Dirk Riehle's Industry and Research Publications

Let’s celebrate relicensing from an open source to a proprietary license

tl;dr Commercial open source firms are beneficial to society, even if they eventually license away from open source, because they are exploring a search space for useful open-source software that is otherwise hard to get to.

Commercial open source firms that license away from open source licenses to non-compete licenses don’t get a lot of love these days. They are called fake open source companies, betrayers of the spirit, etc. I beg to differ. Commercial open source firms, in particular venture-capital funded single-vendor open source firms play a useful role and contribute significantly to the software ecosystem and society in general.

Single-vendor open source firms are companies that go to market with an open source version of their product while developing a closed complement that they make money off. As the product matures, the open source strategy often becomes less valuable to them, and many, if not all, will license away from open source to a more restrictive license. This change in strategy as signaled by the license change has led to the complaints mentioned above.

These complaints were only justified, if the company had promised open source forever and had anchored altruism and minimizing profits as their reason of existence. And if they had done that, who would have believed it and would the company been able to achieve its goals? The answer is obviously: No, non-profits don’t get venture capital (VC) funding, and VC funding is critical to building the software in the first place.

Venture capital funding enables entrepreneurs to answer the following questions:

  1. Can it be built? (Remove technical risk)
  2. Does anyone care? (Problem-solution fit)
  3. Is it economically sustainable? (Product-market fit)
  4. Does the economy at large want it? (Channel-product fit)

Without VC funding and commercial motivations, these questions for a proposed software would be much harder to answer. Sometimes there will be nobody to explore the idea. Sometimes there may be a traditional open source community to do so, but when compared with a VC-funded firm, its development will be much slower than that of a company, and often less focused and stable.

The complaint is usually not about a company providing open-source software, but rather about (a) withholding the closed complement and (b) eventually dropping the open source license for future development. Again, without the closed complement there wouldn’t be the commercial open-source software in the first place, so complaining about it is pointless. (If it is a not-so-smart complement, e.g. withholding of critical features, then either fork or don’t use the software.)

Most commentators view the licensing away from open source as a negative event. I’d like to argue that it is a milestone to celebrate. By licensing away the company signals that the product has achieved a mature state and that the help of an open source strategy is not needed any longer: The company has proved to the world that the software can be built and that the economy at large cares and thinks this software is a good idea. This is an important achievement!

As we can observe, such a signal will be quickly answered by industry. If the company is correct, other companies (usually led by the hyperscalers) will jump in, fork the last open source version, and start developing a next version. If the company is not correct, the open source project will falter, and even if the company survives, the world won’t care much.

Let it sink in: Without VCs, there would be no Terraform, and without Terraform, there would be no OpenTofu. Without VCs, there would be no ElasticSearch, and without ElasticSearch, there would be no OpenSearch. The direct way from idea to OpenTofu or OpenSearch did not happen; it needed a VC-funded startup to blaze the trail.

I’m not saying that changing the license from open source to non-compete is the final word in commercial open source business models. There may well be better approaches that leave more open source on the table, and I’m working on some. But for now relicensing is the strategy du jour, and the world is better off for it.



Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Posted on

Share the joy

Share on LinkedIn

Share by email

Share on X (Twitter)

Share on WhatsApp

Featured startups

QDAcity makes qualitative research and qualitative data analysis fun and easy.
EDITIVE makes inter- and intra-company document collaboration more effective.

Featured projects

Making free and open data easy, safe, and reliable to use
Bringing business intelligence to engineering management
Making open source in products easy, safe, and fun to use