One key way Open Source Software is different from classic Commercial software is that not every user is going to be a customer. In fact, for most successful Open Source projects, the number of users and uses is orders of magnitude more than the number of customers and “paid” deployments.

You may argue Commercial Open Source is just a case of “Freemium” model, which a lot of SaaS solutions use, yet there is a difference, if you have a SaaS you have total control over changing what is included in “free forever” plan and what is not, whereas in open source there’s much more nuance.

For simplicity, let’s focus on Single Vendor Open Source, where a single commercial company has all IP (trademark, source code, etc.) related to a given Open Source Project. From that company’s point of view, there are N deployments of the project, showing its traction, and P% of those are paying customers. These paid customers can be running the “Enterprise” version, Support Subscribers, or running in your Cloud.

The number of paying deployments (D) equals N × P if P is a proportion, or N × (P/100) if P is a percentage. So to drive it up, you can either increase N or increase P%. To increase your Sales $$$, you also can increase the number of $ you get per deployment, though trying to grow your business only through price increases is usually a very slippery slope.

With basic math out of the way, let’s talk about a couple of mistakes I see over and over again, which can cause catastrophic outcomes for the project, and which are basically on the opposite ends of the spectrum.

Implementing Open Source Crippleware strategy

First, if you just listen to members of the Sales team, they often hate what the Paid version needs to compete with the Free version. In their mind, if only they could avoid “losing to Free and Open Source,” they would easily hit their quota many times over. As such, they often would advocate for increasing differentiation, which often means crippling the free and Open Source version. This, of course, can increase the P% and, especially short term, can give a very positive boost to sales, as it often takes a while for your users to find a feasible alternative.

Over time, though, you often would see your user base stagnate and shrink, and with N going down, there is only so much and so long you can continue by increasing P% and raising prices.

Furthermore, it is very possible for members of your community to come together and exercise their “right to fork,” which is unique to open source and which does not exist for “Freemium” SaaS Software. We have seen it happen with Redis, Elastic, MySQL, Terraform, and OpenOffice, among others.

Not enough Differentiation

Having said that, not having enough differentiation is problematic, too. Even if the number of deployments is insanely high, if your P% is zero… you’re obviously not making any money. You need to make sure there is a reason for customers to pay, and most likely it should not be charity/donation-based, as those do not scale and are hard to secure on an ongoing basis (though I’ve seen small projects successfully funded through donations, I would not call it a sustainable business model).

How to avoid those mistakes?

As Garima Kapoor, co-founder of MinIO, put it: “Never let monetization interfere with adoption.” I think it is a great way to think about this problem—you want everyone to be able to use your Open Source project and find it awesome for the purpose, yet you want those with the ability to pay to be motivated to do so. It can be a hard balance to find, but it is essential for long-term success.

Want to talk about where balance can be for your project? Drop me a line.

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I fly a fair amount – both for business and for pleasure, domestically (in the US) and internationally.  This document outlines some “best practices” which I found working well for me. I am a frugal value-seeking traveller – I do not pay for “Business Class” unless it is some very cheap last-minute paid upgrade, though I get upgraded because of my airline status sometimes.

• Stops are risky (of missed connections) and waste time, so fly direct or minimize the number of stops, even if it is slightly more expensive
• For pricing, I look at the cost of the ticket and the difference between the preferred airline and the cheapest ticket available now. For me, if it costs below $400 to fly domestically and  $1000 for an International ticket, I just buy my preferred Airline (Delta or other SkyTeam airlines) if it is more expensive than that I’m OK with roughly 30% premium for the most convenient ticket.
• Having chosen an airline (Delta in my case) is a good idea – as you earn airline status you get some perks, most important of which for me is quick access to the human in case something goes wrong with the travel. In the past, I’ve wasted so much time waiting on the phone or trying to chat with airlines to rebook my travel or deal with other issues…  and still do flying with airlines where I have no status.  But even besides that sticking to the same Airlines means you get to know its route network better and know how to navigate connection airports easily, saving time and energy
• Access to Clubs can make travel much more pleasant and also save on airport food, especially travelling internationally as clubs outside of the US tend to have better food options. I get access to a lot of SkyTeam clubs through Delta Status (though it can be confusing which exactly) and have a Priority Pass through my credit card.
• Travel Early.  I prefer to take the first flight even if it requires a very early start.  These flights tend to have fewer delays and cancellations… and if something goes wrong there is a whole day ahead of you to be rebooked.
• Avoid Redeye.  I do not sleep well on the plane and will be quite grumpy if I did not sleep the night before. It is pretty impossible going to Europe or Asia though and Jetlag will make me miserable for a while anyway.
• Arrive in the US at my local RDU Airport.  While this is not always possible, it is awesome – passport control in RDU is a breeze.
• Know your connecting airports – I like Atlanta (ATL) and hate layovers in JFK as a personal preference.  Know the connection time actually needed, especially if security check and passport control are required – I’ve seen airlines suggesting itineraries which would be so tight even a minor delay means you’re missing a connection.
• Look for connecting airports with multiple daily flights when possible, so if you’re late you’re likely rebooked on a later flight instead of needing to wait another day or add a stop.
• Check weather in connecting airports – if there is a high risk of a storm or hurricane you may be better off changing your flight through a different airport before official notice and a mad rush of people trying to make changes.  This is especially great if there are no change fees.
• Fly with carry-on only.  I am always on the lookout for a maximum-size suitcase and backpack which I can get away with.   Checked baggage can get lost, you waste time waiting for it and it also limits your flexibility to adjust your flight if you’re on the way.
• Have a plan if WiFi does not work. Unfortunately, the availability and reliability of this service have a lot to be desired
• Watch inbound flights – this works especially well in the US with services like FlightAware –  in so many cases I can see inbound flights being delayed and make alternative arrangements before flight delay is officially announced
• Choose seats in advance. Otherwise, you might be assigned quite a poor one.  Here are a few tips:

○  Choose seats closer to the front, this can save 10+min, which can be important especially if connection time is tight

○  Emergency Row seats and Front row seats can be awesome, some have just an insane amount of legroom, though a fixed seat divider might be a liability if you happen to have an empty row.

○   On long flights checking seat-map during check-in can help you to spot where empty seats are likely and move there

○  If travelling with a companion taking window and aisle seats increases the chance no one will be travelling in the row with you… and if you get someone on that seat you can usually offer them an aisle seat and sit together.

While many flights these days have virtually no penalty for booking one way, some flights between the US and Europe may cost more one way than return. This does not make sense but this is how it is. In such cases, I book a return and when to cancel the return portion of the ticket for flight credit

Hope you find some of those tips helpful!

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Personally, I love Angel Investing! Not only does it provide an opportunity for outsized returns (if you’re making good choices) but also, compared to being LP in the early-stage Venture Fund it often allows you to have a direct line to founders, which tends to be awesome, and an opportunity to contribute to business success. 

Yet as I found helping to organize Coroot “Family and Friends” pre-seed round, not everyone thinks this way!   Even among my high net worth connections who have capital available, many are not interested, even before they know the project.    Sometimes the reason is the lack of time they need to evaluate if it is a good investment or not being familiar with the logistics of making such investments, in many cases though I think it is something different…

Early stage Angel Investing is not different to other early-stage investments, such as those done by VC funds – overall most startups fail, resulting in complete capital loss, and even if you’re good at picking winners you will have to deal with large amounts of failures and many people… just do not like it.  Even worse, while failures often happen within the first 1-3 years after investment, you may need to wait 5+ years for that runaway success to fully materialize,   making perception even worse than reality.

Investing in some form of early-stage fund, which makes a substantial amount of investments makes failures less visible and also with regular NAV calculations can make you feel good about unrealized investments quite early in the game. 

This reminds me that Entrepreneurs, like me, tend to have a higher risk tolerance and ability to deal with failures – it is an important part of the entrepreneurial journey, though I’m probably more risk-tolerant than average even among this group. 

If you like Angel Investing as an idea but are not sure where to start and how to stomach it, I would suggest starting by thinking about it as Gambling but with higher expectations of returns and possibly even more fun. If you’re OK losing $1000 in Las Vegas you probably will be OK losing it on your Angel Investment too.  Start with your play money, not retirement money, especially before you get a feel for how it works for you. 

The other good practice is to build a portfolio of investments, rather than have a single investment and look at portfolio, rather than single investment performance – some 20 investments would be a good start. 

Finally, you may want to spread your investments in time over multiple years as for various reasons some years may turn out better than others.

This may sound like a significant amount of work, and it is -work tends to be required to achieve good long-term outcomes in about every field.   It is essential if the financial results of your Angel Investing are your primary goal, which it might not be, it is not uncommon to do a small number of “investments” in businesses led by family or friends with the primary focus of supporting them or supporting the mission of the company  – many contribute to charities after all, where no direct financial return is expected. 

If you invest in your Family or Friend’s business for this reason, I would suggest asking yourself a question whenever investment loss is likely to ruin your relationships, and if it is worth it in the end.   Thinking about such an investment as a gift may help. 

I’m having fun doing Angel Investments and I think more people can have fun and profit from doing it too!

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A few years ago when early-stage investing (investment crowdfunding) went mainstream I was very excited and over the years invested small amounts in various companies on StartEngine and similar companies. 

I found it not very rewarding though for one (obvious in retrospect) reason – StartEngine helps companies to collect investment, get their fees, and when you’re on your own. Companies may use the platform to provide some kind of updates but they do not have to and often, they do not. 

In a number of cases, I simply find the company website down and the Founder working on different projects on LinkedIn with no communication about the company being shut down (or might be assets, IP being sold? I do not know) either from the company management or StartEngine. Moreover, the old capital-raising pages just seem to be disappearing from StartEngine (see a link to the BOXX funding page mentioned in this announcement as an example). 

The fact StartEngine does not defend shareholder interests and there is no practical way for small retail investors to defend their interests (legal fees are expensive) makes StartEngine more attractive for scam artists, compared to cases when there is professional investment management. 

What could be done better on StartEngine and Crowdfunding Investing in general?

I find SPV/Syndicate Investment Model as Angelist offers much better as there is a professional investor with skin in the game, experience, and resources to fight to maximize returns for investors. There are Management Fees involved which are not cheap but which I think are well worth it with early-stage investment. There is also additional friction needing to apply to join Syndicate making it more practical for larger investment sizes compared to what many Crowdfunding investment campaigns operate with.  

There is perhaps the opportunity for less expensive, more automated investment management similar to what Groundfloor doing with Real Estate Investment and investment minimum as little as $10.

If that sounds heavy and complicated it may be. At the very least StartEngine could provide space for investors (and potential investors) to discuss the company they invested in – share good news or concerns, which in case of a need could help investors to organize to defend their interests. Currently, as I understand it, StartEngine only allows Investors to communicate to shareholders, who can respond with comments – in the end, though it is the Startup raising money that is in control.  

I think this is a rather deliberate choice as it is Startup raising funds which is the primary customer of platforms like StartEngine and empowering “crowds” to speak their mind may interfere with raising the money. 

If not StartEngine though, there might be a business opportunity to build something similar to Glassdoor but focused on crowdsource information about crowdfunding investment opportunities, founders, etc.  

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I knew about Turo for years, yet never had a good reason to use them instead of the Rental Cars company. However, on my recent trip to Portland OR Area, I discovered my provider of choice does not have any car available and the only option aggregators offer is cars from Dollar for $600 for 2 days which is insane. I went out of the city so Uber/Lyft was not feasible and so I ended up checking out Turo. 

Similar to AirBnB Turo offers an “Instant Booking” option, which avoids the hassle of waiting for approval, though at the cost of fewer options and potentially lower prices:

Unlike Rental Car companies you know exactly what you’re going to get, if this is important for you. I just needed to get somewhere so I chose the cheapest reasonable option available.

I was wondering how Airport pickup and drop-off would be handled. It turns out I pick up the car at the Short Term Car parking garage with the owner sending me the car location a couple of hours before my pickup time. Key and Parking ticket in the central console. 

The car I got was in great condition and super clean in and out. I think rental cars tend to be in worse shape when they get to 20k miles my ride had on it:

I had to pay for the exit ($30), though the owner said he would refund everything past $20 or I could return the car with ¼ less gas than it had when I picked up the car, which is the option I chose.

Return was the same – park the car in the Short Stay garage and send the owner’s location, which went quite uneventfully. It is surely more smooth than returning the car to the rental car location and taking the shuttle, which was very much appreciated as I had an early flight.

The things to be aware of with Turo, as I find from my limited experience are as follows:

• – Insurance. You can get it from Turo but it is quite expensive and Credit Card based Insurance I tend to rely on does not seem to cover Turo rentals.
• – Mileage Limits. While most Car Rental companies in the US seem to have “Unlimited Mileage” Turo rental comes with a Limit. Mine was 400 miles for 2 days and some $0.50 for an extra mile.  My drive was well within the limit but if I would be going for a long drive it could become an issue.

Would I consider Turo again? Yes, though more likely in similar unusual circumstances when Rental Car companies can’t offer the vehicle I’m looking for at a reasonable price.

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