It's what you've stated but also there's an ethical side to it. Many founders want to give the option for competent users to self-host, only way to do that is open up the source code. They could go completely down the open source route and rely on donations but that doesn't usually cut it. The business model then is to provide a managed service where the founders deal with the hosting, updating, security, etc.

Open source isn't the only way to allow people to self-host. Before SaaS was a thing, nearly everything was a closed-source self-hosted application.

And this is something that ONCE by 37signals is trying to bring back: https://once.com

I hadn't seen Once, but that is pretty cool. I hope more and more companies start to offer this again.

is it closed sourced? they said you get to see the source code and can even edit

You have to purchase it to see the source. After purchasing, you "own" it and can do with it as you see fit (outside of selling/distributing ofc).

License: https://once.com/license

Consider you are the author of a SaaS. You realize that your product does not have business value in some sense. By open sourcing your SaaS, you minimize the business side and emphasize the technology side. "Look at this cool open-source SaaS I've built. I make for a great Software Engineer."

And doing so could end up making it accelerate, possibly making the unviable business eventually viable: https://github.com/maybe-finance/maybe

Personally, an open-source project lets me take a little bit more risk on a startup's product. If the company goes under, I can always host myself, even if it's a bit of a pain.

If you want to hear if from the horse's mouth, I wrote about it a lot more here [0], when I open sourced my business last year.

But if you don't want to read the entire post, here's the tl;dr:

1. My (larger) customers wanted the source code for auditing purposes. I was using code escrow for larger customers and it was annoying to manage. If some can have the code, why not all?

2. My customers wanted me to eliminate my bus-factor of 1. If I got hit by a bus, the business died. Now it can live on and I can grow on my terms.

3. My customers wanted to have an "out" if the business ever decided to shut down. Now they have that "out" via self-hosting/forking.

4. My customers wanted me to show them they can trust me with their vital business data, and open source builds trust.

5. I was tired of dealing with copycats (some verbatim stealing my API schema and docs). Hopefully, moving forward, nobody will want to use a closed source copycat of an open source project.

6. My (larger) customers wanted to self-host for compliance purposes (mostly i.r.t. where data is hosted and accessed). If some can self-host, why not all?

As you can see, most of my reasons (but not all) stem from what my customers wanted. I didn't open source my SaaS for community, or to get free work, or to tap into "a bigger pool of effort." I did it because being closed source was a major pain point for me and my customers. So I took notes over the first 7 years, and I finally reacted. And I've only seen positives thus far (which I'll write more about later this year), so my initial fear wasn't warranted. I encourage others to do the same.

(My reasons aren't going to Cal's reasons. Peer wrote about his reasons here [1].)

[0]: https://keygen.sh/blog/all-your-licensing-are-belong-to-you/

[1]: https://cal.com/blog/longevity

The shift to commercial open source with a hybrid financing model is what's driving the trend. It makes it possible to get enough funding to build high-quality software while bringing the costs down for everyone.

We're doing just that with our own CRM [1]. It couldn't have been a side-project as you need thousands of engineering hours to build something decent. But with only a few millions in engineering spend, we'll have something that is genuinely as good as the products from billion dollar behemoths. Open Source software will never be able to monetize as well as closed-source. We might only capture 10% of the value we create. But being open source inherently creates strong network effects that tends to push towards a limited number of winners, and the addressable market in CRM is so big that it's still possible to build a multi-billion dollar company while massively driving the costs down for everyone.

It's kind of like the Prisoner's Dilemma: If every company keep their software proprietary, they can all make moderate growth/profit. But if one goes open-source, they could attract a large community, drive innovation, and potentially reap long-term profits while reducing the overall market size.

[1] https://github.com/twentyhq/twenty

Instead of asking why, perhaps it's better to ask: Why not?

Consider Bitwarden, for instance. Does it have any real competitors running on a quick rebrand of their stack?

Better yet, as a non-technical founder, why haven't you stood up a successful Bitwarden competitor? The secret sauce is right there and you can contract-out the rebranding for like $20.

It's rare to have a tech mote nowadays and without a tech mote competitors will pop up whether or not you choose to go F/OSS.

It's makes me confident to depend and use a service because I know that if it shuts down.

I can simply run a self hosted solution.

This is why I love Bitwarden and Source Hut so much.

I echo this sentiment. I pay for Bitwarden because it is convenient _and_ I know that I will be able to keep it alive if needed.

Of course, the other side of the coin is that you have to be careful with the price point, if you move it up too much I might want to self host despite the inconvenience.

Where is the value of a business? Is it the idea (or ideas written as code) or the execution (or service)?

What do people pay for? The code, or the things the code does?

What is valuable to customers? Is trust more important than the unknown? Is expertise valued?

What other things apart from code makes up a business? For example customer service, marketing, etc.

Yepyep - but my question is: what's the spiel? What do these companies get "in exchange for" becoming open-source? What's the incentive?

A flip on the incentive might be that their core product uses open-source software somewhere in it and the style of open-source license may compel them legally to release any modifications, additions, etc. I don't know which licenses that may or may not apply to and IANAL.

Also for reference, RedHat's entire business model was like this, mostly charging for enterprise support. I use past tense because I have no idea what they do today. Way back in the day that mean when you submitted a support ticket, you might get a developer that worked on the product to help you if it was beyond their initial support triage level.

> What's the incentive?

More sales and trust. Vendors who open source are offering their customers the right to repair and self-host their products should they go belly up. That itself is a selling point.

They can't compete with the closed-source ones. Open source is a very efficient user acquisition strategy. Not as much to turn users into paying customers tho. But it is a way to go from 0 to 1 in a market that otherwise would be very difficult to call attention.

They get customers who are developers, who won't settle for closed source, or who want to self-host.

You could read up on the "open core" approach. Gitlab is a good example.

Some projects have varying licenses to extend their open source product beyond a bare bones system. Some companies pick "open core" license models which lock enterprise features behind a paywall.

For example a collaborative software text editor might require connections to a central database for synchronising the various users. The code to handle these connections might not be available, or at least heavily restricted through licensing from using in a business environment.

The SaaS company makes money by providing the infrastructure to allow users to actually collaborate with others. Until then it's simply a stand alone desktop text editor.

Alternatively the company may offer basic collaborative features which only support one 3rd party auth provider and synchronise via the public internet.

A customer might want on-prem networking only and Active Directory auth, and will pay for these features.

It's mostly a marketing tactic.

People find your free product, you lock some core features behind a paywall or make the cloud offerring easier to use, so people switch from free to paid. It's a lead magnet.