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Ask HN: What's the deal with the "open-source SaaS" trend these days?

by chdaniel on 1/25/24, 9:40 AM with 22 comments

Hi HN,

I'm a non-technical founder.

I've built a couple of SaaS companies, many products, etc. Some failed, some allow me to conduct my living.

I'm non-technical so please consider you're explaining this to a Neanderthal:

What's the deal with this increasing trend of open-source SaaS companies?

Sure I know of WordPress and what have you - but what's the implication of e.g. Cal dot com, who's a Calendly alternative, but it's open source and it's clearly a business?

For instance, is it that: • people contribute to it (since it's open-source) and the founders can therefore build a better product... • ...whilst the PEOPLE also get a better free product, if they so choose to run it on their instance?

Is the above true? Because if so, I get it - it's a win-win, and the founders "tap into" a bigger pool of "effort", if that makes sense.

What other implications are there? Thanks so much.

  • by HuwFulcher on 1/25/24, 10:45 AM

    It's what you've stated but also there's an ethical side to it. Many founders want to give the option for competent users to self-host, only way to do that is open up the source code. They could go completely down the open source route and rely on donations but that doesn't usually cut it. The business model then is to provide a managed service where the founders deal with the hosting, updating, security, etc.

  • by a2code on 1/25/24, 10:50 AM

    Consider you are the author of a SaaS. You realize that your product does not have business value in some sense. By open sourcing your SaaS, you minimize the business side and emphasize the technology side. "Look at this cool open-source SaaS I've built. I make for a great Software Engineer."

  • by chadash on 1/25/24, 4:59 PM

    Personally, an open-source project lets me take a little bit more risk on a startup's product. If the company goes under, I can always host myself, even if it's a bit of a pain.

  • by ezekg on 1/25/24, 5:22 PM

    If you want to hear if from the horse's mouth, I wrote about it a lot more here [0], when I open sourced my business last year.

    But if you don't want to read the entire post, here's the tl;dr:

    1. My (larger) customers wanted the source code for auditing purposes. I was using code escrow for larger customers and it was annoying to manage. If some can have the code, why not all?

    2. My customers wanted me to eliminate my bus-factor of 1. If I got hit by a bus, the business died. Now it can live on and I can grow on my terms.

    3. My customers wanted to have an "out" if the business ever decided to shut down. Now they have that "out" via self-hosting/forking.

    4. My customers wanted me to show them they can trust me with their vital business data, and open source builds trust.

    5. I was tired of dealing with copycats (some verbatim stealing my API schema and docs). Hopefully, moving forward, nobody will want to use a closed source copycat of an open source project.

    6. My (larger) customers wanted to self-host for compliance purposes (mostly i.r.t. where data is hosted and accessed). If some can self-host, why not all?

    As you can see, most of my reasons (but not all) stem from what my customers wanted. I didn't open source my SaaS for community, or to get free work, or to tap into "a bigger pool of effort." I did it because being closed source was a major pain point for me and my customers. So I took notes over the first 7 years, and I finally reacted. And I've only seen positives thus far (which I'll write more about later this year), so my initial fear wasn't warranted. I encourage others to do the same.

    (My reasons aren't going to Cal's reasons. Peer wrote about his reasons here [1].)

    [0]: https://keygen.sh/blog/all-your-licensing-are-belong-to-you/

    [1]: https://cal.com/blog/longevity

  • by iFelix on 1/26/24, 9:13 AM

    The shift to commercial open source with a hybrid financing model is what's driving the trend. It makes it possible to get enough funding to build high-quality software while bringing the costs down for everyone.

    We're doing just that with our own CRM [1]. It couldn't have been a side-project as you need thousands of engineering hours to build something decent. But with only a few millions in engineering spend, we'll have something that is genuinely as good as the products from billion dollar behemoths. Open Source software will never be able to monetize as well as closed-source. We might only capture 10% of the value we create. But being open source inherently creates strong network effects that tends to push towards a limited number of winners, and the addressable market in CRM is so big that it's still possible to build a multi-billion dollar company while massively driving the costs down for everyone.

    It's kind of like the Prisoner's Dilemma: If every company keep their software proprietary, they can all make moderate growth/profit. But if one goes open-source, they could attract a large community, drive innovation, and potentially reap long-term profits while reducing the overall market size.

    [1] https://github.com/twentyhq/twenty

  • by acuozzo on 1/25/24, 8:32 PM

    Instead of asking why, perhaps it's better to ask: Why not?

    Consider Bitwarden, for instance. Does it have any real competitors running on a quick rebrand of their stack?

    Better yet, as a non-technical founder, why haven't you stood up a successful Bitwarden competitor? The secret sauce is right there and you can contract-out the rebranding for like $20.

    It's rare to have a tech mote nowadays and without a tech mote competitors will pop up whether or not you choose to go F/OSS.

  • by max_ on 1/25/24, 11:58 AM

    It's makes me confident to depend and use a service because I know that if it shuts down.

    I can simply run a self hosted solution.

    This is why I love Bitwarden and Source Hut so much.

  • by thinkingemote on 1/25/24, 10:05 AM

    Where is the value of a business? Is it the idea (or ideas written as code) or the execution (or service)?

    What do people pay for? The code, or the things the code does?

    What is valuable to customers? Is trust more important than the unknown? Is expertise valued?

    What other things apart from code makes up a business? For example customer service, marketing, etc.

  • by comprev on 1/25/24, 1:35 PM

    Some projects have varying licenses to extend their open source product beyond a bare bones system. Some companies pick "open core" license models which lock enterprise features behind a paywall.

    For example a collaborative software text editor might require connections to a central database for synchronising the various users. The code to handle these connections might not be available, or at least heavily restricted through licensing from using in a business environment.

    The SaaS company makes money by providing the infrastructure to allow users to actually collaborate with others. Until then it's simply a stand alone desktop text editor.

    Alternatively the company may offer basic collaborative features which only support one 3rd party auth provider and synchronise via the public internet.

    A customer might want on-prem networking only and Active Directory auth, and will pay for these features.

  • by XCSme on 1/30/24, 2:30 AM

    It's mostly a marketing tactic.

    People find your free product, you lock some core features behind a paywall or make the cloud offerring easier to use, so people switch from free to paid. It's a lead magnet.