Category Archives: Technology – Insights

David vs Goliath: 5 Strategies for Commerce Startups to Succeed in an Amazon World

This article was first published in Business Insider.

Disruptive commerce founders want to revolutionize what we buy, how we buy, or who we buy from. But commerce is a notoriously competitive space with unique hurdles. Standing large against that backdrop is Amazon.  

It’s safe to say that Amazon is the Goliath in the arena. Spurred by the pandemic, US online sales grew +30% year-over-year and the biggest beneficiary was Amazon. By the end of 2020, close to $4 out of every $10 spent online by the US consumer went to Amazon.

And yet, opportunities to capture consumer attention still exist. One only has to look toward Shopify’s $170 billion market cap and its strategy to arm the Davids entering the field.

In this David vs Goliath situation, where and how can startups compete to win?  

As a starting point, here are five observations on what it takes to significantly improve your chance of winning in an Amazon-first world.

1. Know your customer and what matters to them

This seems so silly and basic at first, but you’d be surprised. Oftentimes, we get mired in feature sets and forget to answer the critical starting question, “Who is our customer, what do they want, and what’s critically lacking for them today?”

Where I see startups frequently go amiss: Tackling perceived pain points that aren’t critical for their customer.

How do you know it’s critical? Customers open up their wallets. Better yet, they sing your endless praises, driving significant revenue through word-of-mouth.

2. Provide unique inventory that can’t be found on Amazon

Etsy provides handcrafted, artisanal goods.  The RealReal provides authenticated resale luxury. Dapper Lab’s NBA Top Shot (a Venrock portfolio company) sells unique moments in sports history.

What do they all have in common? They sell products that can’t be found on Amazon. If your inventory can easily be found on Amazon, what’s your competitive edge?

This is an area where founder creativity never ceases to amaze me. Five years ago, most of us wouldn’t have imagined paying for Cameo’s celebrity shout outs, or for Dapper Lab’s NBA digital collectibles. With the rise of creator-led experiences and newly emerging metaverses, we’re seeing a whole new set of discrete, digital-first goods that can’t be indexed and served up by Amazon’s existing taxonomy and marketplace.

3. Support repeatable purchase behavior

If you have a large captive audience (eg Facebook, Instagram) with multiple monetization streams, you can afford to focus on novelty, impulse items where purchase frequency is low. But if you’re a commerce-focused startup, it’s imperative that you’re driving stickiness as evidenced by repeat purchase behavior. We’re looking for customers who are willing to commit, not one-night stands.

Dollar Shave Club (a Venrock portfolio company) sells razors that are needed with such regularity that customers are willing to sign up for a subscription. Wish may feature novelty goods, but they also sell household goods that need regular replenishment. For the sneaker aficionados on StockX, collecting is an ongoing passion that requires replenishment of new finds.

The key is to support a pattern of repeat behavior that already exists in the offline world.

4. Leverage data to inform a continuously improving, personalized experience

We’re still in the early innings of personalization. The old days of guessing your customers’ preferences a year out are over. But compare the personalization of your TikTok feed to the personalization of your Amazon feed. One is clearly superior.

Just remember, it’s as simple and as hard as delivering the right product at the right time at the right price.

5. Harness technology to support newly emerging consumer preferences

I get the most excited when I see the intersection of two things — new technology or applications thereof with newly emerging consumer preferences. Here are two examples:

One, the emergence of iPhone enabled services just a click away from your couch. At the same time, we work more than ever before, putting an ever increasing premium on convenience. You put the two together, and you get the on-demand economy.  

Two, the increasing sophistication of fertility treatments afforded parents-to-be with expanded options for growing their families. At the same time, women are having children later in life than before, due to a number of factors including career expectations, economic stability, and changing cultural norms. This represented an opportunity and unmet need across women’s health and fertility.

We’ll look back on 2020 and 2021 as a messy cauldron of new realities and ideas, many of which feel overwhelming at the moment, but I predict will birth a groundswell of marked innovation. It’s in this messiness that new opportunities abound.

If you’re a founder that’s passionate about re-imaging the future of commerce, I’d love to hear from you!  You can reach me at jpark@venrock.com


David vs Goliath: 5 Strategies for Commerce Startups to Succeed in an Amazon World was first published in Substack.

Source: https://juliepark.substack.com/p/david-vs-goliath-5-strategies-for

The $1BN GMV Livestreaming Startup You’ve Never Heard Of

In China, livestream commerce is a $60B market and growing.  Think QVC but interactive, mobile, and highly entertaining.  Ever since Connie Chan’s illuminating post on China’s livestreaming boom, there’s been ongoing debate as to whether or not livestream commerce will catch on with the US consumer.  Will she or won’t she buy?  It’s the perpetual question.

Let’s put this debate to rest.  

Most folks haven’t yet heard of CommentSold.  It’s based in Huntsville, Alabama.  Its founder, Brandon Kruse, is quiet on social media.  And yet, he’s quietly built a powerhouse supporting over $1Billion of livestream GMV.  Yes, you heard that right.

I first ran across CommentSold over the winter holidays.  I was on my couch doomscrolling through Facebook when I noticed a particular trend:  Small boutique owners and resellers, mainly women, hosting livestreams across a wide range of categories from candles to jewelry to clothing.  And their audiences were tuning in daily to engage, interact, and shop – often after dinner or after the kids were asleep.

Southernangelsllc.com | Accessorizewithstyle.com | Simplyobsessed.com 

In the left corner of these livestreams, I noticed the same “Comment” callout.  Having worked at FB, I knew this wasn’t a FB call to action.  Intrigued, I tracked down the origins of “comment selling”, and came upon CommentSold.  

Simply put, CommentSold provides custom checkout and unified invoicing and order management to allow small business owners to easily sell across multiple platforms, whether that’s social channels (FB Live, FB Groups, and IG), an eCommerce webstore or their own branded mobile app through CommentSold.

Having been raised in the south and midwest, I recognize these small business owners.  They may have started their boutiques as side-hustles to supplement their family income, but many are now running full-time businesses.  And with stores closed and everyone cooped up at home, it was clear why they’d jumped online and brought their audiences with them.  

Their livestreams feel intriguingly personal – sometimes a husband or the kids pops by to say hello.  There are inside jokes starting to form amongst the members.  Judging by the comments, you sense the audience is decompressing with some wine on tap.  Or maybe that’s just me.

So what can we learn from CommentSold and Brandon’s success?  

1/ Livestream commerce fulfills an emotional need for American consumers.  Let’s put that debate to rest.  And instead move on to the more interesting question of how it’ll morph and expand in the US, whether as standalone entities or as part of broader social platforms.

2/ Small businesses are increasingly savvy, and in some cases leapfrogging larger brands in discovering and mining new channels.  They are multi-platform sellers and they’re not going back.  They’re no longer content to rely on their physical stores – they’re quickly spreading their presence across multiple platforms and multiple mediums.

3/ Fantastic founders aren’t bound by geography.  They don’t need to live in SF, NY, Austin or even Miami.  Let’s find them and fund them.  I grew up in Nashville and Peoria.  My friends and neighbors were just as smart & interesting with unique viewpoints as the folks I met later in life in New York and San Francisco. 

If you’re like Brandon and quietly building against an audacious goal with seeds of momentum, I’d love to hear from you!  You can reach me jpark@venrock.com 


The $1BN GMV Livestreaming Startup You’ve Never Heard Of was originally published on Substack.

Source: https://juliepark.substack.com/p/the-1bn-gmv-livestreaming-startup

Building for SMBs: 7 Mistakes & Lessons Learned at Facebook

Before I joined Venrock, I was lucky enough to lead the long tail ads business at Facebook.  My customers were realtors, restaurants, accountants, and everyone in between.  Having worked with small businesses throughout the pandemic, I am convinced, now more than ever, that the time is ripe to better support this receptive audience. Building an online presence or embracing digital tools is no longer a “nice to have”;  it’s a survival imperative for most.  This is a profound shift from an audience that has historically been ambivalent to the prevailing “software eats world” narrative.

Although small businesses may ultimately want similar things as enterprise clients (eg find new customer leads, save time & money), the nuances of how she’ll get there will be completely different.  How deeply we understand these differences will determine our success in winning her over.  In sharing my lessons learned – some obvious and some not so obvious – my hope is to shortcut those learnings as we build to support this audience.  

1/ Reskinned enterprise tools =/= SMB tools

At FB, the ads tool for SMBs was internally called “Lightweight Interfaces.”  It was basically a slimmed down version of our core power tools, with a simplified UI.  The front end was different, but the backend was essentially the same.  This was a massive problem.  Here’s one example why:

When I worked with Walmart’s marketing department, there were individual leaders for brand, performance, and social marketing.  We could build distinct products tailored to each.  My SMB client on the other hand?  She was the brand, performance, and social marketing lead rolled up into one.  And she expected one solution that delivered all three outcomes.  She wasn’t asking for a UI/UX change – this was a fundamentally different product than what we offered.

2/ Customer ROI needs to account for both investment of time & money

When I started working with SMBs, I intrinsically acknowledged that our tools needed to be cost effective.  But until I began shadowing our customers, it didn’t really sink in how time constrained they were.  The SMB client had a full-time job – whether that’s selling houses, providing tax advice, or baking cakes.  And now she’s expected to be a marketer, accounting guru, and compliance expert.

3/ Deliver immediate results

Before FB, I had largely worked with Fortune 500 clients with six figure test budgets to “test and learn” over a pilot period.  Test budgets for SMB customers?  LOL.  

4/ Speak plain ‘English’, and don’t forget to localize

When I first transitioned from finance to tech, I kept a little notebook where I wrote down all the terms I didn’t understand.  Then I’d go home and Google terms like “impressions, click through rates, and frequency caps.”  I was mystified and terrified those first few months.

When I started covering SMBs, those emotions came rushing back.  Because in speaking with our customer, we realized that’s how she felt.  We didn’t get better overnight, but this awareness pushed us to get to the heart of what we intended to communicate, vs relying on shorthand.

In that same vein, as startups go global, increasingly from the early days, a reminder to consider how your messaging translates abroad.  Case in point:  We were excited to launch “Ads Camp”, a guided tour on advertising basics.  It was a cute take on summer adventure camps.  But as a colleague from Singapore pointed out, this concept had no relevance in Asia.  D’oh.

5/ Provide encouragement and celebrate the small wins

It’s human nature to enjoy doing the things we’re good at, and avoid situations where we feel inadequate.  It’s why I always avoided playing sports in school.  

The SMB customer feels the same way in this new world of digital tools.  She’s having to learn new skills, and learn them fast.  In situations like this, we all need encouragement.  At FB, we learned to identify ‘small wins’ and celebrate them, showing how she was one step closer to achieving her goals.  This is a concept that many workout apps deploy, and it works elsewhere.  

6/ Mobile first increasingly wins

Although consumer apps are increasingly mobile only, many business apps are still approached with a desktop-first approach.  This isn’t entirely without merit.  When’s the last time you pulled up gDocs or Excel on your phone? But unlike the desk worker, your SMB customer is at the register, on the sales floor, or at a client site.  

In emerging markets, she may not even own a computer.  Partly because of cost, but partly because she doesn’t need to – she’s conducting all her transactions via WhatsApp on her Android phone.  Want to be part of her workflow?  Design it for mobile.

7/ Aim for consumer-grade tools that auto-optimize

TikTok makes it super easy to create content.  Spotify makes it dead simple to find your songs.  Then why do most SMB tools require endless webinars and $100/hr consultants to get going?  

Most consumer products are quietly humming in the background to continuously optimize your experience.  When’s the last time you checked your IG or TikTok analytics to improve your feed?  Answer:  Never.  The same should be said for SMB products.  The best products auto-optimize, vs putting the burden on their users.

Building for SMBs may be hard, but I can’t think of a worthier mission.  If you’re a founder that’s passionate about supporting the SMB customer, I’d love to hear from you!  You can reach me at jpark@venrock.com


Building for SMBs: 7 Mistakes & Lessons Learned at Facebook was originally published on Substack.

Source: https://juliepark.substack.com/p/building-for-smbs-7-mistakes-and

First Time Founder – Now What?

A discussion of the steps that developers can take to becoming entrepreneurs and turn their coding project into a funded start-up company.


Over the past year, a number of early-stage startups led by IT practitioners-turned-founders have been funded, and countless more are currently seeking capital. Many of those founders are on unfamiliar ground, building a startup for the first time. Making the transition from practitioner to founder is a non-trivial move and it can be difficult to navigate without the right resources and guidance; but there are some universal steps that will set you on the right path.

If you’re still reading this, there’s a good chance you’re an IT practitioner. And chances are you’ve been solving problems for your company while gaining a unique insight into where today’s technology is lacking. You’re probably leading your company’s IT department or managing your cloud infrastructure, but are itching to explore your budding start-up idea. While you have the insight and expertise to make it happen, you’re unsure about how to switch gears and take those first steps towards entrepreneurship. Unlike developers who’ve been checking in code forever, you might not know where to begin – technically. You’ve also probably come across a number of companies that have proven themselves successful by becoming a unicorn, getting acquired for a large sum, or going public; you want to join the club.

For those looking for more information on starting a company, here are some tips for navigating the start-up ecosystem and maybe even thwarting some common mistakes.

Building a Start-Up 101 

  1. Start with some key questions: It’s important to define your solution either as a feature, product or company. You’ll also want to figure out if you truly have product-market fit, all the while making sure that you’ll be able to have more than just a few great customers – think long-term. 
  2. Truly understand the market that you’re going into. Researchhow big the market is and know who is in the market right now. Figure out how you are going to be better than what’s already out there or understand why no one else has solved this problem already. If someone has already failed at trying to solve the problem you’re focusing on, why did they fail? Or if you are building off of an existing technology, what would motivate someone to choose your solution specifically? 
  3. Build a strong founding team. It’s crucial toconsider how a potential co-founder works on a professional and interpersonal level. Once you’ve started a company with someone, you’re going to be in it for the long haul; in other words, it’s really hard to get a divorce. The start of a journey is when everyone is on their best behavior, so note any red flags. Within your founding team, you’ll also want to have someone who specializes in the technical aspects, someone who has product experience, and someone who understands marketing and go-to-market. Determining responsibilities early on will also help in the long run.
  4. Know your story. Make sure you can describe your business in a way that is universally easy to understand and compelling. Ask yourself, “Can I explain my solution to this complex problem through a 30-second elevator pitch?” Then practice, practice, practice.
  5. A great pitch deck will go a long way. Cover the basics by including the problem, the market, your solution, your team, your traction (if any), and your special sauce or why you are going to win.
  6. Understand how venture capital operates. It may sound non-obvious, but when raising money,it’s helpful to consider what your *next* round will look like. Always“pre-bake” for the next funding round by outlining key milestones which will pave a path to the next round. Also, keep in mind who you want to be involved in that round. These days, the lines between rounds are blurred, but generally, you can think of the first round as the one to get you to product-market fit, the second round as the one that helps you sell the product in the market, the third round as the one that helps scale-up, and the fourth as the one to further expand your sales motion.
  7. Honesty. Be honest, communicate honestly, and create a culture of honesty. Bonus: culture will shine through to the customer and help scale sales growth. Upfront communication between colleagues will also help maintain relationships and help set you up for success.
  8. Have a solid advisory board. You want an advisor who: 1. provides business advice, 2. opens the door to their network (a.k.a.  potential customers), and 3. has a strong reputation that will help you gain credibility. You likely won’t get advisors that check all the boxes, but if you do, that’s amazing!
  9. Saying no is just as important as saying yes. Early pilot customers are extremely useful for gaining hands-on experience and tremendous amounts of feedback, but you’ll need to sift out the bad advice. Venn Diagram all of the feedback you receive to see what overlaps across different aspects – that’s what you should be focusing on.

Most importantly, remember that it’s a journey. This won’t be an overnight success and there isn’t just one predefined path. In many cases, you’re going to feel like every problem or failure you encounter will be the one that ends it all, but, in hindsight, it won’t be. Remember that you are not alone. In fact, it’s extremely common to run into an avalanche of challenges when building a company – you just have to keep going.


First Time Founder – Now What? was originally published on DZone.

Source: https://dzone.com/articles/first-time-founder-now-what

Earn While Doing What You Love

When I was in high school I had the good fortune to earn a spot on the Jones Beach Lifeguard Corps. It was a job that was every bit as fun as it sounds, and because we were unionized state employees, it paid decently too. Our days involved sitting on the lifeguard stand every other hour, staring intently at our patch of ocean, followed by an hour off, during which we were encouraged to exercise, take out the surf lifeboats, or “patrol” the sand. I remember commenting to one of the grizzled veterans several decades my senior that “I would do this job for free.” He looked at me with a knowing eye, tinged with the pitying look of a chess player who knows they are at least two moves ahead of you, “but the thing is kid, they do pay us to do this.” Those summers were an early lesson in the harmony of getting paid for doing something you truly love.

Because I am passionate about entrepreneurship and software, I am still earning a living doing what I love, as an early stage technology venture capitalist. For many people, however, neither business nor technology sparks joy. For them, teaching yoga, or fitness, or cooking, or magic, or art, or you-name-it, is what they love. Being chained to a laptop with seven browser tabs open so they can create email campaigns, manage customer lists, process payments, and balance their business accounts, is at best a necessary evil to enable them to earn income pursuing their passion.  

The aforementioned state of affairs has long held, but in March of 2020 Covid19 threw a curveball at small businesses everywhere, but especially those dependent on serving clients face to face. All of a sudden small business owners needed to go virtual by figuring out how to use Zoom, accept online payments, and hopefully make up some of their lost revenue by serving a potentially bigger, geographically dispersed audience. And for the employees of these small businesses, many of them saw their work hours shrink, or faced painful furloughs. For some of these employees, however, necessity led them to branch out on their own, serving clients directly through video conferencing, with neither the limitations nor safety net of working for someone else. Add to the mix countless others who saw the opportunity to turn their personal hobby into an income producing “side hustle” as virtual services quickly went mainstream.

Enter Luma, a startup founded, quite appropriately, by two engineers who had* only ever met over video conference. In March 2020, Dan and Victor quickly saw the need to help solopreneurs, small businesses, and groups invite people to virtual events, accept payments, and manage customer relationships. They applied their skills as full-stack programmers to quickly launch an MVP, which met with quick success. Because Zoom was designed primarily for business meetings and webinars, Luma saw an opportunity to leverage Zoom for many other use cases by enabling customizable event pages, CRM and membership management, subscriptions, payments, and easily understandable analytics for event hosts. Luma has been used for hosting fitness classes, magic shows, cooking classes, writers workshops, live podcasts, PTA speaker series, and a myriad of other activities. The list of future features, use cases, and target user segments grows longer everyday.

While Dan and Victor were quick to jump into action with Luma back in April, now that Zoom has become a verb they are hardly the only ones to see the need for a virtual event platform. What drew me to invest in these two founders, however, is their incredible ability to get stuff done, their high bar for quality and customer service, and their relentless intellectual curiosity driving them to best understand how to improve the lives of their users, so that hosts and guests alike can spend more time doing what they love, while the fiddly bits of technology and managing a business become nearly invisible. 

One great example of Dan and Victor’s commitment to customer centricity was the following. One evening a few months ago I was about to log on to a parent education event hosted by Common Ground Speaker Series. What I soon realized was that I had failed to pre-register and so I was missing the appropriate Zoom link. I found a live chat help button, not knowing whether anyone from Common Ground would actually be there at this late hour, and lo and behold Victor pops up in the chat within seconds and immediately works behind the scene with the event host to get my registration accepted so I could receive the link. Victor himself was providing live support to an event host at the end of a day filled with coding new features, working on strategic planning, creating marketing campaigns, recruiting team members, and donning dozens of other hats as a startup founder does. All that, and I’ve never seen either Victor or Dan without a huge smile on their faces. Luma’s founders embody the commitment, optimism, and truth seeking that great founders embrace, which is ultimately why we invested in them, and are so excited for the journey ahead. Luma helps people earn a living doing what they love. I am fortunate to earn my living helping great founders like Dan and Victor.


*Dan has since relocated to San Francisco and the two founders are now bubble-mates working together shoulder to shoulder.


Earn While Doing What You Love was originally published on VCWaves.

Source: https://vcwaves.com/

Building Commercial Open Source Software: Part 3 — Distribution & GTM

Building a Commercial Open Source Company

In our time investing and supporting open-source companies, we’ve learned several lessons about project & community growth, balancing roadmap and priorities, go-to-market strategy, considering various deployment models, and more.

In the spirit of open source, we wanted to share these learnings, organized into a series of posts that we’ll be publishing every week — enjoy!

PART 3: Sequence your distribution & GTM strategy in layers

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1. Vibrant communities make for the best lead generation:
The open-source popularity of a project can become a significant factor in driving far more efficiency and virality in your go-to-market motion. The user is already a “customer” before they even pay for it. As the initial adoption of the project comes from developers organically downloading and using the software, you can often bypass both the marketing pitch and the proof-of-concept stage of the sales cycle.

2. Start bottoms up, developers first: Focus on product-led growth by building love and conviction at the individual developer level. Make it easy to sign up, deploy, and show value. Leverage developer referrals, community engagement, content marketing, and build the product-led growth mentality into each function of your company. Nailing the developer experience can lead to growth curves that look much more like consumer businesses than enterprise, and lead to much larger deals later on.

3. Nail bottoms up before enterprise selling: You can focus on product-led growth (bottoms up) or account-based marketing (top-down), but not both at the same time. Start with product-led growth to build an experience that developers love. Once you’ve reached some critical mass with a flywheel of developer acquisition, begin to introduce account-based marketing, starting with the expansion of existing customers to learn the enterprise sales motion before going after new accounts.

4. Developer first doesn’t mean developer-only: While nailing the developer-first experience is key to driving strong customer growth, it’s often not sufficient when trying to scale the project into larger-scale deployments. Transforming from a proof of concept to multiple large scale deployments across the customer’s organization requires a different set of decision-makers and requirements (i.e. security, policies, control, SLAs). Be sure to understand how the needs of the organization may differ from the needs of the developer when planning how to expand deal sizes and go after larger customers.

5. Build your sales funnel based on project commitment: Customers will come in three coarse flavors: (1) already deployed OSS project internally (2) starting to deploy OSS project internally, (3) decided to adopt OSS project. Design the sales motion tailored to the customer journey in order to focus on solving the right problems and challenges.

6. Target the ‘right’ developer: It’s critical to know who you are solving for and what you are solving for them. Going after the wrong developer persona can make a critical difference in whether the developer community understands and embraces your solutions, or not. Is this a solution for DevOps or data engineering? Technical business users or Data Scientists? An example data infrastructure project could be seen as (a) making it easier for DevOps to manage, (b) shifting the power from DevOps to engineering, c) helping data engineering leverage better code patterns, and (d) making it more secure for SecOps to manage data access. Obviously, all (4) have very different problems, with different values associated to them, but are all value props of the same solution. Focusing on the right persona, with the most painful problem, where you can continually layer value over time, is critical to building wider community love and commercial adoption.

7. Sell impact, not solutions: Help understand the total cost of ownership (TCO) of your solution vs an existing, closed, or in-house system — this matters and is rarely done well by the customer when making buy/build decisions. Understanding the value and ROI your service delivers, both hard and soft, allows you to sell on impact to the business, and not on a technical solution. Are you saving developer headcount? Increasing developer productivity? Reducing infrastructure costs? Cost-take out of a more expensive or legacy system? Being clear on the cost savings and velocity benefits of your solution drives up customer contract values.


Building Commercial Open Source Software: Part 3 — Distribution & GTM was originally published on Medium.

Source: https://ethanjb.medium.com/

Building Commercial Open Source Software: Part 2— Roadmap & Developer Adoption

Building a Commercial Open Source Company

In our time investing and supporting open source companies, we’ve learned several lessons about project & community growth, balancing roadmap and priorities, go-to-market strategy, considering various deployment models, and more.

In the spirit of open source, we wanted to share these learnings, organized into a series of posts that we’ll be publishing every week — enjoy!

1. Solve for the homegrown gap

When developers struggle with deploying an open-source project into their complex internal environments or infrastructures, they build homegrown solutions instead. Solving for key areas turns developer engagement into commercial customers. This means it needs to be as easy and seamless as possible to set up and deploy in order to start demonstrating value. Whether it’s providing Kubernetes operators, specific integrations, CLIs, or UIs, make it dead easy to deploy.

2. Offer an enterprise-ready package

Open source is designed for the community, by the community, and by definition wasn’t designed to work out of the box in the enterprise. Comprehensive testing, a certification program, performance guarantees, consistency & reliability, cloud-native, and key integrations are all substantial value propositions on top of an open core.

3. Layer value on top of the open core

Focus on ways to magnify the value of the open core within the customer’s organization; make it easier to deploy, operate, manage, and scale. Adding capabilities such as rich UIs, analytics, security & policies, management planes, logging/observability, integrations, and more make it easier to work within increasingly complex customer environments. For example, Elastic built a number of products on top of their core that made it easier to deploy and manage such as Shield (security), Marvel (monitoring), Watcher (alerting), native graph, and ML packages.

4. Narrow focus until you become ‘the’ company:

Focus narrowly on making it easy and obvious for every company in the world to be on your open core, and use it to grow both the community and customer love to become the [open source project] company. Avoid splitting focus until you’ve generated enough market adoption (i.e. $25M in ARR) to declare yourself the winner. Databricks is the Spark company, Astronomer is the Airflow company, Confluent is the Kafka company, by focusing on developing, growing, and scaling the open core.

5. Go horizontal over vertical

Focus on modular, horizontal capabilities that apply to all engineering organizations, of all sizes, that make the open core and enterprise solution more robust, manageable, performant, and scalable. Horizontal would include such capabilities mentioned earlier such as analytics, logging/observability, management tools, and automation, but also enabling new capabilities that amplify the value of the core. This might include improved capabilities for data ingress/egress, replacing existing infrastructure components for tighter integration, or moving up/down the stack. Vertical capabilities are focused on specific customer segments or markets, such as offering a ‘financial services package’ or specific offerings designed for large enterprises. The illustration of this has been most recently evident in diverging strategies of Puppet vs Chef and led to Chef’s low revenue multiple acquisition.

6. Optimize for developer usage over revenue

In the early commercial days, usage counts more than revenue. You are looking at downloads, stars/fork ratio, contributor velocity on the open source project, and beginning to see reference customers adopting your project on the commercial side. Developer engagement is key to building customer love, deep adoption, and lock-in. These lead to eventual expansions, referrals, customer champions, and all the goodness.

7. Without telemetry, you’re flying blind

Without understanding how the project is being used, the number of deployments/developers/organizations, service utilization, and adoption curves, it’s difficult to prioritize fixes or features. To better observe, manage, and debug before they become major issues, implementing lightweight telemetry can offer continuous, unfiltered insight into the developer’s experience. Two key projects, OpenCensus and OpenTracing have merged to form OpenTelemetry, enabling metrics, and distributed traces that can easily be integrated into your project.


Building Commercial Open Source Software: Part 2— Roadmap & Developer Adoption was originally published on Medium

Source: https://ethanjb.medium.com/

Building Commercial Open Source Software: Part 1 — Community & Market Fit

Since the early 90s, with the emergence of the MIT free software movement and popularity of Linux, there has been an accelerating shift away from proprietary, closed software to open source.

Today the open source ecosystem has over 40M registered users, 2.9M organizations, and 44M projects on Github alone. Just in 2019, 10M new developers joined the GitHub community, contributing to 44M+ repos across the world.

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Open source continues to be the heartbeat of the software community and one of the largest and growing segments of the market by IPO, M&A, and market cap; with new projects emerging well beyond low-level systems to machine learning, data infrastructure, messaging, orchestration, and more.

Companies such as Hashicorp, Astronomer*, Puppet, Confluent, and Databricks are a new approach to commercial open source, with a focus on deploying their open cores to the broad developer community and the largest companies in the world with enterprise-ready needs attached to them. All while actively contributing to the community and gradually opening up more of the closed platform to the community — and building big, meaningful businesses along the way.

These new approaches are building platforms that wrap open core packages with support, enterprise-focused capabilities, and enterprise-level stability to transform a solution into a high availability, horizontally scalable, modular service that can fit into any set of cloud or infrastructure needs. Riding a tidal wave of community growth and demand as the underlying projects proliferate across developers and enterprises.

While there is no one-size-fits-all approach, each of these companies have navigated a complex maze of decisions as they built and scaled their solutions: deciding when building a commercial solution made sense, ensuring the community still stayed in primary focus, remaining open yet balancing the needs of the enterprise, deciding when to focus on bottoms-up or introduce enterprise-wide selling, and how to remain competitive against the cloud providers.

Building a Commercial Open Source Company

In our time investing and supporting open source companies, we’ve learned several lessons about project & community growth, balancing roadmap and priorities, go-to-market strategy, considering various deployment models, and more.

So in the spirit of open source, we wanted to share these learnings, organized into a series of posts that we’ll be publishing every week — enjoy!

  • Part 1: Building blocks to a commercial open source offering
  • Part 2: Focus your commercial and OSS roadmaps on developer adoption
  • Part 3: Sequence your distribution & GTM strategy in layers
  • Part 4: Your deployment model is your business model
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1. Find Community-Project Fit

Ultimately the success of a commercial open source company first relies on an active community of contributors and developers supporting the project and distributing it to more and more developers. This means building a project that the community has decided is worthy of their participation and support is the most important goal starting out. The keys to building a vibrant community around your project center around earning developer love by solving an important and widely felt problem, inspiring and supporting others to actively contribute, and giving reason for a passionate community to begin to form around it; whether it’s around integrations, an ecosystem built on top of it, or new ways to extend the project. The key questions we ask ourselves when evaluating a new project are: Is the project seeing increases in contributors, commits, pull requests, and stars? Has the community rallied beyond this project amongst the many variants or flavors attempting to solve a similar problem? Is this project introducing a compelling new approach to solving a thorny and wide- felt problem? Have the project creators put forward an assertive and opinionated view on the direction of the project? Have they also been inclusive in ensuring the community has a voice and say? How would developers feel if the project was no longer available?

2. Build Around Project-Market Fit

Next is understanding how your project is being used inside of companies: how are developers using your project? What are the killer use cases? Where are they struggling to use the project? From there, you can decide whether building an enterprise offering around the project makes sense. For instance, is it a run-time service that companies struggle to host where a managed solution would see strong adoption? Are developers building homegrown solutions to make it work or stitch it together internally? Might customers need enterprise-level security, support, or performance in order to deploy into a production environment? Could the value of an enterprise solution wrapped around the open core eventually multiply if coupled with capabilities such as logging, analytics, monitoring, high availability, horizontal scaling, connectors, security, etc. Understanding how the project is being used and where there might be value-add for enterprise customers is key before embarking on building an enterprise service.

3. Start With a Loose Open Core

The goal in going open source to enterprise is to see widespread distribution and adoption of a project by a large community of developers which can eventually turn into a healthy cocoon of demand for an enterprise offering. To do so, it’s best to avoid dogmatic decisions in the early stages of going pure open or what/how will be closed. Rather, focus on keeping a loose open core; keeping the core open for the life of the project and building an enterprise offering as source-available and closed source capabilities that magnify the value of the core when being deployed into complex environments or use cases. Over time you can decide to graduate source available and closed source capabilities into the open core — more about that in an upcoming post. Keeping a loose open core allows the flexibility to continue to build and grow the community while offering specific SaaS or deployment models that meet the needs of the commercial market, and hopefully keep both constituencies satisfied.

4. Pick the Right License

Your project license structure is key to get right from the start; a permissive software license (MIT, BSD, Apache) allows for mass adoption by unburdening users from needing to contribute back. Protective licenses (GNU GPL) force forks/derivatives to release their contributions back as open source. Then there are variants such as the LGPLAGPL, and Apache 2.0 with Commons Clause that are mostly permissive but have specific limits if you’re concerned about cloud providers or others freeloading on your project into a managed service. Thinking through the competitive risks, such as what groups forking your project might be able to do, or if the cloud providers could fork a managed service of your project, are critical to designing the right license structure. See, in example, the Redis Labs post on changing from AGPL to Apache 2.0 with Commons Clause and why.

5. Define Clear Principles for Open vs Closed

Constructing the right open core vs source available vs closed source strategy could be a company-making or killing decision. Source available and closed core need to be thought of as value-adds that wrap around open core, with many cases, in a path to eventually graduating into open core. Be explicit about the principles you use to decide what to open vs close, and how/when/if they graduate. A guiding principle for what to make part of open core vs closed might be (a) the closed enterprise/commercial edition only focuses on the needs of enterprise segment, or (b) the needs of companies that are post-revenue, or © based on use cases that exceed certain scale/performance requirements. Be explicit about it, write it down, share it with your community. The selected guiding principle then dictates when to release to the open core vs keeping closed The community often will understand that a strong commercial business is required for continued investment into the project, as long as you are explicit about the intentions and roadmap to continue supporting the community. These transparent principles will often avoid many of the conflicts between the community and commercial needs, i.e. the community pushing for a feature that competes with the enterprise offering.

6. Maintain Project Leadership

Even as the project creators, maintaining project leadership is key and is not guaranteed. This means striking the right balance between supporting and leading the community, and being explicit with the direction of the project, yet engaging deeply with the community. Taking an active role in the PMC if part of the Apache community, lead the AIPs, know the top 50 contributors intimately, and drive the direction of the project. Be responsible for the majority of the new commits and releases for the project. Ensure there is always a reason for new contributors to join and for the community to continue growing.

Next week, we’ll talk about focusing your commercial and OSS roadmaps on developer adoption.

*Venrock is an investor in Astronomer, the enterprise developers of Apache Airflow.


Building Commercial Open Source Software: Part 1 — Community & Market Fit was originally published on Medium.

Source: https://medium.com/@ethanjb

My First Week Investing at Venrock

Dear Founder,

Today begins my first week at Venrock. I’m excited and very humbled to join this long-standing team of whip-smart, hardworking investors in supporting you, the entrepreneur. Drawing on my background, I’ll be investing in consumer, commerce enablement, and SMB services & tools. I imagine my focus may evolve over time. However, there’s one thing that will remain consistent – my commitment in service to you, the founder.

As the new kid on the investing block, I wanted to share three snapshots that give you some color on me. In 2005, Steve Jobs gave my commencement speech at Stanford. One phrase in particular lingered with me over the years: “You can’t connect the dots looking forward; you can only connect them looking backwards.” So here are three snippets into what’s shaped my perspective of our relationship.

🤝 The Goldman Sachs Years – The Client Always Comes First. That Means You.

Before my transition into tech, I spent eight years at Goldman. It was my first job out of college, and I stayed because I loved my clients and I loved New York City. I covered retail and consumer brands, supporting founders and CEOs through financings, acquisitions, and IPOs.

My first day at Goldman, I was given a laminated sheet of the firm principles. It was the Goldman version of the ten commandments. I forgot most of them, except the first which was in big, bold letters. Principle #1: The client always comes first.

Banking is a services business. Your role is to support your client. And here’s the thing, venture capital is no different. As the founder, you’re my client. It’s my job to earn your trust. This means consistently showing up, listening more than speaking, and supporting you as your company evolves. And if that means flying to Chicago on my birthday in the midst of a midwestern winter, I will do it!

🎢 The Pinterest Years – Startups Are a Roller Coaster. Lean on Each Other.

In 2012, I got the sense that something was happening out west. And I knew where I wanted to be: Pinterest. As someone who loved getting lost on the streets of New York, I was looking for the same serenditipous experience online. The moment I saw Pinterest, I knew this was it.

It took over a year of pitching (aka begging) before I was hired to help build their monetization engine from the ground up. Going from banking, where consistency is the name of the game, to startups, where each day unfolded differently was equal parts exhilarating and scary as hell.

We all know that startups are an emotional roller coaster ride. I can only imagine how amplified this is for the founder. What got me through the lows were two things – my merry band of coworkers and our unequivocal faith in Pinterest’s success. And that’s the same perspective I bring to my relationship with you. The lows feel more overcomable when you’re surrounded by those who believe in you.

👤 The Facebook Years – The Next Zuck Looks Like You.

In my roles at Pinterest and Goldman Sachs, I mainly worked with larger companies. So when I heard that Facebook was increasing its focus on SMBs, I jumped at the chance to lead its long tail advertising business. I met small business owners from around the world. And it opened my eyes in a big way to the diversity and ingenuity of entrepreneurs from all walks of life.

There is no “central casting” for the small business owner. This allows for a greater expression for what a successful business owner looks and thinks like. There’s the 24-year-old woman in rural Indonesia who runs a multi-million dollar batik business. There’s the 55-year-old army veteran in Louisiana who’s cornered his local towing market. I saw this diversity of backgrounds in a visceral way in working with SMBs. Quite honestly, I wouldn’t have grasped it otherwise.

The Internet has expanded access in a way that didn’t exist before. This means world-changing businesses can emerge from any number of communities. I strongly believe that the next Facebook will be built by someone who looks and thinks like you. And it’s my job to find and partner with you.

🙋🏻‍♀️ I Look Forward to Meeting You.

It takes a special person to have the tenacity and optimism to build a world-changing company – to bring the art of the possible to the realm of reality. In times like these, we need you more than ever. I look forward to meeting you, supporting you, and riding the highs and lows of the startup roller coaster with you in the weeks, months, and years to come.


My First Week Investing at Venrock was originally published on Notion.

Source: https://www.notion.so/My-First-Week-Investing-at-Venrock-de652714845340c2874793e16bbbc890

Venrock Adds Two New Investors: Mariana Mihalusova and Julie Park

Much has changed during the past six months, but our search for great talent hasn’t stopped. We are excited to welcome two Vice Presidents to the firm, continuing our effort to help build great companies across healthcare and technology. 

Mariana joins the healthcare team with experience across the entire drug development life cycle. Prior to Venrock, she was Executive Director at Celgene, where she led a broad range of preclinical and clinical stage drug programs through early human studies.  She graduated from Harvard with an MBA and Ph.D. in biochemistry after earning her bachelor’s at Brown University. Her focus will be on early stage biotech companies and she was instrumental in Venrock’s recent investment in a stealth oncology antibody drug conjugate company. 

Julie joins our technology team and will focus on investments in consumer, commerce enablement, and SMB tools & services. Most recently, she was an executive at Facebook, where she helped SMBs grow as Director of the global long tail ads business. Previously, she was on the founding product and sales teams at Pinterest. Before moving to the west coast, Julie was a Vice President at Goldman Sachs, where she worked closely with consumer and retail companies. Julie has dual degrees from Stanford, with a Master of Science from the School of Engineering.  

Both Mariana and Julie will be based in our Palo Alto office upon reopening.