00:00hi everyone welcome to the a 6nz podcast
00:02I am so know we've talked quite a bit
00:04about open source on the podcast already
00:06from the topics of open versus closed to
00:08managing community and identity to
00:10selling to developers and a few years
00:12ago partner Peter Levine put out a piece
00:14arguing why there'd never be another Red
00:16Hat which is one of the only open court
00:17business models to survive but given the
00:19current and coming wave of companies
00:21built on top of open source the tricky
00:23question left it discusses how do they
00:25make money and joining us to have that
00:26conversation we have James waters who's
00:28the SVP of product at pivotal a cloud
00:30platform company that runs software and
00:32multiple clouds and they're part of
00:33VMware and it also moderating this
00:35podcast we have general partner Martine
00:36casado who himself came out of VMware
00:38which had acquired the company he
00:40co-founded and was CTO at previously
00:42nice era and he's a first voice you'll
00:43hear one of the paradoxes in in this
00:46entire space is there's been a ton of
00:49money that's been invested in
00:50open-source but almost no examples of
00:53successful companies built around it
00:55Silicon Valley had a spidey sense that
00:58there was an opportunity there and
01:00nobody pulled it off and now there's a
01:01number of examples of open source
01:04companies doing very well James is one
01:06of the few people on the planet that's
01:07cracked that where they've figured out
01:08how to monetize and build a big business
01:10out of open source just to give a sense
01:13of how real this is pivotal foundry went
01:15from zero to 270 million dollars in
01:17license not supported licensing in
01:20software sales that's the thing we talk
01:25about all the time in terms of building
01:26businesses is that you don't necessarily
01:28want to rely on professional services
01:30cuz it doesn't give you a lot of margin
01:31on your business exactly so this is like
01:32legitimate software sales so James tell
01:35us how you went from zero to 270 and
01:37million we're talking about seconds how
01:39did you do it yeah and I think it's fair
01:40to describe kind of my maturation and my
01:43thinking about this through failures too
01:44I worked on open Solaris at Sun and then
01:47for a while at VMware we were looking at
01:49how do you monetize SpringSource in and
01:51of itself ranked first was like the most
01:52popular Java programming framework in
01:54the world flat by VM were for pretty
01:56famous money over four hundred million
01:57dollars as an open source project I had
01:59worked on on that you know both of those
02:02projects it had gotten my bumps and
02:04bruises along the way and so I had some
02:06very particular opinions coming into
02:07doing the third round of PCF pivotal
02:10I think there's there's kind of two
02:13one is the basics which is if you look
02:16at IBM and Oracle Microsoft I say P etc
02:19what they get right it is a very basic
02:20thing is they understand how to cater to
02:22enterprises yeah and I think the number
02:25one temptation that most open source
02:27companies fall into is the first thing
02:30they do is they cater to their users and
02:31by users you mean the developers so
02:33developers that you know fork it on
02:35github start on github and the the MIS
02:37Association as a first thing between the
02:40people that use it and then the people
02:41they need to cater to selling to its
02:43kind of what you might call the first
02:44false horizon of open-source
02:46monetization interesting what I mean by
02:47cater to is like I think this is another
02:49one thing I see open-source companies
02:51maybe to get wrong is those the people
02:53that show up and talk to you those are
02:54the people that you're interacting with
02:56when you're creating an open-source
02:57community you have to first get these
02:59unpaid users excited but ultimately IBM
03:02and Oracle are not out there mining
03:04their mailing lists of end-users to go
03:07do deals yeah how do you sort of
03:09straddle this because theoretically
03:10should be able to do both but isn't so
03:12the mantra month or I should say it the
03:14Indian Way of open source that you have
03:17to take care of your open source
03:18community and then also figure out how
03:20to become a business like how does a
03:21company that's trying to become a real
03:23big company straddle that it's super
03:26important right the I'm not saying that
03:27that's not what I'm saying is that your
03:29commercial strategy and your community
03:31strategy are not the same thing that's a
03:33it's tempting when you put so much heart
03:35and soul effort into building that proof
03:37of validation around a community first
03:39to say oh well then I'll go upsell them
03:41and I remember meeting MongoDB when they
03:45were early and their rise and they were
03:47selling you know a $4,000 support
03:49contract to thousands of users with a
03:52lot of expense and when we built PCF I
03:54was like I don't think that's the right
03:56way for us to go be big just because
03:58you're open-source doesn't mean you only
03:59sell to your open-source users so what
04:02did you do and getting across this first
04:03arising the next thing you have to get
04:05right is you've got to get a major trend
04:07that affects enterprise buyers so if you
04:09go back to enterprise as being the
04:11you know Oracle didn't magically just
04:13exist one day they they caught the
04:15relational database market at the right
04:16time and they were my franchise and that
04:18relational database market really
04:20changed how enterprises were building
04:21applications what they could do on
04:23applications and in the same way we've
04:26catch the micro-services trend as the
04:28major enterprise change that's happening
04:30that's the kind of change than you need
04:32on your you know commercial strategy to
04:33generate cio interest and enterprise
04:35purchases it can't just be a tool that
04:38someone's potentially using lower levels
04:39there's been a long time this thought
04:42that open-source was primarily a
04:44commoditizing force there's an existing
04:46market say UNIX it's an existing market
04:49where the existing buyer then you create
04:51an open-source version which is
04:52differentiated by being open and
04:53open-source and then you go
04:54commoditizing that existing market and
04:56you're saying something quite a bit
04:57different you're actually saying that
04:58you can enter a new market using a shift
05:01and sell into that so I guess two
05:03questions one do you believe in the
05:06commoditization is is that still a
05:07business plan and then the second one is
05:10like is there any difference in
05:12open-source to identifying these shifts
05:14or is it just like if you're doing a
05:16closed source problem let's look at
05:17history a little bit I think then an
05:18open stock both felt like they could go
05:21commoditize VMware right they both said
05:23we're gonna go commoditize VMware the
05:25last time I checked Oracle and IBM did
05:27not get to be the size they are by
05:29having commoditized a previous
05:31generation of suppliers so if you just
05:33look at the record and this is what I
05:34call like the false horizon of open
05:36source strategy you might be tempted
05:38that your only play is to be a
05:39commoditization play but history tells
05:42us that the largest software companies
05:43in the world that get into the hundreds
05:45of billion evaluation that's not what
05:47they did they caught mega trends they
05:49built something new they didn't just
05:50come out a tie something old they did
05:52and I know that that sounds like obvious
05:54I'm glad you're pushing on it I've
05:56learned over the years that open source
05:58is now both a necessary part of almost
06:00any major software company strategy
06:01because it's a buying criteria that you
06:03know enterprises have for me and new
06:04initiatives yeah but that I think the
06:07open source got a little bit of a false
06:09start by only being low cost
06:12monetization as a business model it's
06:14actually from from my conversations it's
06:17almost somewhat of a contrarian view
06:19because traditionally you're like open
06:21source projects chase after basically
06:23the sales dollars that have matured a
06:25market like my sequel yeah you know like
06:27Android like Linux like JBoss every one
06:31of these you can point to a closed
06:32source incumbent that they were chasing
06:34after so it's nice it's nice to hear
06:36that you believe that open source is not
06:40relegated to this commoditization
06:42because i agree with you that basically
06:43limits the upside you're gonna get it
06:45does because it limits your business
06:47model it doesn't let you invest we have
06:49a hundred million dollar a year rd
06:50budget when you're chasing a new big
06:52strategic trend you're getting the kind
06:54of checks that we are and a trust we are
06:56yeah you can build a big R&D team if
06:59you're chasing commoditization well yeah
07:02i mean you're you're trapped to a
07:04fraction of the market you're chasing
07:06after life by definition like if it
07:08wasn't a fraction of it you wouldn't be
07:09commoditizing it and it's very unlikely
07:11you're gonna get it at 100% so
07:12necessarily you know have a ceiling over
07:15you it sounds to me that your
07:17recommendation is a lot like Lowe's or
07:19software sale however is it more than
07:20just kind of software sales or is it
07:22just that like the industry is ready for
07:24open source now or it wasn't before like
07:25what has happened in the last two years
07:26to make this viable or is there more to
07:28the puzzle that you haven't talked about
07:29so the basics are of strategy and
07:32segments if your strategy and segment
07:34looks wildly different than every other
07:35big software companies existed before
07:37that's probably a pause yeah and then
07:39the second thing is I think that cloud
07:41has started to affect open source and
07:43we've taken a model of continuous
07:45delivery of our software inclusive of
07:48cloud API we don't do what I call
07:50shipping you the tarball and the support
07:51contract and say good luck
07:53we actually automate the continuous
07:55deployment and update of our software
07:57and so we have an additional point of
07:58leverage other than just support which
08:01is that if anything doesn't work in that
08:02large-scale update of thousands of nodes
08:04you just blame us and call us and that's
08:07a different vector that's almost like a
08:08cloud vector in terms of value add yeah
08:11software packaging that's exactly right
08:13we hear this all the time which is more
08:15and more the customer wants to consume
08:18things as a service and this is often
08:20conflated with whether it's deployed off
08:23premiere on print like I mean this is a
08:24total conflation right like whether or
08:26not the service does not mean it's
08:27necessarily the plate off Prem right
08:29these are two things
08:30so one decision off premiere on Prem
08:32like that's actually a decision often
08:34like bound by regulatory compliance and
08:36security etc there's an entirely
08:37different decision is is my consumption
08:40model as a service that could be I pay
08:42for it as a service but also could be
08:44somebody else basically manages it does
08:45the update manage the lifecycle I don't
08:47deal with the tarballs that's very much
08:49in line with what we're seeing across
08:53and what makes this discussion
08:55particularly relevant to open source is
08:58that it seems that once you're talking
09:02about something as a service questions
09:03around open source kind of diminish
09:05because they're not actually dealing
09:06with the code itself they're dealing
09:07with the service big success stories
09:10sometimes have contrarian bets in them
09:11yeah and I would distill our two
09:13contrarian bets - we did not go for the
09:16commoditization play we went for the the
09:18sea change and design play yeah and then
09:21we also tried as best to deliver a
09:24service like experience even with
09:25software are there any challenges though
09:27and sort of bringing a Polish to open
09:29source work because when I think of
09:31traditional software companies they have
09:33baked in design for user like really
09:36client facing versus developer facing so
09:39how do you sort of navigate that part of
09:41that is building a real business on top
09:44of open source if you don't have that
09:46experience natively one of the seasons
09:48we made is we made our you eyes closed
09:50source so everything about the
09:51infrastructure of the platform is
09:53completely open source and we chose to
09:55make the UI and that last mile of
09:57experience built off the api's yep close
10:00source okay so I do think there is some
10:02room to differentiate there and you know
10:04when you when you go to monetize you're
10:06gonna need some small check boxes I've
10:08learned a lot you know growing this
10:09about the importance of packaging for
10:12procurement and one of the things I've
10:14observed is that procurement is
10:15exceptionally good at pricing a certain
10:17kind of thing which is labor per hour
10:19so I've seen very large software
10:21contract orders and procurement will
10:23actually pick on the labor per hour
10:25because that has a near comparable and
10:27so when you start to think about
10:28procurements looking to compare things
10:30to exact replicas as to price it having
10:33a little bit of you know closed-source
10:35UI or things that are maybe even
10:36immaterial to the product but they're
10:38still there to say oh well this is
10:40it's somewhat important interesting and
10:42really interesting and thinking about
10:44dynamics of navigating the politics of
10:45procurement are important what is other
10:47dynamics of navigating the policy of
10:48procurement your lessons learned that
10:50you can share with us here I mean you
10:51guys are asking for the goods
10:54I think that says it generally in an
11:01enterprise when you get to procurement
11:02somebody wants you to win yeah
11:05and you're actually then in a political
11:07process to get through the last mile
11:09like they're kind of like the Guardians
11:10they mean the internal champion it wants
11:12you to win like you're in procurement
11:13they want you to win and they want to
11:16work with you and this is why one of my
11:18other rules about open source
11:19monetization is try to avoid dog piles
11:21so a dog pile is a little bit like
11:24everyone's doing X project we've got a
11:27distro of X project think about that
11:30dynamics when you go into procurement
11:31then and 20 people show up with an offer
11:34for X project like no matter how much
11:37your champion loves you the procurement
11:39officer is going to have ten comparables
11:41to compare you against if you look at
11:43MongoDB for instance one of the things
11:44that protected them was that they are
11:46the only supplier of yeah so while
11:48they might not have had the high end
11:50strategy right when they started they at
11:52least were the sole supplier so they
11:54could still somewhat dictate prices if
11:56you look at OpenStack just shows I don't
11:58know that anyone made it out of light of
11:59that gun fight this is such an important
12:01point and I think it's actually worth
12:03restating which is if you've originated
12:06a project and you're bringing that to
12:08market you should retain the ability to
12:10be the sole supplier if only to set
12:14pricing and brand awareness in the
12:16market companies live or die by this
12:17type of thing another thing I like to
12:19hear this is true for you having spent a
12:20lot of time dealing with procurement
12:21more than anything else dictates the
12:23life of enterprise sales before going to
12:25procurement I always expect procurement
12:28to need their pound of flesh like these
12:29is this how these guys are comped often
12:31it's like ok you know whatever the
12:32discounting is and so we would expect
12:35that going to procurement you go a bit
12:37of a kabuki show and then you know you
12:39end up with some pricing and that
12:40pricing is actually for the vertical has
12:42been set in the market somehow so it's
12:44pretty well understood for forecasting
12:46by the business pretty understanding by
12:48the customer and it's kind of emotions
12:49you have to go through do you find an
12:51open source that that discussion is
12:54different because you are open source do
12:56like do you have more pricing pressure
12:57because it's open source do you have
12:59more of a push towards service
13:00components or can I think about it the
13:02same way I think about closed source I
13:03think you can think about it the same
13:05way as closed source if you're
13:07model is you've sold someone on a big
13:10you've helped train their organization
13:13to get there and then you're working on
13:15a fresh demand forecast of the
13:16transaction together if you're coming in
13:19and upselling support only and they're
13:22already installed and all your upselling
13:25is this support model that's going to be
13:27a lot more difficult because they
13:28already have it running they already
13:29have it working at their scale and all
13:31they want is essentially professional
13:33services by phone what happens when a
13:34big company comes in and competes with
13:36you as a smaller growing open-source
13:39based company this is something the open
13:41source companies have to navigate which
13:43is that sometimes larger companies will
13:45adopt the same software by name if
13:47you're not careful about how you
13:48position yourself we would do you mean
13:49like they can literally just take your
13:51name even though it's very popular for a
13:53large company say IBM or somebody else
13:55to say we support X oh I see what you
13:57mean okay Larry Ellison famously did
13:59with Larry Lennox he tried to do with
14:00the Red Hat they often don't have that
14:02much capability behind it but they can
14:04at least push a little go to market on
14:06it what are your internal champion and
14:08the procurement office be able to tell
14:09the difference like why would they even
14:11pick something else when they can get
14:12your product which is what they want is
14:14why having a unique market position is
14:16important regardless of your open source
14:17or not because I've seen cases where
14:19very large orders were suddenly stopped
14:22because another large company just
14:24quoted something that sounded similar
14:26for the same amount now that can happen
14:27open or closed but if you're in an open
14:29source dogpile as I mentioned yeah what
14:31a caution it's especially rampant that
14:33can actually drive your entire upside of
14:36ever being a half-billion-dollar your
14:38software company like your probabilities
14:40go down really hard so how do you get
14:41out of it the key is keeping a unique
14:44offer in the market right you don't want
14:46to be yet another distro of you know a
14:50certain famous technology that provides
14:52support I think you want to have a fully
14:53packaged differentiated approach
14:55okay so here's probably the most basic
14:57question in this space if you have an
15:00open source project it's probably
15:02available online so if you're walking to
15:04somebody and you're about to sign a ten
15:05million dollar la4 license what's
15:07stopping them from just downloading and
15:09running it themselves
15:13the answer to that - James you know some
15:16of the origin of this discussion was we
15:17were speaking on Twitter around this
15:19hundred or $200,000 contract value and
15:22even some sub that as sort of a valley
15:25of death I think if you go back to why
15:27the big software company is successful
15:30they're an extended part of those
15:33companies teams so I don't really like
15:36the hundred thousand dollar a year
15:37relationship because it's very
15:38transactional you know when you're part
15:40of a big change like micro services in
15:43the enterprise they're gonna want
15:44advisory they're gonna want you there
15:46they're gonna want a team of two to
15:47three people that just live there a key
15:49thing is that when that 10 million
15:51dollar transaction comes there as much
15:53voting with you know they want you to be
15:56part of their extended team part of
15:57their strategy part of a relationship
15:59with you yeah because you have an
16:01expertise that's been hard-won that they
16:03do not have it so I've spent you know
16:05quite a while doing enterprise sales and
16:07I've got this views on this cause this
16:09conversation that you and I had on on
16:11Twitter which I had claimed that you
16:13know indirect enterprise software sales
16:16it seems to be this valley of death
16:17between like say 30k and 150 if you're
16:2120k or below you know it you can call
16:24somebody up and they can pay for it
16:25and let's say if you're 200k and above
16:28then you have a hopes of supporting a
16:31direct sales force and still have good
16:32margins and then in between that you've
16:35got this valley of death where you can't
16:37really support a direct sale because you
16:39can't pay the people but like you know
16:40like if you're trying to do something
16:42new and innovative you don't have
16:43account control and becomes very
16:44transactional I'm like so do the
16:45dynamics of that change with open source
16:49sales I think what's happened is is that
16:51open source has become how large
16:53enterprises when I bet on big new trends
16:55and then that opens the the capability
16:58for the first time of open source
16:59companies I'll use the word being
17:01high-end meaning that IBM and Oracle are
17:04parking a bunch of good platform
17:06architects as we call them technical
17:08architects at the account that explain
17:10the new things to that account if you
17:12want to get a 10 million dollar
17:13relationship going you've got to become
17:16that extended part of their team that's
17:18why I jumped in our original Twitter
17:20discussion around the hundred thousand
17:21dollar a year deal and I was like hey
17:23actually I think 100 is too low like
17:25I would try to get to 400 21.5 and the
17:29critical thing that happens at that is
17:31not that you extract more money it's
17:32actually you can be a better adviser
17:34like you can actually put talent on the
17:36ground and you'll find that these large
17:38enterprises during times a big change
17:40really value that talent on the ground
17:42it's just so this is this is a nuance a
17:45new way of looking at that discussion so
17:47how much does your a CV have to be to
17:49support a Salesforce I'd say it has to
17:52be at least 150 200 K you would say that
17:55it actually should be higher than that
17:57because the goal isn't just the margins
17:59on the direct sales for us the goal is
18:01really strategic account control correct
18:03and to get that you need a deeper
18:05engagement yeah interesting so many open
18:07source companies have died because they
18:09transact around the edges with like
18:11director level or technician level with
18:14for support and they never got to the
18:16CTO the CIO and true strategic account
18:19control like the big players had so I'd
18:21love to get back to this question of
18:22like why now like I'm just so curious
18:25which is like is it like have you
18:26figured out something that nobody else
18:28has or is it that the enterprise is now
18:32realize that they need to pay for this
18:35software or is it something else going
18:37on like like why are we starting to see
18:39the elastic searches why are we starting
18:41to see the mesosphere is why are we
18:43starting to see these companies be
18:44successful well if you look at the clock
18:46cycle of how often big new software
18:48companies get built it's not everyday
18:50enterprise architecture has only changed
18:51so often right if you were to try to
18:54sell a middleware offer in 2008 I don't
18:56think you could have raised money you
18:57would have had a really hard time
18:58because none of the design patterns were
19:00changing I think what's happening now is
19:02that cloud is disrupting a lot of
19:04people's approach to software
19:06infrastructure to how they build
19:07applications and so this crop of open
19:10source companies is getting a chance to
19:12be the leader of a new thought versus
19:14purely being a commoditization play I
19:16say so you're thinking that it's not
19:18inherent an open source is actually
19:20inherent in the trend that's going on an
19:22open source is just becoming basically a
19:25requirement because of customer
19:27expectations and community I have to
19:29push back on this one isn't that
19:30inherent and open source because that
19:32has to do with the nature of a community
19:34the speed of development the fact that
19:36you don't have to necessarily go to go
19:37through a waterfall type of development
19:39process I mean isn't there something
19:40here that's inherent to open source by
19:43definition fixing problems is fixing
19:44problems whether you do it in open
19:46source for the source and the reason
19:47that we're seeing this rise in open
19:50source companies is not endemic to open
19:52source it's the fact that we're seeing
19:54actually a transformation developers and
19:56their aesthetic and then the question is
20:00where does open source come into the
20:02play with it it seems like there are
20:03intrinsic benefits to it and there's a
20:05level of expectation from the customer
20:06yeah and I think the commodifying open
20:09source companies did a really good job
20:11of normalizing open source is something
20:13that people did and even create an
20:14expectation that that's the right way of
20:16going and then this wave of what you
20:19might call like the microservices
20:21generation or the cloud generation open
20:23source companies are actually catching
20:25enterprises with a new need yeah and a
20:27new might you might call it hundreds of
20:29billions of dollar need yeah and
20:31suddenly IBM and Oracle's earnings are
20:33missing every time yeah and suddenly
20:35these new companies are getting young
20:37shoots okay that's fair just wanted to
20:39make sure like there wasn't some
20:41inherent experimentation baked into an
20:43open source based project that then
20:45leads to this more innovative type of
20:47you keep getting me to talk open-source
20:49strategy I'll keep talking software
20:50strategy that's great sometimes people
20:54say oh well why is enterprise software
20:55so expensive it's expensive because you
20:59know the trust model of enterprise
21:00buyers is you're really gonna take care
21:02of them advise them ensure outcomes
21:04you're not just providing support so
21:07what you're really fighting for is the
21:09chance to be one of those new trusted
21:11architectural advisors I believe Red Hat
21:12lived on the X eighties this is kinda I
21:15got lucky and find a commoditizing
21:17change which was UNIX to Linux yeah
21:19that's an rare event to have a major you
21:22know chip system replac forming see
21:26change so let's talk about Red Hat
21:28because Red Hat seems to not follow
21:29there's a big transformation yeah
21:31open-source is a great way to do it cuz
21:33it gives you the edge with community all
21:34the things I mean all the bromides that
21:36we normally talk about so you you take
21:39advantage of the transformation you
21:41become a strategic adviser etc but if
21:44you look in the back that's kind of like
21:46the one success case doesn't really
21:47follow that for all of the time it's
21:49been in market Red Hat
21:50still a two billion dollar your software
21:52company right if you compare it to what
21:54IBM or Oracle or s ap or Microsoft or
21:57any of the Megas they still haven't
21:59caught that size of a trend even though
22:03their prices frankly are similar to
22:04Microsoft's now like twenty five hundred
22:06dollars an OS so it's not that they're
22:08just down market is they just didn't
22:10catch a trend big enough to become a
22:12company that big like I don't think they
22:15you know in the same way that the
22:16mainframe captured all of the world's
22:18transactional processing or Oracle
22:20captured all relational database apps
22:22and enterprises I mean I've described us
22:24now a few times on this podcast catching
22:26this trend this wave this this need
22:27that's just product market fit like
22:30that's that there's a real market need
22:32for this yeah I think my thesis is that
22:33just saying we're an open-source company
22:35can distract you from software strategy
22:39that's great so open Solaris get wrong I
22:42mean I think you you've seen this from
22:44many angles oh there's a there's a
22:47pained look on his face I'm not sure
22:49about kick to kick the wound you know it
22:51was a great learning experience for me
22:53because I think Jonathan Schwartz had a
22:56fairly early and simplistic open-source
22:59strategy and he was one of the first
23:01CEOs of a mega enterprise company to do
23:03this so I watched this firsthand yeah
23:05and he was like we're an open-source
23:07company the problem was that son was
23:09still on the wrong side of all the
23:10trends like it was actually late to x86
23:14yeah it was late to everything that was
23:17happening around web scale and so
23:19open-source actually only hurt us in a
23:22sense because you know working on
23:24monetizing open Solaris one day Jonathan
23:26said it's all free it's no longer
23:28license go sell support contracts
23:29everyone will buy support well what
23:31happened was that overnight like
23:33hundreds of millions of dollars of
23:34revenue evaporated and then it was a
23:36tactical challenge to get people to sign
23:38up for it again yeah we didn't have some
23:40strategic initiative to go talk to them
23:42about which goes right to building a
23:43strong good software company to your
23:45original so Ethan we worked on that and
23:47then the next thing I saw was within the
23:49spring group there's something called TC
23:51server which is just cheaper middleware
23:53and it only got to say tens of millions
23:56of dollars in sales and an average
23:57selling price of say eighty thousand
23:59somewhere in that range
24:00and it never caught a strategic new
24:02design point either so when we had PCF I
24:05really said hey this microservices reef
24:07Factory is actually a once in a
24:08generation change we could take a
24:11different tact what would I really like
24:13about your view on this conversation is
24:15you're basically saying open source or
24:18not open source you have to build you
24:21know a solution that solves a real
24:23problem take advantage of a trend it's
24:25like traditional it's like a traditional
24:27you know software company in software
24:29sales and then you know open source
24:30provides you know uplift and etc and
24:33often open source has been viewed very
24:35differently like it's got something
24:37magic that will save you and so what you
24:40would see as you see these incumbents
24:41that are desperate and like in an act of
24:45desperation the swan song is to release
24:47something open-source because they think
24:49that somehow that's going to magically
24:50save them Community development's really
24:52important but if you just develop a
24:54little community and it doesn't change a
24:56cio a CTO anyone that's writing a
24:59serious checks priorities like by
25:01definition you didn't build a software
25:03company that had an opportunity to be
25:05the big new strategic adviser and that's
25:07a critical architecture another thing
25:09that I like about your view and all this
25:11it seems like it's a very kind of plan
25:13top-down view which often discussions
25:15around open source to me are very
25:16organic which is you know you get a
25:19community and that community will grow
25:20yeah this is kind of very kind of like
25:22organic progressive product vision like
25:25having someone to direct it top noise
25:27but what I'm hearing is the next Steve
25:28Jobs will be the Steve Jobs of an open
25:31source company good because it's a great
25:32CEO great product guy great business it
25:35doesn't have to be open source or a
25:36closed source it's it's to your place
25:37building a great software comes in if
25:39you write which is like listen there's
25:40an industry trend you're gonna build
25:42real value added in that trend you're
25:43gonna go from the top down bales for us
25:45and this is really about kind of
25:47top-down like strategy and planning I
25:49mean not just kind of progressive
25:50community a great thing that's happening
25:52is because buying open source should
25:53become a normative behavior yeah exactly
25:55which means that you don't have to be
25:57shy about doing something audacious and
25:59asking for money I said even further do
26:00you think open sources become a
26:01requirement I think this cacao is
26:04becoming a requirement it's close to a
26:05requirement I think for major new bets
26:08like if you look at our biggest buyers
26:12don't want to get into what Oracle is
26:15doing to them right now like every year
26:16they're using less Oracle and every year
26:18they're paying as much that's a very
26:20negative feedback loop wait to explain
26:22why a la structuring enterprise license
26:25agreement and what is that like just
26:27kind of talk us through it so what
26:28buyers are trying to escape from in one
26:29reason they want open source as a
26:30protective measure even if they don't
26:32use it it's the right to keep using
26:33their software without paying more and
26:35more for it every year yeah companies
26:36like Oracle have been out there charging
26:38more and more for the same usage over
26:40the last few years so they basically
26:41trap you into that and say well we can
26:44increase your unit costs even if you're
26:46decreasing your unit consumption yep
26:48that's great to get back to this
26:49original question which is a lot of the
26:51Constituent that listens to this podcast
26:52or entrepreneurs or the aspiring
26:54entrepreneurs or existing entrepreneurs
26:55so let's say one of these entrepreneurs
26:57wants to create a company Acme Inc and
27:05so so they're creating Acme Inc they've
27:08got a software project they think is
27:09going to change the world and they have
27:10a decision to do open source or closed
27:12source is there a difference or is it
27:14the exact same thing I think we got
27:15incredible liftoff of open source for
27:17instance IBM showed up and standardized
27:19than what we were doing HP s ap other
27:23people we got huge liftoff of open
27:25source though is that doesn't mean that
27:26you have to accept the usual low end
27:29yeah tarball and support contract
27:31business model so I would probably not
27:34start a closed source software company
27:36today unless I had a very niche novel
27:38idea that I felt no one else would try
27:40to do because quickly there'll be an
27:42open source alternative to what you're
27:43trying to do if you do not open source
27:45it ok last question then you started off
27:46describing how you've been through like
27:48two sort of failures before you kind of
27:49struck the right model for building a
27:52great software company not necessarily
27:54great open source company what advice
27:56would you give to entrepreneurs today
27:57you were trying to do the same thing or
28:00the next thing I think the trade-offs
28:01that you're gonna make as an
28:02entrepreneur is to come out into an
28:05existing trend with a lot of people
28:07having already validated that that was
28:09easy to get into that trend it wasn't a
28:11big risk so I think the challenge for
28:13entrepreneurs is trading off like a
28:15vision of change that will happen over
28:17the next couple years that you're going
28:18to grow into versus just joining an
28:20existing parade around a standard
28:23open-source community yeah and I would I
28:25that things that you could tangentially
28:28apply to previous architectures don't
28:30necessarily carry forward right I mean
28:32like often we're like oh this worked for
28:34VMs that fro it works for containers and
28:35so I do think that I'm just really need
28:37to be piped in the nervous system of the
28:39evolution of the market and you really
28:41need to be bold about kind of going
28:43after new solutions that are part of the
28:45evolving land it's the first principles
28:46way of thinking like saying don't derive
28:48it from what happened before I think
28:50about it from scratch Martine said one
28:51of the most brilliant things which I was
28:53sitting at homeless in the podcast
28:54cheering on which he said there's so
28:56much metadata and a micro service now
28:57that you could change the way you think
28:58about networks that is these fundamental
29:01shifts if you catch something like that
29:02yeah that then then you have a game
29:05changer that's wonderful thank you for
29:07joining the SNC podcast James
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