Episode 38: npm Inc.– From Software Registry to Software Business, with Isaac Schlueter, Chief Open Technology Officer

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Isaac Schlueter emerged as one of the most important leaders from the Javascript community. As Chief Open Technology Officer of npm Inc, the company behind the essential software registry, he has a bird’s eye view of what makes Javascript such a unique ecosystem. And his mission was also unique: to transform a free public utility into a viable enterprise software business. This episode was recorded in person at the Open Core Summit.

Transcript

Intro



Michael Schwartz: Welcome back to Open Source Underdogs. I’m your host, Mike Schwartz, and this is episode 38, the last in-person interview recorded at the Open Core Summit. Our guest is Isaac Schlueter, CEO of npm Inc.

Many programming languages have a central software registry, but the JavaScript npm Registry is unique. It’s the biggest and the busiest by far. For example, it has around four times the number of modules as a number two registry, which is Maven for Java.

If you want to learn more about npm, Isaac was a guest on Founders Talk Episode 61. And for an interesting perspective on the npm ecosystem, you might want to listen to Changelog Episode 355 – it’s an interview with C.J. Silverio, as a former CTO of npm Inc. She provides an interesting perspective on the economics and the technical challenges of running the world’s largest package registry.

I hope you enjoy this episode. And if you like it or you’d like to start a discussion, tweet at us. Our Twitter handle is @fosspodcast.

So, without further delay, onward with the interview. Isaac, thank you so much for joining us today.

Isaac Schlueter: Hey, happy to be here.

What Is Npm?

Michael Schwartz: Some business people listening to this podcast might not know what npm is or what it does – can you give a really quick explanation?

Isaac Schlueter: Sure, this is my very fast 50-cent tour. Basically, npm is a way for JavaScript developers to share modules of JavaScript code. So, if you have some reusable function, something that you’re using in a bunch of different places, they can publish that up to the npm Registry. Other developers in other projects can use npm to install that dependency and also keep up-to-date when there are updates to it.

If you’re depending on a platform, or a module, or a library, or something, you can automatically pull in all of those updates and keep your app up-to-date.

Why Inc. Not Foundation?

Michael Schwartz: Most other package ecosystems are supported by a foundation, for example Ruby, or maybe Python – why didn’t that work for JavaScript and npm?

Isaac Schlueter: There is a couple of reasons for this. The first one is, if we go back to the kind of the history of npm, when I decided to start a company around it, it was my side project for about four years.

And it grew in popularity. It was running on donated infrastructure from this company, Iris Couch. We just grew to a point where the scale was too massive for them to be able to afford to keep doing that.

I looked at my options, and starting the foundation was definitely on the list of things that I could do. Another option was, find a home for it in some big company, try to get hired by Google or Microsoft, or somebody.

The reason why I decided to start an independent company was simply owing to the scale and the rate of growth that we were seeing. So, the typical way that a foundation operates, you raise a bunch of money from a bunch of companies who have some vested interest in whatever the thing is, whether that’s an open-source project or some other thing. And then, you spend that money on keeping the thing going, so that might be, having developers work on the project, your managing governance, or marketing, whatever.

Within npm, we had this exponential growth curve that we are still at the very beginning of, in terms of the number of users on the npm platform. We’d grown to about a million users. Our rate of downloads and package growth was just astronomical.

The JavaScript language is used in pretty much every application out there. There are Ruby developers, there are .Net developers, there are Python developers, but the front-ends are all running in JavaScript, and everybody was increasingly putting more and more stuff into npm and using it very widely.

So, we kind of did some back-of-the-envelope math and realized like, “Okay, well, we could go, raise a couple million bucks to start a foundation and be able to put some resources behind this thing. But what are we going to do next year? We’re going to need 10X as much. And then, the year after that, and the year after that.

The task of just kind of continually being in fundraising mode was pretty daunting. Especially because it’d be hard to justify that the benefits to each of those member companies would also keep increasing enough to justify them, increasing their investment.

On the other hand, if you have an exponential growth curve of almost anything, even rising costs, you can take that to an investor and say, “Here’s the thing: it’s a thing that’s growing, it is a thing that’s exciting.” You can tell a story about how you’re going to go about monetizing that in the future, and that’s something that is sort of a good fit for a venture-back startup.

Npm Products

Michael Schwartz: Most people use npm for free – what do you actually sell?

Isaac Schlueter: We sell two main things right now. The first is npm Orgs product, which is a multi-tenant SaaS thing that you can use to store your private code within your organization. That’s used primarily by smaller companies or front-end development teams within larger companies.

The price point there is $7 per user per month. It grows depending on the size of the Org, you can have multiple packages all underneath that same Org.

The other thing that we sell is our product called npm Enterprise, which is a single-tenant instance of the npm Registry and website. It has some additional features, like single sign-on, or security policy enforcement, that kind of thing, which is more of a need at bigger companies.

Market Segments

Michael Schwartz: What kinds of companies use the Enterprise products – do you segment the market at all?

Isaac Schlueter: The sweet spot for us is about development team of 50 or more. We do some market segmentation to go after different sectors. There are some sectors that we focus on, but obviously, we will sell it to anybody who wants it. There’s a fair amount of inbound that comes in as well.

We’re seeing the most traction in sectors that have really high compliance, policy and security compliance needs, so financial industry is a really big one. And there’s also a ton of customers with money to spend on their development practices, and they get a lot of benefits by having their developers able to build things in a more frictionless way.

The other sort of category of markets that we go after, where we’ve seen some good results, are companies where there is sort of an internal agency model, where you have a web development team that has multiple different website properties.

There might be hopping between different websites that are all kind of under one big corporate brand. And in that case, there’s a lot of benefits to being able to reuse those modules.

Also, frequently, in both types of companies, once a company gets to a certain size, there’s often like a tools team or kind of a platform team that’s in charge of all of the reusable JavaScript code that’s used across all of the different properties. And in those cases, they also benefit a lot by having something like npm in-house.

Marketing / Sales

Michael Schwartz: In terms of marketing, you were sort of starting from a nice position because everyone knows npm – how do you organize sort of the marketing effort so that people know what the commercial offering is? And how do you organize the sales – do you just wait for inbound or you do any outbound marketing?

Isaac Schlueter: We do a fair bit of outbound marketing, and it’s a little bit of a double-edged sword. Everybody knows npm, but not everybody knows npm Inc. or npm Enterprise.

One of the challenges that we ran into, which I think is common among a lot of companies that are operating in open-source communities, is that people have heard of the thing but they haven’t really heard of the product.

One of the things we heard is, “Oh, npm? That’s a company??” I just thought packages came out of the ether. I didn’t realize it was downloading from somewhere.”

So, when it comes to our marketing efforts, a fair amount of the work there is in continually beating the drum of like, “Yeah, we have things for you.” “If you need policy compliance, if you need security, if you need proprietary code, and you want to manage it, using the things that your developers already know and love, then we have a solution for you.”

When we go through the sales process, typically we have an internal champion, which is usually engineering architect, or engineering manager, or something like that, who sort of intuitively understands the benefits of npm.

Then, the sale process tends to be one of making the case to folks who are not already deep in this ecosystem. That tends to be people in kind of like internal development tools, purchasing team, the CIO’s office – it can take a couple of different shapes, but, you know, the folks within a large Enterprise who managed to spend on development tooling.

Free V. Commercial

Michael Schwartz: Diverting a little bit from marketing, one of my guests said to me that it’s almost better to start a company around a product that you don’t write, an open-source product that you don’t write, because all those engineers who are working on the open-source thing, they’re not billable, or they’re not contributing to their commercial product – do you feel that friction at all, where maybe part of the team is really committed to the community mission but maybe other parts of the organization are more interested in the product than actually generate revenue? How do you reconcile that?

Isaac Schlueter: It can be a tough needle to thread. I mean, not to dispute the past guest who said that, there’s some sense in what they’re saying, but obviously, I do disagree because of what I’ve done.

I think that the challenge, or at least the puzzle, is to figure out how do we continue to make good on our community mission in such a way that it serves our product interest, and how do we design our product interest in such a way that they’re served by the success of the open-source community.


We have certainly made some missteps in the past. One of the biggest things that makes good intuitive sense. You have an engineering team, you have a web team, you have a backing team. Of course, you’re going to have an open- source team, but the minute that you start doing that, you create this unhealthy dichotomy.

Even if it’s just in your own thinking as a founder, and as a manager, as an entrepreneur, where it can be very easy to get into these dysfunctional patterns of being resentful about, “Well, these five engineers are spending all their time on the open-source stuff, and we’re just giving that away, and how is that helping the company?” “And here I am, busting my hump every day, trying to make our website better, and trying to sell products and trying to get new log-ins and new sign-ups.”

And every time you want to build some new thing, it’s like, when we run into this case of like, “Should we give this thing away or should we charge for it?” And the thing that I’ve come to after five and a half years of doing this is – if I was smarter, maybe I would have come to it sooner –
is just that that’s the wrong question.

The minute you find yourself asking, “Should this be free or should it be paid?”, you’ve already kind of committed the fundamental thinking error of putting those two things at odds.

The better way to think about it is, “What is the free thing that will get someone to pay for this?”

So, what can we give away in such a way that it will open the door for an upgrade path, and that will open the door for a paid product that is a very clear enhancement to the thing that they’re getting for free.

Some of the best companies in the space that I’ve seen tend to have an approach of, like, their explicit goal is that individual developer should never have to pay for our product. But, a company should almost always have to pay for it.

And that really clarifies the thinking, and it clarifies a puzzle in a really interesting way. Because anything that involves a team of ten people, writing a proprietary application, like, they got to pay for that. That’s a company, that’s a for-profit company.

Now, okay, it could also be like a school or it could be a nonprofit org – you can always give those folks a coupon, that’s not actually a problem. But with our Enterprise product and with our Orgs product, I think we’ve done okay. Orgs are free if they’re open source.

If you have five people collaborating on an open-source project, and they want to keep a bunch of modules under a namespace, they don’t have to pay for that if it’s all open source. And we really see that as part of the nice, easy transition from like an individual working on open-source, a group working on it, and then up to a group working on some kind of paid product.

One of the things that we did not anticipate when we made Orgs free was actually it increased our paid Orgs signups.

We’d always intended to do some kind of, like, first month free, type of trial type of thing, and just kind of didn’t get to it because it takes time and attention, and there’s only so many people and only so much code you can write in a day.

And we decided that we want to make Orgs free for open-source projects. Because there was a handful of different open-source projects, and we gave them an Orgs, one of our database markets just went free. And we were kind of like, “We should just make this a thing.”

When we did that, what was surprising was, people at companies would sign up for a free Org, add their whole team, try it out for like an hour, go, “Okay, this is going to work, and then, they’d flip the switch to be a paid org.

That’s for me when kind of the light bulb went off. Like, “We should not be thinking about what is paid and what is free, we should be thinking about what is free, so that it makes it easier to buy the paid thing, if you need it.

Pricing

Michael Schwartz: So, it was all on the honor system? You could sign up as an Org?

Isaac Schlueter: You couldn’t publish anything private. You couldn’t have a package in your organization that had access control attached to it. Anything you published in a free Org would be open to the entire world.

Michael Schwartz: You really almost had to invent a business around this because I can’t say there was like any direct model you could choose. And one of the hardest parts of that is figuring out what to charge for that, especially because you didn’t have a lot of data. I’m wondering since you started the last five years, have you had to pivot on the pricing model a couple of times? Or has it been relatively stable, and did you get it right?

Isaac Schlueter: Yeah, we just stuck the landing – it’s been perfect. No problems at all. I wouldn’t say that we’ve pivoted on the pricing model. We have made some changes that I think are somewhat subtle. And most of those I’ve been owing to user experience.

Around in 2016, or beginning 2017 I think – I forget the exact dates now, it’s all lost in the mists of time – when we originally released our Orgs product, our paid Orgs product, basically an organization, again, you build things in the simplest way possible with the stuff you have because you’ve got to ship something, and if at one point it was perfect, you waited too long. And just the easiest way to do it was to say, “An organization is a subscription that belongs to a particular npm user.”

That gets us into some real interesting subtlety I think that not a lot of Org users, then or now, really fully appreciate it. But the idea was, your Org would have an owner – that was an npm account.

The real big problem that came up, and it came up fast, was, well, what happens when that user goes away, what happens if they leave the company and now what. It’s still billing to their account and their account has this credit card attached, it is a corporate credit card, and like, the only way to resolve it was actually to go through our support team, which, I love our support team, I think that they’re great, they do great work, and I’m really happy that they’re there, and supporting our community, and our customers, but every time somebody has to contact support – that’s a mistake we made, that’s something that we needed to fix.

So, we kind of went back to the drawing board and said, “How do people think this works? How do users think this Orgs thing works?” They think that they create an Org, and they think that they just pay for the Org, and the Org has some user who is administering it, but they can change that user.

So, what that said to me and what we kind of landed on was, the organization itself should be the primary first-class kind of billing entity. And then, the user account of the subscription, and everything else, is attached to that organization, not to some individual user.

Then, that shift, due to some other sort of subtleties, and how it was implemented, we realized that if we made this transition, a bunch of Orgs, who are currently not paying for users who have access to their packages, would suddenly have to start paying for those user accounts.

And the way that we addressed it was, we just collected all of those cases where that would happen, and we applied a coupon to all of those accounts to give them a discount and said, “All right. Like, your bill isn’t going to go up.”

Yeah, we probably could have just said, “Well, bad news. I know you’re paying $7 a month now, but it’s now going to be 21 because you got these other two users that technically are part of this other Org, even though they’re in your Org also.” And it got really hairy, but we figured that the user experience hit just wasn’t worth it like, “Thank you for being an early subscriber, an early adopter.”, but moving forward, it really vastly simplified it.”

The organization is a top-level thing, it’s like a first-class entity in our system. Every user account costs 7 bucks a month – that’s it. There’s no like discounts if you’re in multiple Orgs or anything like that.

Nobody complained, some folks got an email that said, “Hey, you know, we’re changing our pricing model. This would make your bill go up, but here’s a discount, so it won’t.” There was basically no reaction, which is what we’re hoping for.

Now, our Enterprise product, regarding pricing, yeah, we’ve been all over the map there. You talked about there not being data, well, with a self-serve product, you have quite a bit of data. It’s really easy to just throw a survey out there, and like, yeah, it’s going to be noisy, and you’re going to get a dozen people were like, “Oh, I wouldn’t pay more than a penny.” But you can wipe out the outliers, and get some kind of at least directional data.

One of the things we found was, there’s already some services out there, like GitHub costed 7 bucks a month for Orgs at that time. I think they’ve since changed their pricing model for their Orgs products, so it’s like $25 for the first 5 users and then $9 after. We thought about doing something like that in our sales, mainly in the future. Just to kind of help people get over that initial hump.

But once you had your first 5 users, it’s very, very sticky. The easier we can make that seem, it’s like 25 bucks and you get 5 users – that seems cheap. But if it’s $7 a user, and you only had two users, there’s a pretty good chance you might not like stick with the product. If you get those 5 users in, now you’ve got five people all collaborating on code, and they’re not going to abandon that for anything because now it’s kind of in their process.

So, with the Enterprise product on the other hand, there really is almost no data, and it’s very difficult to get that data. A lot of Enterprise products, even if you go to like companies, providers, websites, and you look at their Enterprise products, it says, “Call us.” You are kind of in this like arm wrestling match with the procurement department, where your price is, like, you give us ‘whatever we can get out of you’ basically is the price.

I think with our Enterprise product now we start at $50 a seat, and the product has quite a bit more features in it than our previous generation of our Enterprise product which was quite a bit cheaper. And we also have a minimum number of seats in order to qualify for an Enterprise product. We don’t offer it for less than 20 seats.

The nice thing about that is that it immediately selects out everybody who’s not actually going to need the benefits of this product, who is not going to need the policy enforcement and security features of it.

They are not going to be as well served by that product like they should really be buying Orgs. So, it’s tempting to look at pricing as like the way that you make money, but really, another way to think of it is like, how does a pricing act as a filter for who should be using this thing, and how does it work as a signal.

If you have a product, and you have your product break down your pricing page, or whatever, there are companies that are going to just look, and they’re going to say, “I don’t want the cheapest one, I don’t want the most expensive one – give me the one in the middle. I don’t want to look at all these words.” And they’re just going to buy it.

You need to think of, like, who is that user, who’s that persona and kind of focus your research there, and then, work backwards, like, “What is their budget? What can they pay?” And then from there, you’ve got pretty good answer about your price.

Every Enterprise is going to try and make some argument for why they should be paying less. So, start high and let them push you down. And also, like, if you don’t start high enough, then they’re not going to think that it’s legit.

More On Pricing

Michael Schwartz: Was that one of the hardest parts of migrating from I guess open-source repository or open repository to business? Just getting that right?

Isaac Schlueter: On the list of hard things, that doesn’t even make it top 10, there is quite a bit that’s much more challenging. I mean, the other thing about product is, I think it’s really much more art than science, and certainly, there’s product managers out there who are like pounding the table as they listen to this, and sure that I’m super, super wrong about it.

But, so much of it is, you need to figure out a price that you won’t go bankrupt. And then, you need to figure out how to sell that at that price. And the specific number, is it 8, or is it 9, or is it 20, or is it 25.

I think at the end of the day, that probably matters a lot less than have you built a product that people want to use, and have you priced it in such a way that it sends a signal that those people actually are the ones who should be using it.

If you look at the pricing of wine, great example of this — I don’t know, I’m going to offend some wine snobs in your audience, I apologize – a lot of the pricing of wine is like completely arbitrary.

It’s like, are you somebody who likes the expensive wine or who doesn’t care, or you’re like somebody who kind of wants, “I want it to be good, but like I don’t want to spend a lot.” I mean, all wine, it’s all fermented grape juice. It’s not that different, it’s essentially just overstock of wine, that’s why they’re able to sell it so cheap.

But that price signals a particular kind of buyer who is likely to benefit from that product. And on the other end of the spectrum, it’s the same kind of thing. You’re buying this $500 bottle of wine because you want to show off how rich you are, and in order to show off how rich you are, it has to cost $500. And so, that’s why people buy that.

In the world of software product management, we like to pretend that we’re a little bit more rational because we’re all like tech people and we are very cerebral and logical. We do math, and it still largely just kind of comes down to like, what are the products that your product is like, how much do they cost. If you just copy them, it’s probably you could do a lot worse.

Lessons Learned

Michael Schwartz:  So, now I have to ask a question – what were some of the hardest challenges? Please, take top, one or two.

Isaac Schlueter: I set myself up to that one, didn’t I? I mentioned a kind of the split brain that can happen within an organization when you separate out your free, or open-source, or community offerings from your paid offerings, and think of them as different things. That’s a very, very easy error to make, but it’s a very pernicious one that really gets in everywhere.

And I think it, in order to avoid that error, you have to think about that design, not just in your product design but actually in your organization design, in your strategy, in your go-to-market, in where you get your investment from, and who you have on your board. Like it has to really, really inform everything about your company in order to steer yourself away from that kind of problem.

Another big and easy mistake to make is having an on-prem and a SaaS product at the same time early in companies like them. Eventually, you’re going to need to have an on-prem product. And if you’re positioned well to do a bottoms-up sale, that has to be a SaaS.

Because no development team — if it’s five people on a Dev team and you’re trying to convince them to use this tool, they’re not going to spin up a server and install it and operate it themselves – they’re just not set up for that. If there’s a SaaS offering, they’re going to take that one.

And as an early stage company, when you’re talking about like 10, 20 people, if you are building products, like you’re going to take every single shortcut you possibly can. And the biggest shortcut you can take, if you have an on-prem product and a SaaS product, is to start putting big ‘if blocks’ in your code base. And you can tell yourself like, “Oh, they’re the same code base, were totally keeping them in sync.” It’s all one big Dev team.

What’s going to happen is, even the same developer working on both things is just going to put a big ‘If Block’ and say, if process dot, end of dot enterprise equals true, and then basically fork in place, which is even worse than actually forking two code bases. Because now you have this kind of like convoluted ball of mud.

We originally did have an on-prem Enterprise product, we still have some customers who are using it, even though we’re still trying to kind of like nudge them to our Enterprise SaaS product. We reached a point as a company, where we sort of realized we can’t keep running this Enterprise product, we’re actually losing money on every sale, because the cost to support and operate and get a customer up and running is just too high.

So, we pivoted somewhat, we kind of instead said, “How do we take what we do with the registry and with the website, with the Orgs and everything else?” “How do we make a SaaS offering there?” And what do the Enterprise customers actually need for that?”

We’re still figuring out kind of how to play in that space, and how to best have that integrated and connected with our self-serve products, but it’s still a huge step in the right direction. I think hindsight being 20-20, going out the door really in our first year with an on-prem Enterprise product and a SaaS team’s product at the same time, seemed fine. It seemed like a good idea at the time.

A bunch of people told me, “Well, you need to really make sure that the code bases don’t diverge if you do that.” I heard that from a bunch of folks at GitHub, who made the same kind of error, and I was like, “Okay, noted. Don’t let the code bases diverge.” Got it. What they didn’t tell me was, “You’re going to let the code bases diverge. That is absolutely going to happen – it’s inescapable.” You can either be a SaaS company or an on-prem product company, and those two companies are very different shapes.

If you’re going to be an on-prem product company, that means there’s a lot more of a top-down sale most likely. Or it just has to be so easy to install and start running like on a laptop. It’s almost certain that you’re going to need some really good professional services skills within your company, because making a customer successful with that product is going to require that you have somebody who knows how to stand it up, and how to operate, and kind of which buttons to push, and which knobs not to push, how to tell if there’s a problem – all of that stuff.

That means training, that means customer success, that means like really building in good metrics into the product itself, but in such a way that they’re not going to offend people who don’t necessarily want data collected about them, or if it’s behind the firewall, like, how that all works.

On the other hand, the way that you go to market with a SaaS product is completely different. It’s more about adding hooks and adding limits and adding these pay walls within your free product. So, when you go to your settings page, or you go to like view some metadata, or you go to view a report, or you go to add a new package, they can say, “Hey, you need to pay to use this feature. And those are two completely different mindsets.

At a certain point of maturity, you could reach a point where you have enough, maybe you fall of the bottoms up path, the bottom up path eventually gets to the top, and the top down path eventually gets to the bottom. But if you try to approach it from both sides at the same time, I just feel like that almost never can work out well. Now, there are companies that end up doing both, but if you really look carefully at the companies that are successful doing both, most of them started on one end, and then made it to the other.

Either they started as a top-down company, and they did well enough with like evangelizing, and marketing, and getting adoption, and gaining traction within these large companies that it became sort of a de facto standard. And then open-source parts started to kind of become the way that developers expected to do things.

Or they started as a bottoms up strategy, where every developer just eventually started to expect that this is how things work. And when they came to a big company they said like, “We need to sign up for these.” And then, eventually, they built out features that built up to that enterprise-level. And obviously npm loses position to do the bottoms up thing, and so, approaching both the same time was — I would not do that again.

Team

Michael Schwartz: What’s your approach to building the team?

Isaac Schlueter: Before there was a company, there was me and there was one guy who was in Thailand. Another couple of folks, one was in Eastern Europe – again, this was a whole donated infrastructure stuff, so whatever that other company was doing. I didn’t really recruit them, it was kind of just like who I ended up with. And luckily, some of them were really good. A lot of npm’s success really owes to that.

When we founded the company, you know, it’s easy to forget now, because it doesn’t feel like it was that long ago, but video conferencing was not as good as it is now. Chat apps were not as good as they are now. Slack didn’t exist, Zoom didn’t exist. I think Zoom might have existed, but it wasn’t what it is now. It wasn’t back then easy-to-use.

So, initially, we would focus our hiring on the Bay area, which seemed reasonable. It’s what you do, it was a Bay area startup. We opened an office in Oakland, mostly because that’s where I live. We went from there, so that the initial team was almost all coming from Oakland. There’s one person we got doing op stuff, who is in South Africa. And part of the challenge was like adding remote people was really hard, because the whole team is there in Oakland.

Like, we’re talking about strategy, and tactic, and products, and technical direction, and stuff over lunch, out everyday, like, it’s really, really hard to keep people in the loop if they were not colocated with us.

We eventually moved from IRC to Slack, and we started doing more and more stuff on Slack. We found that we actually needed to have a little bit more time zone coverage. So, we added some other developers, we hired somebody who was in Europe, and that really pushed us to operate in a more distributor friendly way. So, doing more of our discussions on Slack, having our meetings with Zoom.


We kind of just kept adding remote people. It was like, “Well, there’s those two developers we want to add, we want to hire.” And like, can they do remote, and one of them is remote, and you do that again, again, again, and after a while, it got to a point where like, our CEO is in Halifax, our CTO is in Toronto, I’m here in Oakland. We have this big beautiful office, and I’m one of like four people in it.

When we rented that office, we had this plan to like eventually grow to 50 people. And we were looking at the office we were in. We were 13 people, and we did not fit. We had a single conference room, a single room with a door that closed, and we grew to about 13 people, and we were just like, “This is ridiculous, we got to get out of here.”

We found a bigger space, we knew that we would end up growing to between 30 and 50 people over the next couple years, so we’ve rented the space that could house that many. I think it was just a few weeks or a month ago actually, or maybe a couple months ago, where we had this interesting situation where our landlord wanted to move us to a different spot within the building.

You know, we’ve been thinking for like a year how stupid it was that we had this big Oakland office, and like, we’d really like to get rid of it, but we’ve got another year on the lease. And they’re like, “Hey, we want to move you from the 11th to the 5th floor.” And we’re like, “How about we just leave?” They are like, “Yeah, cool. We get to rent the space out at 2019 prices instead of keeping your lease? Yeah, go.”

So, it actually worked out great. It was a little bit sudden, the way that sort of fell on our lap. But yeah, now we’re just 100% remote, everybody works from home, and that freed up a lot of capital for us to actually offer like a monthly work from home allowance, to cover things like internet, and the desk light, or whatever work expenses you might have, whereas previously, it was like we really can’t afford to do that because we’re spending our whole office budget on an office.

If you want to work in the office, like, we got this great office, but most of our staff was not in the Bay Area. So, in terms of like, where do we recruit people or how do we find talent, we do get a lot of resumes, we do get a lot of interest especially in technical roles.

When it comes to other roles, when it comes to non-technical roles, things like sales or marketing – I hate that term ‘non-technical’, like, the profoundly technical jobs, but if I want to hire a product manager who doesn’t write JavaScript, if I want to hire a VP of finance, it’s kind of the same thing every other company does.

We use a combination of just our networks, which has some pros and cons. The obvious pro, hiring somebody you know is you know them, so there’s a good chance that there’s a little bit more of like a connection, they may be a little bit more motivated to make it work, etc.

The downside is, you probably know people who are like you, and so you can very quickly and easily get into a bad cycle, where your kind of diversity just goes off a cliff. Or even worse, we’re like people who are kind of in the crowd, or like included in decisions, or have a little bit more power or authority within the company, then they probably sort of can get very like toxic and weird that way. I think that we’ve avoided that for the most part.

The other thing we’ve done in, especially tough to find rolls, we’ve had some success with executive search firms, we’ve done that a couple of times. And then, also posting stuff on LinkedIn, on Lever, on our other social media channels. We have our own npmjs.com/jobs that shows what roles we have open, and people apply for them.

Advice For Entrepreneurs

Michael Schwartz: The last question. Any advice for new entrepreneurs who are starting a business where open-source is a part of their business model?

Isaac Schlueter: I talked about this a little bit, but I’m going to go ahead and just repeat myself, because I feel like this is really important and really easy to miss and really easy to not understand the importance of it.

You have to craft your plan such that doing the free thing actually serves your strategy. And there’s a lot of subtlety to that. I don’t have like one weird trick that will fix everything. But you definitely need to think of, like, “If we give this thing away for free, what happens?”

Part of the thinking there is, imagine that you have like ants roaming around on a dirt floor or on the ground, if you pour some honey in one spot, that’s going to change the whole ecosystem. And that’s kind of what happens when you start giving away something for free, whether it’s an open-source product, whether it’s a service that you say, like, “This is free for open-source packages or for open-source projects, or for open-source users whatever.”

You’re creating a pile of honey in the middle of all these ants that are currently just kind of roaming around in their own different ways, like, they’re all going to find it, and they’re all going to come to it. It’s like, “Okay, now what?” What I mean by that is, when you get something away for free, you are fundamentally kind of like disrupting an ecosystem.

It’s important none of the ants are complaining about the honey, but you’ve now changed the shape of the scenario. And that can be really, really good, or that can be really, really hazardous.

It’s tempting to be like, “Oh, I’m charging for this thing and I’m giving this thing away.” And how do I convince the free people to buy the paid thing? Like, you’d really need to back several steps up and think, “What do these people need? What’s the thing that I can sell them that will address that need? And what’s the free thing that’s going to drag them over?” Instead of saying, “What do I give away for free?”, and then separately from that, “What do I pay for it? How do I balance these two?” They have to be one thing in your mind.

Closing

Michael Schwartz: Isaac, that was super interesting. Thank you so much for joining us today.

Isaac Schlueter: Thanks for having me.


Michael Schwartz: Huge thanks to the Open Core Summit for connecting us to Isaac and for volunteering their only sales office to provide a quiet place to record. Don’t miss the next Open Core Summit. It was one of the best conferences I attended in 2019. Where else can you get a critical mass of open-source founders in one place?

It’s essential that we foster an event like this so we can share experiences about what’s working in open-source business.

Transcription and episode audio can be found on opensourceunderdogs.com.

Music from Broke For Free and Chris Zabriskie.

Audio editing by Ines Cetenji.

Production assistance by Natalie Lowe. Operational support from William Lowe.

Have comments? Tweet at us. The Twitter handle is @fosspodcast.

Please, subscribe to the podcast on your favorite podcast platform. Every subscription helps. Next week we have Shannon Williams, one of the founders of Rancher. He was fantastic, so don’t miss this one.

Until then, thanks for listening.

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