Should you consider building a non-dev open-source SaaS product?

🌈 Abstract

The article discusses whether building a non-developer open-source SaaS (Software-as-a-Service) product makes sense. It analyzes 40 commercial open-source software products that are not developer tools, examining their monetization strategies and go-to-market approaches.

🙋 Q&A

[01] When it makes sense to build a non-dev open-source SaaS product

1. What are the key factors that make it suitable to build a non-dev open-source SaaS product?

• Open-source companies are typically founded by technical individuals solving personal problems, which allows for faster iteration and feedback from the open-source community.
• Open-source dev tools attract a large user base without charging individual developers, with users becoming paying customers when their needs grow, such as for team or enterprise use.
• However, highly technical open-source products like CRM or CEP may not fit the same model as they can be run in production from day one.

2. What are the three key personas or contexts where the "dev bro" (tech-savvy decision-maker) is crucial?

• Engineering-driven teams led by tech-savvy founders who prefer self-hosted technology.
• Data or engineering leadership who are key decision-makers for the problem being solved, and may leverage open-source tools to customize and enhance functionalities.
• Strict security requirements, such as for government agencies or healthcare providers.

3. How can transparency in open-source software benefit enterprise sales?

• Transparency can streamline the sales process by reducing the need for extensive security and compliance documentation, as developers can directly audit the running code.
• Open-source analytical tools like Posthog and RudderStack have pioneered this approach, offering both self-hosted and cloud SaaS options.

4. How can open-source systems benefit from integration-rich products?

• The open-source community can develop niche features and integrations to expand the software's utility, unlike closed-source solutions that depend solely on their internal engineering team's capacity.
• This is particularly beneficial for products with long-tail dynamics that need multiple connections with libraries, frameworks, or applications.

5. How can the open-source community benefit product development?

• Users actively engage in forums, comment on docs, create GitHub issues, and chat in community channels, providing valuable feedback and insights to the product team.
• This can reduce time spent on product discovery and focus on delivery, making the team leaner. It also makes hiring engineers easier, as the open-source nature appeals to the developer community.

[02] Go-to-market motions for open-source operational tools

1. What are the common pricing models used by open-source operational tools companies?

• Volume-based pricing is the most common (12 products), likely following their non-OSS counterparts.
• Unit-based pricing (7 companies) is popular for website analytics and workflow automation tools.

2. How do open-source operational tools companies approach on-premise vs. enterprise offerings?

• Large enterprise clients typically value effective, reliable, and user-friendly solutions over the open-source nature.
• Companies offer premium support, single sign-on (SSO), and air-gapped instances to enhance security and data features for enterprise customers.
• Some companies, like Lago and Refine, solely target enterprise clients and do not offer cloud options.

3. How can open-source operational tools companies leverage a platform strategy?

• Companies like Cal.com and RocketChat are experimenting with building platforms for developers using their open-source tools, enabling them to expand their offerings and create powerful flywheels.
• By providing a core toolset with an excellent developer experience, they can gain traction and encourage developers to build new functionality around the platform, leading to increased consumer engagement and further developer traction.

4. What are the common open-source licenses used by the 40 companies analyzed?

• The most common licenses are MIT (10 companies), AGPL-3.0 (9 companies), and GPL-3.0 (4 companies).
• 11 companies have created their own custom licenses, and 9 of the 16 VC-funded companies have done so.

5. What are some potential opportunities for open-source alternatives in the operational tools market?

• The article suggests that there are not many open-source alternatives for GTM (Go-to-Market) tools besides CRMs, such as for human email, lead scoring, product-led sales, or enrichment tools.
• The author encourages readers interested in this domain to subscribe to the newsletter or reach out, as they plan to continue writing about it in upcoming issues.