and developers building ecommerce platforms, who was worried about being able to build extensions
How an open source company like Bagisto fits into the larger commercial strategy for the parent company.
Build a community of developers versus building a community of merchants, and why both are important for a project like Bagisto
How Saurav manages the tension between adding features that people want and not building an overly bloated product, including how to manage this tension when someone wants to contribute a feature that the core team may or may not want.

It’s always interesting to me to see different models for open source companies, and Bagisto certainly is a different model. Especially after last week’s episode with Tanmai Gopal, which had a much more classic story.

For open source projects, the tech stack that the project is built with can in fact be a differentiating feature. This is unique to open source (and has come up before, both in my consulting work and in podcast interviews). Users might want to choose a project because it’s written in the language they are familiar with, even if the functionality is exactly the same as a competing project
The difference in needs between the merchants (who just want to get their ecommerce store up and running) and developers building ecommerce platforms, who was worried about being able to build extensions
How an open source company like Bagisto fits into the larger commercial strategy for the parent company.
Build a community of developers versus building a community of merchants, and why both are important for a project like Bagisto
How Saurav manages the tension between adding features that people want and not building an overly bloated product, including how to manage this tension when someone wants to contribute a feature that the core team may or may not want.

Previous Episode

Improving Your Value Prop Exponentially with Tanmai Gopal

This week on The Business of Open Source I spoke with Tanmai Gopal, co-founder of Hasura. We talked about how Hasura grew out of Tanmai’s previous company, which was a consulting company. I like to call out examples of really novel open source businesses, but in fact the thing that stuck with me from the conversation with Tanmai was that Hasura is going the ‘classic’ route... and it’s working.

What does the ‘classic’ route look like to me? It’s an open source project that targets individual developers and a commercial product that targets teams and teams of teams. It’s having additional network security features in the commercial options. It’s using the open source project as a growth engine and getting leads from companies that depend on it. It’s also using the open source project as a way to get feedback on the product roadmap.

Here were some of the takeaways from our conversation:

It’s a lot easier to sell a product if your customers see it as mission-critical. One of Hasura’s first inbound leads was from a Fortune 100 company who said they’d be unable to ship any software for two weeks if Hasura went down — and so they wanted to make sure the team behind Hasura was serious and also wanted to pay them to make sure they didn’t go down.
For Hasura, the first clear difference between open source project and commercial product was that the open source project is for individual developers but the commercial product is aimed at the team level.
Even for the cloud hosted edition, the product with ‘developer-level’ focus is free. In fact, if you go to the Hasura CE product page, the CTA asks you to use for free on the cloud. Tanmai said this is an intentional choice because they want to reduce friction for people to test it out, and the fastest way to get up and running will always be to use the cloud version, not the open source.
We talked a lot about the control plane versus the data plane — all the editions have the same functionality at the data plane level. But the control plane, where people are collaborating — that is commercial only.
The open source project can be a great way to stay close to your users / customers and use their feedback to constantly refine your product roadmap. In fact, this can be a main advantage of being open source, because it is the only way you stay close to your users and get their feedback — otherwise you would often only talk to the buyer, who is likely an exec with a big budget but not using the technology on a daily basis.
This doesn’t mean open source doesn’t create liabilities for Hasura — it does, and those liabilities have to be managed. And Tanmai is frank about the fact that creating enough value on top of the open source project without crippling the growth engine is a tough balancing act.
Pay attention to what your best customers are doing! That has informed some really important product decisions for Hasura — and it took them way to long to figure out the unique way their happiest customers were getting more value out of Hasura than other users.

Definitely check out the full episode for more insights from Tanmai!

Next Episode

Ensuring the Difference in Value between Project and Product is Big Enough with André Eriksson

This week on The Business of Open Source, I spoke with André Eriksson, founder and CEO at Encore. We talked about how open source develops trust, something I also discussed in the episode I recorded with Reshma Khilnani. For Encore, it’s subtly different, though. In the case of Medplum, open source is a differentiator in a market that’s used to black boxes, for Encore, open source is tablestakes in a market that won’t adopt a completely proprietary software.

We talked about:

Launching with a cloud platform from day one — not the open source project.
On the other hand, open source is also important because often users and customers have to modify things to get it exactly right; the flexibility is a critical part of the platform’s draw.
The challenge getting contributions, which André doesn’t find surprising, especially because it’s a project/product that solves problems for companies, not hobby projects.
Having one brand for the open source project and the product, which can make it hard to communicate the difference between them.
Ensuring that the open source project and all of the features in it are useable without being dependent on the commercial product — which is not always easy. Finding the right balance between avoiding crippleware and still having enough of a difference in value between the open source and the commercial product to sell it is a core challenge.
The biggest risks from open source, which André kicked off by talking about the difference between what you perceive as a big risk and what objectively is — this is a distinction that I think is super important to understand in life and business. Ultimately he settled on a big risk just being that you build something that isn’t valuable or differentiated enough for people to pay for.
Communicating the value proposition clearly is their top challenge at the moment.

Check out the full episode for some serious insights into what’s working and what’s a struggle at Encore.