Should You Open-Source Your New Excellent Product?

Should you open-source your new excellent product?

You are almost ready to launch your product and wondering if open-sourcing would help with its success. There are generalized articles about the benefits of open-sourcing. However, this question often comes in different contexts, and considerations will differ for each case. For example, hobbyists building a side project could benefit by improving their resume, connecting with like-minded folks, and getting feedback. But what if you are trying to create a business and not just a product? Let’s discuss when it makes sense for B2B startups to open-source their products.

You have formed your dream team, have innovative ideas, and are executing toward building a great enterprise product. Yet, you still have much to do to bootstrap and grow your business. You might have some competition in open source, especially if you are building in an open-source heavy domain like AI or Data. You might feel compelled or even feel FOMO to open source your product.

Take a breath before you decide! Open sourcing is not just a product decision. It is a business decision that will alter your business model. It is also practically an irreversible decision, and you can easily paint yourself into a corner before you realize it. You can change your mind later if you decide not to open source. However, once you open source, you cannot revert that decision without losing significant trust.

When considering open-sourcing, it’s important to align this decision with your business goals. Before deciding, carefully weigh your specific case’s pros and cons. Some primary considerations to keep in mind include:

• Marketing – Open-sourcing might attract interested parties to your product. However, open sourcing does not sell the product itself. You will still need to market your product. You might even need to spend more on marketing to distinguish your business’s benefits from the open-source edition. At the same time, you might get access to a larger audience, and especially if you can create hype, you increase the ROI for your marketing efforts.
• Onboarding experience – Getting more people to try out your product and experience the benefits you offer would help with your funnel. But is an open-source product easier to try and onboard because the code is available? Not really. For example, a ready-to-use small-scale version of your product, like a web-based playground, would be much easier for people to try.
• Attracting talent – Your open-source project might bring brilliant contributors and help you advance your product. However, this is quite unlikely. It takes lots of time to make those deep technical contributions, and volunteers would unlikely commit to your project that much early on. At the same time, you may not even need this early on, especially if you already have a founding team that is technically strong.
• Attracting partners – Partnerships could help you achieve bigger goals sooner. However, your partners must trust your ability to deliver and stay in business. Openly sharing your product might make it easy to partner with other companies by addressing some risks. For example, even if you run out of business, they can still keep and maintain the open-sourced product.
• Business model - You need to change your business model as part of your decision to open-source. This change needs to be your most important consideration before making your decision. Your decision could go in a few ways; you could open-source:
  • The core of your product but none of your differentiators: This will not create a compelling open-source product, and you are unlikely to benefit from the aforementioned advantages, including garnering trust with customers and partners.
  • The core of your product, along with some differentiators, might help build a growing open ecosystem. However, giving away some of your differentiators will reduce the perceived value of your added proprietary features and the size of the target customers who need those.
  • The complete product: You will no longer be able to capture the additional value created by your differentiators. You need to find an alternative business model offering services and consulting around your product. Additionally, you might need to compete with other service providers, including mega-corps, who offer similar services around your product.
• User trust - Open-sourcing your product would help build trust with your users. You would build confidence for a few reasons. First, you will reduce the risk for your customers. If your company ceases to exist one day, they could continue using the product without disrupting their business. Second, your customers would not feel locked into your proprietary product and would have the option of moving away from your company but not your product. Finally, they will have better visibility into your product roadmap (as the product will evolve in the open), and they will also have a better ability to influence and even participate in the product-building experience. All of these together will make it easier for them to adapt your product today more confidently.
• Liabilities – Open-source is not all about benefits, and there will also be liabilities. Your team will spend more of your time building a product and a community in the open. You might neglect and limit the resources you spend on these parts, but then you would not be able to nurture a successful open-source product and a community.

Now that we have looked at the considerations, let’s take a step back and understand what you are trying to accomplish and what lightweight and reversible options you have before deciding to open-source. Let’s look at some examples:

• Let’s say you are trying to accomplish growth. You can try several things, like building an easier-to-try version of your product, offering a free tier, reaching out and working directly with your end users, or forming a customer-oriented team to help your early users onboard your product.
• Perhaps you would like to build trust first. Again, you will have several options, like building API compatibility with existing products to prevent product lock-ins, publicly and visibly talking about your product roadmap, and promising to open-source your product should your business cease to exist.

Open-sourcing your product may or may not be the right decision, but it is probably the wrong question to ask. First, clarify your business goals, analyze the costs and benefits, and then decide whether it will support them.

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