Navigating the Complexities of Open Source Commercialization: Insights from Adam Jacob
Navigating the Complexities of Open Source Commercialization: Insights from Adam Jacob
In this latest episode of "Hacking Open Source Business," Avi Press and Matt Yonkovit sit down with Adam Jacob, the co-founder of Chef and current CEO of System Initiative. With a rich history in the open-source world and numerous thought-provoking opinions, Adam delves into the intricacies of open-source commercialization, offering valuable insights and alternative strategies to the commonly held Open Core model.
Adam recalls the early days of Chef and the significant open-source contribution it made. Chef was initially produced for free, and the brand grew rapidly as a result of widespread community contributions. However, transitioning from a purely open-source model to an enterprise-focused one came with its own set of challenges and criticisms.
"There was a thing called Chef, and we produced it for free. And then we stopped producing it for free. And we were happy to see a fork called Sink come into the world. If you want a purely open-source version of Chef, you can get one from those people." - Adam Jacob
Adam discusses the common Open Core strategy, its limitations, and why he believes it often fails. Open Core involves offering the core software for free while holding back certain high-value features behind a paywall. While this strategy aims to market segment by selling enterprise-level features, it often leads to a tricky balancing act of what features to include in the paid version versus the free version.
"That's a doomed strategy. A great product that is enterprise quality that anyone can use where the price is nothing, that comes from the exact same producer that's then trying to sell you a product at a high ASP."
Adam explains his alternative strategy for System Initiative, utilizing trademarks and focusing on segmentation. In this model, all software remains open-source, but the branding and distribution of the product carry significant value. By controlling the trademarks, System Initiative ensures that if users want the finished product under the System Initiative brand, they have to pay for it.
"The only thing you can't do with it is call it System Initiative unless you pay."
Jacob emphasizes the distinction between software and a complete product. Software can be seen as the 'pieces parts' that engineers need to craft their solutions. In contrast, a product is a polished, integrated, and ready-to-use solution that ensures ease of use and reliability.
"What people buy are products, that's it. IntelliJ is a product, you buy IntelliJ, you buy Figma because it's a finished product that is well-integrated and supported."
One of the most insightful parts of Adam’s discussion revolves around the sustainability of open-source business models. Competing against your free open-source version of the product is counterproductive. Instead, businesses should focus on creating distinct value for their commercial offerings while encouraging community participation and contributions.
"The art of it is that you have to allow other people to thrive. You have to just make the space that says, yes, you're allowed to."
The podcast concludes with a rapid-fire round where Adam shares some personal interests and opinions, offering listeners a glimpse into his multifaceted personality. From favorite guitar riffs to essential Linux distros, it’s a fun and engaging way to wrap up an insightful episode.
1. OpenCore Model Limitations: Often places unnecessary restrictions that hinder widespread adoption and community trust.
2. Trademark Usage: Leveraging trademarks can help differentiate between free open-source software and the paid product, establishing a sustainable business model.
3. Product Focus: Emphasizing a polished, integrated product over fragmented software parts increases consumer willingness to pay.
4. Community and Competition: Encouraging competition and community contributions can help broaden the market while focusing on being world-class at your specialty.
Adam Jacob’s innovative approach to open-source commercialization provides a fresh outlook for businesses navigating the complex landscape of open-source software. By restructuring how value is captured and emphasizing the importance of products over mere software, his insights offer a roadmap to achieving both community support and commercial success.
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Published
June 5, 2024
This article was originally posted on
Hackernoon
In this latest episode of "Hacking Open Source Business," Avi Press and Matt Yonkovit sit down with Adam Jacob, the co-founder of Chef and current CEO of System Initiative. With a rich history in the open-source world and numerous thought-provoking opinions, Adam delves into the intricacies of open-source commercialization, offering valuable insights and alternative strategies to the commonly held Open Core model.
Adam recalls the early days of Chef and the significant open-source contribution it made. Chef was initially produced for free, and the brand grew rapidly as a result of widespread community contributions. However, transitioning from a purely open-source model to an enterprise-focused one came with its own set of challenges and criticisms.
"There was a thing called Chef, and we produced it for free. And then we stopped producing it for free. And we were happy to see a fork called Sink come into the world. If you want a purely open-source version of Chef, you can get one from those people." - Adam Jacob
Adam discusses the common Open Core strategy, its limitations, and why he believes it often fails. Open Core involves offering the core software for free while holding back certain high-value features behind a paywall. While this strategy aims to market segment by selling enterprise-level features, it often leads to a tricky balancing act of what features to include in the paid version versus the free version.
"That's a doomed strategy. A great product that is enterprise quality that anyone can use where the price is nothing, that comes from the exact same producer that's then trying to sell you a product at a high ASP."
Adam explains his alternative strategy for System Initiative, utilizing trademarks and focusing on segmentation. In this model, all software remains open-source, but the branding and distribution of the product carry significant value. By controlling the trademarks, System Initiative ensures that if users want the finished product under the System Initiative brand, they have to pay for it.
"The only thing you can't do with it is call it System Initiative unless you pay."
Jacob emphasizes the distinction between software and a complete product. Software can be seen as the 'pieces parts' that engineers need to craft their solutions. In contrast, a product is a polished, integrated, and ready-to-use solution that ensures ease of use and reliability.
"What people buy are products, that's it. IntelliJ is a product, you buy IntelliJ, you buy Figma because it's a finished product that is well-integrated and supported."
One of the most insightful parts of Adam’s discussion revolves around the sustainability of open-source business models. Competing against your free open-source version of the product is counterproductive. Instead, businesses should focus on creating distinct value for their commercial offerings while encouraging community participation and contributions.
"The art of it is that you have to allow other people to thrive. You have to just make the space that says, yes, you're allowed to."
The podcast concludes with a rapid-fire round where Adam shares some personal interests and opinions, offering listeners a glimpse into his multifaceted personality. From favorite guitar riffs to essential Linux distros, it’s a fun and engaging way to wrap up an insightful episode.
1. OpenCore Model Limitations: Often places unnecessary restrictions that hinder widespread adoption and community trust.
2. Trademark Usage: Leveraging trademarks can help differentiate between free open-source software and the paid product, establishing a sustainable business model.
3. Product Focus: Emphasizing a polished, integrated product over fragmented software parts increases consumer willingness to pay.
4. Community and Competition: Encouraging competition and community contributions can help broaden the market while focusing on being world-class at your specialty.
Adam Jacob’s innovative approach to open-source commercialization provides a fresh outlook for businesses navigating the complex landscape of open-source software. By restructuring how value is captured and emphasizing the importance of products over mere software, his insights offer a roadmap to achieving both community support and commercial success.
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In this latest episode of "Hacking Open Source Business," Avi Press and Matt Yonkovit sit down with Adam Jacob, the co-founder of Chef and current CEO of System Initiative. With a rich history in the open-source world and numerous thought-provoking opinions, Adam delves into the intricacies of open-source commercialization, offering valuable insights and alternative strategies to the commonly held Open Core model.
Adam recalls the early days of Chef and the significant open-source contribution it made. Chef was initially produced for free, and the brand grew rapidly as a result of widespread community contributions. However, transitioning from a purely open-source model to an enterprise-focused one came with its own set of challenges and criticisms.
"There was a thing called Chef, and we produced it for free. And then we stopped producing it for free. And we were happy to see a fork called Sink come into the world. If you want a purely open-source version of Chef, you can get one from those people." - Adam Jacob
Adam discusses the common Open Core strategy, its limitations, and why he believes it often fails. Open Core involves offering the core software for free while holding back certain high-value features behind a paywall. While this strategy aims to market segment by selling enterprise-level features, it often leads to a tricky balancing act of what features to include in the paid version versus the free version.
"That's a doomed strategy. A great product that is enterprise quality that anyone can use where the price is nothing, that comes from the exact same producer that's then trying to sell you a product at a high ASP."
Adam explains his alternative strategy for System Initiative, utilizing trademarks and focusing on segmentation. In this model, all software remains open-source, but the branding and distribution of the product carry significant value. By controlling the trademarks, System Initiative ensures that if users want the finished product under the System Initiative brand, they have to pay for it.
"The only thing you can't do with it is call it System Initiative unless you pay."
Jacob emphasizes the distinction between software and a complete product. Software can be seen as the 'pieces parts' that engineers need to craft their solutions. In contrast, a product is a polished, integrated, and ready-to-use solution that ensures ease of use and reliability.
"What people buy are products, that's it. IntelliJ is a product, you buy IntelliJ, you buy Figma because it's a finished product that is well-integrated and supported."
One of the most insightful parts of Adam’s discussion revolves around the sustainability of open-source business models. Competing against your free open-source version of the product is counterproductive. Instead, businesses should focus on creating distinct value for their commercial offerings while encouraging community participation and contributions.
"The art of it is that you have to allow other people to thrive. You have to just make the space that says, yes, you're allowed to."
The podcast concludes with a rapid-fire round where Adam shares some personal interests and opinions, offering listeners a glimpse into his multifaceted personality. From favorite guitar riffs to essential Linux distros, it’s a fun and engaging way to wrap up an insightful episode.
1. OpenCore Model Limitations: Often places unnecessary restrictions that hinder widespread adoption and community trust.
2. Trademark Usage: Leveraging trademarks can help differentiate between free open-source software and the paid product, establishing a sustainable business model.
3. Product Focus: Emphasizing a polished, integrated product over fragmented software parts increases consumer willingness to pay.
4. Community and Competition: Encouraging competition and community contributions can help broaden the market while focusing on being world-class at your specialty.
Adam Jacob’s innovative approach to open-source commercialization provides a fresh outlook for businesses navigating the complex landscape of open-source software. By restructuring how value is captured and emphasizing the importance of products over mere software, his insights offer a roadmap to achieving both community support and commercial success.
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