Using your open source community to help you grow your startup, according to founders of HashiCorp and Hasura
Congratulations, you’ve successfully launched an open source project into the world, and users love it. The GitHub repo is hopping with discussions and contributions, the Discord community is abuzz as members pour in, and the first user meetups were standing room only. Now comes the real challenge: Turning that thriving community into the foundation of a sustainable business model for your startup.
It’s a problem Armon Dadgar, the CTO and co-founder of HashiCorp, and Tanmai Gopal, CEO and co-founder of Hasura, both know all too well. In a roundtable discussion at Vertex Intersect ’24 — the annual gathering of CEOs, founders, and investors hosted by Vertex Ventures US — Armon and Tanmai laid out their playbooks not only for building strong community around its products, but also for turning that fervent support into sales momentum.
Here’s a brief summary of Armon and Tanmai’s lessons for open source software (OSS) startups as they build both their community and their business, as told to Vertex’s Jonathan Heiliger:
- Make it really easy for the community to form: From its earliest days, HashiCorp followed a procedure for building community that was similar in some ways to a sales playbook. When the team identified a super-fan of its open source projects, it would reach out and offer them the chance to lead a local HashiCorp User Group, or HUG. The company would help that super-fan create a custom branded logo for their HUG, send over lots of stickers, and sponsor the pizza and beer at the event. In return, that HUG would essentially become a vehicle for HashiCorp to identify potential customers in that city or region. Armon and co-founder Mitchell Hashimoto would reinforce this support by personally flying to as many HUGs as they could around the world.
- OSS still requires a traditional sales process: Armon says that an early lesson that HashiCorp learned is that the user usually isn’t the customer. The attendees at each HUG meetup or industry conference were enthusiastic about what HashiCorp was building, but rarely had the authority to actually sign a contract for a purchase order for the enterprise versions. Instead, HashiCorp learned to rely on these user champions to make warm introductions to their company’s CIO or CTO — at which point the company would run a fairly traditional software sales process to close the deal.
- Messaging is strategy: For a deeply technical startup like HashiCorp, it was sometimes difficult to communicate to prospective buyers exactly what its products actually do. When it started selling Vault, for example, it didn’t gain a lot of ground when HashiCorp referred to it as a “secret manager,” even though that was technically the most accurate description. This is where the HUG community came in handy, too: It could try out new messaging in front of a group that was invested in helping the company build its appeal to their own bosses. With their feedback, they found success in simply referring to Vault as a way to secure API access with passwords. The product didn’t change, but the way HashiCorp talked about it accelerated the sales process.
- Be strategic about what’s open source and what isn’t: Like many OSS companies, HashiCorp and Hasura both employ an open core model, where much of its core code is freely available, while enterprise-grade security and compliance features cost extra. Armon and Tanmai warn founders to resist the urge to put too many features behind the paywall. If a user feels like they won’t be able to scale up their usage of the software without shelling out, they probably won’t even bother getting started. The litmus test is whether or not a hobbyist would ever conceivably use a feature. Scaling up to hundreds or even thousands of cores? Maybe. Auditing tools for FINRA compliance? That’s probably safe to make a paid enterprise feature.
HashiCorp has gone through many changes over the years, figuring out its own open source business model and navigating the search for product-market fit even as the cloud computing market boomed around it. Even now, Armon says, HashiCorp is evolving, as it places an increased focus on selling its software as self-service SaaS. HashiCorp’s community has grown in line with the company, though, and Armon says that it’s given the company the support it needs to navigate these tricky issues.
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