Being a capitalist

Today’s Black Friday in the US, which is kind of a holiday for capitalism. So it’s a good day to write about open source founders need to be honest with themselves about how much of a capitalist they are, or are not. This is one of those issues that really only comes up for founders of open source companies — I don’t think it’s much of an issue for your average straight SaaS company.

Is your primary motivation that you want to tinker around with your cool project, or is your primary motivation that you want to build a profitable company and have a big exit and get rich and make a bunch of other people rich too?

If you just want to tinker around with a cool project, you’ve got a hobby. It doesn’t actually matter how cool or well loved your project is, if you’re always going to approach it as a hobby it’s not going to work as a business.

There were actually two conversations I had this week that made me think about this topic. One was with a VC in London, the other was as I was recording a podcast episode on Everybody Hates Marketers.

In the first conversation, the VC I was talking with mentioned how often he meets with founders with an open source project who clearly is more devoted to the project than to the idea of building a profitable business. Unsurprisingly, he always passes on those companies. This distinction is also really important to me in the work that I do: If a company’s leadership is too attached to the original vision of what they wanted to build, it means they won’t be able to reposition their project or company so it can become something that the market actually wants. If you want to build the thing you want to build, users/customers be damned, you have a hobby on your hands. If you have a strong point of view but are concerned above all else with building something that people will want to buy… that’s a company. VC’s know the distinction and they invest in companies, not hobbies.

But there’s a nuance here: Many open source founders are not pure capitalists. They might have gotten involved with open source because of the community aspect, often they’re obsessed with things like transparency and privacy. There’s often a strain of anti-corporatism among open source founders (use our thing so you don’t have to give money to the man! In which ‘the man’ is AWS, Microsoft or Google). They are kind of open source hippies, in the same way, though, that Yvon Chouinard, the founder of Patagonia, is a hippy, too. Still committed to building a successful business, but there’s a tension between the pure open source world and the commercial world. I think this tension is healthy and what makes open source companies so interesting. On the one hand, the company is not completely mercenary: following open source practices is important. On the other hand, the company is not a charity. It’s seriously committed to building a profitable business that created financial value for shareholders.

So if you’re an open source founder, it’s ok to feel the tension between open source hippy and hard-core capitalist. Building a profitable business doesn’t have to mean giving up all open source ideals, but you do have to be more user-centric and more customer-centric than if it’s a hobby. And you have to commit to building a business. And that means charging people money, sometimes a lot. You have to be ok with that.

It’s really common for me to talk to open source founders who say “I built X because the other options were too expensive.” This leads them to chronically undercharge for their product, when they build one. You have to be enough of a capitalist to get out of this trap, and recognize that if your product is awesome, you can charge serious money for it. Maybe even more than all the other options out there.