Open-source business models (MongoDB)

Created by Rishabh Srivastava, Founder of Loki.ai

This summary was largely done for my own note-taking, sharing it just in case it adds more value to other people.

I have no affiliation whatsoever with anyone in this note. This is a summary largely taken for my own reference, and may contain errors :)

Context

Source URL:

What If It's Trump?, An Update on MongoDB, An Interview with MongoDB CEO Dev Ittycheria

What does it mean for tech if Trump wins? Then, catching up with MongoDB, and an interview with Dev Ittycheria, the company's CEO.

https://stratechery.com/2020/what-if-its-trump-an-update-on-mongodb-an-interview-with-mongodb-ceo-dev-ittycheria/

Why is it important: Shows how the business model for a very successful open-source company works

Keywords

Open source, SaaS, Startups, Database, MongoDB

Summary

Trends

Storage costs have almost gone to zero and the biggest constraint now for organizations is developer productivity and developer capacity

Open-source strategy

You have two kinds of open-source strategies: crowd-sourced R&D (which the MongoDB CEO things is a bad idea), and a "freemium" strategy that basically enabling developers and users to easily get access to the code and be able to quickly build applications in a very frictionless way

MongoDB's original strategy was to offer commercial features around management and security etc to enterprises companies that bought it for on-prem deployment. But cloud killed this strategy. What was interesting is when you offer open source as a service, a la through the cloud providers, you can actually monetize it better

Licensing

One of the really smart things the founders did is the open source model that they used at first was AGPL, which is much more restrictive than the classic Apache license model

AGPL basically says everything has to be shared back, and that includes things that run as a service, whereas a more Apache model or an MIT model, you don’t have to share back changes and you can just take it and use it

Later, they changed it to SSPL. It basically mandates that it’s still a free-to-use license, but with one exception, that if you plan to monetize an offering of MongoDB as a service offering, you can still do that, but then you have to basically open source not just the code but also the management plane so that anyone can take that code and basically also offer MongoDB as a service offering

Strategy for winning with open-source

Get the product-market fit right. Developers must REALLY like your product

Get a licensing model that allows you to build a real cloud business, without the cloud companies just ripping off your software and running it on their servers

Get your go-to-market strategy right

GTM Strategy

3-layered GTM:

Frictionless self-serve. A lot of developers hate being sold to, hate being marketed to, they just wanted a very frictionless way of engaging. We found that not only did small companies like that but even developers of a large bank, for example, would use the self-serve option to play with the product as a precursor to doing a large project with MongoDB.

Inside sales. When you have a lot of small customers, where it’s too expensive to send someone to go visit them, you should conduct business over the phone or over the web and build an inside-sales team to do this

Enterprise sales. For large accounts - self explanatory

Note: read the summary of the a16z approach when thinking deeply about this ▶️Approach to B2B Growth and Sales

Flywheels in GTM

What’s interesting is that the different channels to become a flywheel effect, self-serve becomes a massive lead generation for us and then our sales people can cherry-pick the most important self-serve customers who show the most upside growth and then we help those customers not only be successful, but then they come back and consume a lot more