The hidden benefits of being an open-source startup
How being open source helps us win
PostHog wouldn’t be here now if it wasn’t open source. It’s that core to our success, and has been since day one.
Inevitably though, what “being open source” means has changed as we've grown. It started as a product differentiator, but it’s evolved to be more than that: a core part of our culture and business strategy.
Throughout this evolution, we've learned a lot the benefits (and the downsides) of being open source. We're detailing them here in the hope more will follow this path.
For transparency, here are our open-source credentials:
You can find PostHog's code (and work) publicly available on GitHub.
A majority of it is MIT licensed, but some parts are under a separate enterprise license.
Note that:
1. PostHog can be tricky to self-host due to our breadth of products, but many people have managed to do so. Our DevEx team is working on unifying the dev environment with self hosted to make this better.
2. It is totally fair for you to have a different definition of open source (some would call us “open core”), but this is where we're coming from.1. It distinguishes you from the crowd
Rarely is a software product entirely original. Everything is a remix.
This creates a lot of competition, but being open source instantly distinguishes you from your closed-source competitors.
Many new products ride this differentiation to successful launches. Just look up “open source alternative” on Hacker News to see how successful this is.
We know this because PostHog did the same. Launching as “open-source product analytics” was instrumental in helping us get our first 1,000 users.
A couple of days after posting on Hacker News, we reached 300 deployments, and, with a little paid Twitter promotion, our repo started trending on GitHub.
This swell of interest was all thanks to being open source.
This was fueled by two groups.
The first is open-source advocates, who are dedicated to seeing open source succeed. They use open-source products whenever possible, recommend them to others, and post about them. We benefit hugely from this (700+ messages in our #brand-mentions channel include "open source").
The second group is buyers. They have been burned by closed-source options and have seen the benefits open-source products provide including:
Easier to try out
Transparency
Freedom from lock-in
Cost reduction
Both these groups boost open-source startups in launches and beyond. They create word-of-mouth and bottoms up growth.
We continue to see this. There are many reasons to choose PostHog, but we still get many signups where being open source is the most important one.
2. It helps you hire great talent
We've written before about how important hiring is. Any advantage you can get here is huge. As non-obvious as it might seem, we've found being open source is one of them.
This was true from the very beginning of PostHog. We can thank being open source for one of our earliest employees: King of ClickHouse, flip-flops, and moustaches: James Greenhill, aka Jams.
In the early days, co-founder James would check who starred the GitHub repo. One day, he spied a data engineer at Uber (Jams) who had left a star and this piqued his interest.
On a call, Jams explained Uber had built a bunch of internal tools like PostHog for data control reasons. He found the project interesting, wanted to work on it, did a SuperDay, and has manned our data infrastructure ever since.
Since then, being open source has been instrumental to our hiring process:
Engineers know what they are getting into before they start. They can see the codebase, how often we ship, what the PR process looks like, and more.
This also means they know their code will see the light of day. Users will use it and there won't be tumbleweeds in their GitHub profiles. For future jobs, they have real features, code, and pull requests they can point to as examples.
They can contribute before they start. Opening a pull request with their solution is often part of the SuperDay process and some keeners even do this before we ask them to, which makes an even better impression.
This isn't just the case for us, many companies hire people who contribute to their open-source project and have for a long time. This is beneficial to both parties:
Companies can look for (and find) people who are more familiar with their codebase and domain.
Candidates get a preview into what working at the company is actually like. Companies can't lie when their work is in the open. This lowers the risk of their expectations not matching the reality of the job.
3. It creates trust
PostHog (and many other open-source startups) are built for developers. A defining feature of developers is their strong BS detector. Luckily, being open source is a key way to defuse this BS detector. As they say: “code don't lie.”
Open source builds trust in multiple ways:
Instead of saying “trust me bro, we're working on it”, we can link to issues, or better yet, pull requests that show what we are actually doing. Users can then give us direct feedback about these and we ship a solution that actually solves their problem faster.
Similar to this, our decision-making process is also in public. We can talk through and share why we went with certain product or technology choices. Being secretive about this is not the source of our advantage.
If developers need to know the details of our implementation, they can look for themselves. They can audit our code for bugs or potential issues. This enables developers to self-serve answers to their issues.
As buyers, you can see our pricing and entire sales process. There's nothing hiding behind a “request a demo” button, whitepaper, or “quick call.” You can even see what sorts of discounts we offer without needing to haggle like a used car salesman.
As employees, everything from compensation to benefits to ways of working are detailed transparently in our handbook. This helps new joiners know what they are getting into and everyone gets treated with respect and fairness once in.
The trust you create by doing all this should be taken seriously. Being open source creates an implicit agreement between a company and community. The company is expected to be transparent and consistent. The community provides their support and contributions in return.
It is when this agreement is broken that people get angry (often more so than if the company was closed source in the first place). We recognize this and do our best to prevent it by:
Remaining alive and sustainable as a company.
Setting clear expectations of how open source works at PostHog.
Keeping our licensing the same as we've grown (and having no plans to change it).
4. It generates more feedback and contribution
A failure mode of many startups is a lack of people who care. Open-source startups often face the opposite challenge: an overwhelming amount of support in the form of feedback and contribution.
The solution to this is channeling these contributions. For example, we realize PostHog is more difficult to contribute code for than other open-source projects, so we need to encourage people to contribute in other ways by:
Making our feature requests and roadmap open. We ask people to 👍 and comment on features they would like to see next. This also helps identify potential user interviewees and beta testers.
We make it easy for people to contribute to our website. Roughly 10% of pull requests on our posthog.com repo are from contributors outside PostHog. I've even seen people write entirely new docs pages.
Having cool merch and being generous with giving it out to contributors. Anyone on our team has the power to give out a merch code. “Merch them” is a common response to seeing a great contribution.
By providing ways to contribute outside of code, we maintain the community ethos of open source without asking people to make the heavy investment to get up to speed on development – we pay people to do this instead.
The contributions we do get are hugely helpful. They help us ship a product that is both more polished and better tailored to our users' actual use cases.
What are the downsides?
We know being open source is a net positive, but it isn’t without drawbacks.
Some perceived downsides, like the fear of having one’s work judged, rarely happen in reality. Most people will never see your work and your coworkers will almost always be tougher critics than the community is.
Instead, there are some non-obvious downsides to being open source we have found. These include:
1. It can be tough to monetize
Every open-source startup struggles with how best to monetize. Enterprise plans? Paid self-hosted plans? Cloud?
We tried a combination of these, but settled on cloud hosting. This enabled us to build a sustainable business while continuing to offer a free product.
The breadth of PostHog made this decision easier. While users love having more products, it has made hosting PostHog more complicated. We make up for this by offering a generous free tier for all products on Cloud.
More than 90% of companies use PostHog for free and, with some exceptions, this mostly why people want to self-host in the first place.
2. Support is not free
Because open-source projects offer the code for free, people expect support to be free as well. Maintainers often burn out dealing with the flood of support requests without the resources to respond to them.
We felt this too with our former paid Kubernetes deployment:
It was becoming too complex and difficult to debug from afar.
Supporting it was taking a significant amount of our engineering resources.
Overall, it was not a good experience for us or our users.
Eventually, we made the tough decision to shut it down, provide migration options (like our free Docker Compose option), and redirect our engineering resources to making our Cloud version work for our former paying Kubernetes users (with features like SOC 2 compliance).
3. You might be competing with yourself
It can be hard to balance a free, open-source product and a paid, hosted option. No matter what you do, you'll face allegations that you are making the open-source version worse intentionally (whether that is true or not).
To be honest, five years in, and we are still figuring this one out. PostHog has become more complex to host, even for us (our infra team has grown to 5 people). We continue to offer a generous free tier, but many people still want to self-host and find it difficult to do so. Again, we're working on it!
What hasn't changed is open source being a core value of our company. We have a broader definition of open source than most. We think it's not just the code you write, but your overall culture. We try to be open source in all the ways we can. Our handbook, roadmap, and even this newsletter are all testaments to this.
We've found this to be a better solution as it is a lot easier to be consistently open source when your code isn't the only thing you open source.
Words by Ian Vanagas, who snuck a Canadianism 🇨🇦 in here (you hoser)
Another idea for a post I would love to read is how PostHog thinks about competition, if at all (maybe I missed it). Definitely a topic that comes up more often with AI reducing the technical barrier to entry for many products!
Man! I love how y'all write