How to commercialize open source

In early October 2019, Peter Levin at Andreessen Horowitz published what I am certain is a seminal work in the history of open source software.

Levin's post, about the commercialization of open source, explains the historical progress of the open source movement from "free software" to multi-billion dollar exits. He shares a framework that open source entrepreneurs can follow today, and posits how SaaS is the future for open source commercialization.

The November following Levin's post, I delivered a talk at the DeveloperWeek Austin conference about the same topic. The vision was to share an update on my then employer's progress over the prior four years growing an open source project, highlighting business model and pricing experiments, why launching the industry’s first cloud editor platform mattered, and how we expanded our value into the enterprise.

The goal of the session was to "share the growing options available to the founders of open source projects who want their passion project to become a sustainable business."

Since Levin's seminal work articulated more eloquently than I ever could , I re-wrote the presentation leaning on several of his concepts. He had explained our experience commercializing an open source project since 2015 so clearly.

One of the key theories underpinning Levin's model is the path from "community to commercialization." It starts with project-community fit, concluding with value-market fit. My view is that this is a linear path. Open source projects cannot skip the three stages. Levin defined them like so:

1. Project-community fit, where your open source project creates a community of developers who actively contribute to the open source code base. This can be measured by GitHub stars, commits, pull requests or contributor growth.
2. Product-market fit, where your open source software is adopted by users. This is measured by downloads and usage.
3. Value-market fit, where you find a value proposition that customers want to pay for. The success here is measured by revenue.

Across more than four years we had unknowingly "muddled our way through" these stages, eventually landing at value-market fit. I half-joked with our CEO at the time that if only Levin's framework had existed four years earlier we might have saved ourselves a lot of heartache. Levin's gift is the creation of a framework that I believe every open source project can follow to commercialization.

I've come to appreciate the importance of frameworks. They provide a construct we can apply our understanding of the world to. They help make sense of chaos, creating constrictions we can use to test hypotheses. Levin's is a clear path to success.

Marc Andreessen (founder of a16z, where Levin is a general partner) famously wrote that "software is eating the world." In turn, open source is eating software. Founders, contributors, and employees of open source projects should familiarize themselves with Peter Levin's work. "Open Source: From Community to Commercialization" is the ultimate guide to building an open source business.