> there would be “no more open source companies in Silicon Valley” unless the community rethinks how it protects innovation
This is a sentiment I've heard from VC friends of mine for the past year now after their experience seeing the inability of Confluent, Sysdig, and even Hashicorp fail to successfully monetize their core offerings by undervaluing them.
They shouldn’t have gone all OSS if monetisation was their goal. It’s their own fault for thinking they could build a base off open source and then monetise it later.
Public Investors have significantly higher expectations for rates of return, and plenty of OSS-core companies raised significantly larger late stage rounds. That said, try IPOing a tech company with $15-70M a year in revenue in the 2020s.
Those numbers were the norms in the late 90s/early 2000s, which allowed companies like RedHat or Sun Microsystems to IPO, while still being able to ramp up their own vision and product lines.
Until almost a year ago you could raise IPO-sized valuations in the private market, while dealing with less regulatory scrutiny and overhead.
It may seem like the early 2000s were a different era, but it's better to think of it as an earlier stage in this era. These companies built on OSS with varying degrees of giving back, so it seemed like they were all about the sharing economy. A decade later they'd built out their business (RIP Sun, though) and had solid positions in the market, not easily displaced. A decade later and the clawbacks begin. RedHat and HashCorp are just two examples of companies closing the doors, changing the terms of the deal, and harvesting the revenue they forwent in the early years. AKA the rug-pull
> A decade later they'd built out their business (RIP Sun, though) and had solid positions in the market, not easily displaced
They were given the ability to build out their business.
Companies like Hashicorp and other OSS core companies have revenue numbers roughly comparable to what would give you an IPO even 10 years ago. Mind you, Hashicorp is public, and their YoY revenue is around $520M a year.
The issue was they listed to minimize their IPO listing "Pop" (probably due to pressure from late stage investors IME), and this doomed them as a $70-80 per share value is difficult for any company to hold. Companies like Salesforce ($3.95) and RedHat ($14) listed at much lower share prices.
Lots of companies IPOed/SPACed during that time period as a number of the funds matured and needed to return profits to LPs. I know Social Capital had a similar thing happen due to Chamath's acrimonious divorce leading LPs to call their funds earlier. That's probably the most prominent example, but there were plenty of other funds that had a drawdown during a similar period.
None of which is especially relevant to the rug pull business, except in the sense that investors have seen the rug pull work and they are seeing that wild ride of the SV VCs is coming to an end, either through regulation or collapse, so they are doing it sooner.
That "rug pull" you and other HN commentators talk about has happened after there is a need for cost cutting (eg. IBM wanting RoI after an expensive M&A deal, late stage Confluent investors wanting stronger returns, pissed off activist investors in MongoDB and Hashicorp annoyed that the share value has dropped despite core revenue fundamentals being consistent).
A lot of these OSS-core companies are extremely late stage or already public, so they are at the stage where investors wish to get an RoI out of them.
> seeing that wild ride of the SV VCs is coming to an end
Most of these OSS-core companies switching to restrictive licensing are towards the later stage/age of a company - around 10-15 years old. Their late stage investors (if their a startup) and largest shareholders (if public) tend to be Growth Funds and Mutual Funds - both financial instruments that have different goals and return criterias compared to Venture Capital.
> the stage where investors wish to get an RoI out of them.
Exactly describing the rug pull or, as Cory Doctorow deemed it, the final stage of enshittification. Clawing back all the value provided to customers to hand to the investors. See for example Google's two $70 billion buybacks at the same time they were joining the rest of Big Tech in Big Layoffs.
> there would be “no more open source companies in Silicon Valley” unless the community rethinks how it protects innovation
This is a sentiment I've heard from VC friends of mine for the past year now after their experience seeing the inability of Confluent, Sysdig, and even Hashicorp fail to successfully monetize their core offerings by undervaluing them.