Lessons learned acquiring a massively popular open source project

The crowd is watching.

Today Ephox marked a significant milestone. It is the first anniversary of the founders of TinyMCE, Joakim Lindkvist and Johan “Spocke” Sörlin, joining the Ephox team and bringing with them the open source project that they started.

If you are not familiar with TinyMCE, it is an online editing component that developers can embed in a web application or content management system. It provides word processor-like features for WordPress, LinkedIn, Evernote, EventBrite and many more. We like to describe it as the “Word in WordPress.”

As Ephox’s CEO I saw great value in TinyMCE as we explored the merger. I was familiar with building a business around online editing. It is, more or less, what I have been doing at Ephox since 1999. I had a feel for the unit economics and market dynamics. I had an intuitive sense of what capabilities users might be willing to pay for. What we didn’t have at Ephox was a cost effective customer acquisition channel. TinyMCE’s popularity could be the beginning of this.

For Joakim and Johan, they saw the extra resources that could be deployed on making TinyMCE successful. This was not going to be an “acquihire” — we intended to double down on the TinyMCE project. It really looked like a good 1 +1 = 3 fit.

Is it a merger or an acquisition?

It can be hard to describe whether something is a merger or acquisition. We discovered that you cannot control the message anyhow, so it is not worth getting attached to one description or the other. We described it as a merger with Joakim and Johan’s company Moxiecode Systems AB and I was going to great lengths to describe it as such. However, the media defined it as an acquisition. Joakim and Johan joining Ephox was friendly and voluntary, and now they are some of the largest shareholders in Ephox Corporation, so what does it matter what people call it?

An organic brand is a huge asset

We also learned that TinyMCE is a unique and valuable brand. Before the merger, we thought it was good, but now we know it is great. I ran into the legendary Marc Canter, a founder of Macromedia, at a BBQ recently and he knew all about TinyMCE already. I find this repeated over and over again in tech circles. My guess is that about 30% of developers have heard of TinyMCE. How many products can claim this ubiquity?

This brand translates into an enormous volume of use. The TinyMCE website receives more than one million visits each year and almost 18 million page views. There are just 20 million developers in the world; to have one million past our website each year is no small achievement. That even understates our usage; 70 million websites are using TinyMCE in WordPress for example. Our content delivery network is on track to deliver almost one billion hits this year. It almost doesn’t matter which number you pick TinyMCE is a powerhouse.

The volume of usage of TinyMCE drives a community. There are more than 5,000 posts on Stack Overflow, thousands of issues/requests, hundreds of tweets, and hundreds of contributions. While this can be overwhelming at times, we are very grateful for the attention that the product receives and those who contribute to making it better. The [angular-ui/ui-tinymce] project is an excellent example of the community’s participation in building up TinyMCE.

Premium features are a viable business model for open source

In the past 12 months, TinyMCE has also become a great business opportunity. Open source is not a business model — it is a production and distribution model. A year ago the business around TinyMCE was small — less than $1M in recurring revenue. In the time since we have proven out many of the ‘unit economics’ behind building a business around TinyMCE and have almost tripled our related revenue. There are hundreds of thousands of web applications that rely on TinyMCE that would benefit from a commercial relationship with us for premium features, support and more. We are seeing very good signs of our ability to take TinyMCE from project to product.

Alienating the open source community is unlikely

So far we have been able to commercialize TinyMCE without alienating the community. If anything, the community appears to be happier with more backing for the project. A better website, documentation improvements and many updates to the open source version have all won us more users. We think that the larger opportunity we can build around TinyMCE the more that the open source project will benefit. We are continuously worried about not ruining the magic around such a successful project, but so far it has not been an issue.

It takes more than 12 months to achieve everything

Our excitement about the business opportunity has meant significant growth at Ephox. We have grown our team to more than 50 and we are still recruiting. We are planning on launching a cloud-based version of TinyMCE that adds many server-side features such as spelling and image hosting that were previously difficult to implement and support. We are also beginning to converge our newer editing technologies, such as Textbox.io, into our roadmap for TinyMCE.

I am sure we will learn many more lessons about running such a popular and much-loved open source project. I am excited about where the next 12 months will lead us.

Originally published at www.ephox.com on June 23, 2016.

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