Posts from Open source

Licensing, according to wikipedia, is an authorization (by the licensor) to use the licensed material (by the licensee). Of all the business models listed on the revenue model hackpad, licensing is the least net native business model. There is very little about the internet that makes licensing work better and there is a lot that makes it work worse.

Here are some of the ways licensing can be used to build a business:

The first five items in that list are related to the software business and reflect the dominant business model for software before the internet came along. Software used to be sold (licensed) with maintenance as the recurring revenue item. The internet has largely changed that with software moving to a subscription model (SAAS) as we discussed in the subscription post. Software is still sold with a license, in fact the SAAS model doesn't change the provision of a license, but the idea that you will pay up front for a license has largely gone away in favor of the subscription.

An important and growing form of license is the open source license. There are a number of variants on the open source license but the basic idea is the licensor makes a license of the software avaialable for free for anyone to use, modify, and share. The benefits of this model is that the software is maintained and improved by a group of developers working together with no economic model around their collaboration.

The last two items are forms of intellectual property licensing where an owner of a patent or a brand will license it to someone else to use in return for a monetary payment. These revenue models can work online but they don't take advantage of the scalability of the internet. In fact intellectual property and the internet are in many ways in tension with each other.

The only form of licensing that USV is actively investing around is the open source model. We think open source is an attractive form of licensing that creates network effects in the developer and user community and we have had success investing in the open source model.

That said, licensing is probably the least interesting business model to me of all the ones we are covering in this series. It is possible that entrepreneurs will invent new ways of licensing that take advantage of the scale and reach of the global internet, in the way that open source does, and that could produce some interesting opportunities.

Our portfolio company 10gen's open source datastore called MongoDB has been seeing some serious uptake recently, particularly among startups. Yesterday I saw this poll on Hacker News:

Hacker News is a very specific community and so by no means is this poll representative of the entire software engineering community, but I am so proud to see Mongo up there as the top non-sql datastore.

MongoDB has recently added a couple of new features, including sharding and auto-sharding. The growing popularity of Mongo among startups, its comprehensive feature set, and the flexibility of a no-sql data model is turning out to be a powerful combination.

The recent MongoNYC was packed and for those of you in europe, please note that MongoUK and MongoFR are both happening later this month.

If you are frustrated with your sql datastore and want to try a non-sql approach or if you are starting from scratch and want to try a modern datastore, please check out Mongo. You won't be alone.

I can't say what company this is for but I can assure you its one worth joining.

Here's what they are looking for:

NYC start-up looking for a ruby/rails developer who enjoys working up and down the application stack. You'll have a huge impact on the expansion of our platform and the growth of our small engineering team. Your time will be split between iterating on the product, developing new areas of functionality, and applying a maintainability and scaling-aware mindset to our core architecture. 

Help us solve interesting problems, from adding location features, to looking for interesting patterns in our data, to assessing and implementing new technologies like MongoDB. We encourage contribution to open source projects and appreciate diverse backgrounds in and out of technology. Experience with payment platforms, faceted search, and building content management tools is nice but not a must.  

Interested? Get in touch at [email protected] (pls link to your github profile, if you have one).

There was a lot of noise in VC/startup land earlier this week about the Series Seed documents that can be used to close a seed round. Marc Andreessen told PE Hub:

It’s like open source software. If it’s developed by IBM, there’s no
reason for another company not to use it. The documents aren’t owned or
controlled by Fenwick. Fenwick isn’t getting paid for them. I don’t
think there’s a reason for another attorney not to use them, except if
they’re concerned over reduced billings. Lawyers have a financial
incentive to make things more complicated because they are paid more.

I'd like to differ with Marc on this one. First, as Brad Feld points out, there are now four sets of "open source" seed documents:

• TechStars Model Seed Funding Documents (by Cooley)
• Y Combinator Series AA Equity Financing Documents (by WSGR)
• Founders Institute Plain Preferred Term Sheet (by WSGR)
• Series Seed Financing Documents (by Fenwick & West)

I will add a fifth of sorts; Gunderson has set up a "Simple Series A" set of forms that our firm has used a few times. I am not aware that they have been published on the Internet yet though.

There are no shortage of "standard forms" out there. TechStars uses one set. Y Combinator uses another. Founders Institute uses a third. Andreessen Horowitz uses a fourth. And USV and other firms uses a fifth.

The problem, as Brad Feld points out, is that nobody has done the work to get all the various players in the room and standardize on one form. Ted Wang showed me the Series Seed documents last year and while I am hugely supportive of his intent here, I can't and won't get behind the Series Seed forms because they leave out some critical stuff that we simply won't do a deal without.

I guess it's like open source software in that there are many flavors of it out there. One project might choose MongoDB for their project. Another might choose Cassandra. A third might choose Hadoop. All will get the job done and all are open source. But each one has its strengths and weaknesses and there is no standard. That's ok with me as long as everyone understands it.