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Jared I thought with Joseph Jack, the founder and general partner of his capital. He joins the show to share his team's plans for funding. The future generation of commercial open source software based companies this is a growing landscape of one hundred billion dollar revenue companies. That's just not getting serious early attention and institutional backing and we talked through many of those details of Joseph core. The wise the house why open source software now deep details around licensing implications. And we speculate the types of open source software and companies that make sense for this investing. Joseph. We're here today. Talk about oh, S S capital. I think this is a first in the industry a. A company that invests closely in commercial OS as startup companies. So very cool you announce this recently, first of all welcome to the change long. Thank you so much for having me. It's really really cool to be here. So is this a first of its kind. I mean, I feel like maybe it's a threshold move moment for the open source community. We have not just venture capital, but like specifically exclusively capital focused on open source startups. Yeah. I mean, I think it is pretty much the first of its kind. I it's it's sort of happened organically, we've been thinking about the sort of nature of open source as it relates to company building, and this sort of broad. Of companies that you could call commercial open source software companies. And I mean, there's certainly been venture venture capital investors who have an affinity for open source. They've certainly invested quite a lot of people like Peter Fenton, come to mind, Mike Volpi marching Casado. You know, Dan, Skolnik others, and it's certainly a really exciting area. But what what we needed to exists? Just just in terms of the critical profound nature of open source as as it relates to changing world and changing the technology industry and the software industry at large is really a focused firm that also has a bit of a different structure. We think it it's it's pretty pretty novel and super excited to be talking about here, we actually shared some interesting things that you share recently on our news fee, which was an index that you have an open source software company index of companies with one hundred billion dollars plus in revenue now, the caveat also has recurring or not and then also in or which adds that also potentially could just generate the equivalent of twenty five million dollars a quarter. And you know, I put my own sub note, they're seeing these comes found a way to build a very large business around one or many opens or software companies are sorry one or many more software projects. And I think, you know, maybe a place to begin might be the fact that exists, and there's I didn't even count them. I think let me come the racial quick big. It's thirty six thirty seven. There was only I know I know there was only six or seven about four years ago meeting Makati area. So it's what. Grow will be little over forty by the end of the year. But yeah, definitely growing growing space for sure you're pretty close. There's thirty seven rose not including the header or including the header or thirty eight not including the header. So that means thirty seven. So you're pretty accurate and this is over a thirteen year period. So it makes sense to see a fully focused venture capital firm. Come into the space. Thirteen years later. Why why suddenly or I guess why? So late it's almost late. Yeah. Yeah. That is a really really good question. I think one way to answer that there's lots of ways to answer that question. But one potential way of looking at it is two thousand eighteen is is a really huge year for commercial open source. I guess open source overall is about twenty twenty five years old right open source software and just just in the last sort of five ish years, we've seen a huge amount of growth in into sort of kind of emerging category of companies that that you could kind of classify as commercial open source software companies like your your mention of the index that we've been managing maintaining for several years kind of indicates that that obviously there's there's quite a lot of activity and companies that forms that have reached huge us all of us upscale hundred hundred million in revenue or or twenty five million revenue quarter. So sort of a run rate of one hundred nine revenue was chosen as a metric just. Based on like that revenue number being pretty relevant to companies that can kind of go public or have large outcomes. And so yeah, I mean why. Now, I think is really a function of two thousand eighteen hundred and eighteen we had and I'm actually just up and get hub university that right now. So get up the good good one dimension. But so far in aggregate we've had over thirty three zero billion dollars in either IPO's private equity events or mergers and acquisitions of commercial open source software companies. Most of those are companies that have been in existence for several years at least five or six or seven years in some cases, ten years. So it takes it takes the sort of similar or same amount of time. Roughly for commercial open source software companies I believe it's possible to do this in shorter period. But roughly between eight to ten years to sort of become large large sustainable, sort of public IPO will companies, and I think doesn't eighteen has been sort of tipping point year for sort of public markets. And then seeing lots of these large outcomes occur where most of these companies are venture venture funded. But like as we talked about kind of the opening we haven't really seen a focused firm. I think mostly because that that just hasn't sort of been the synthesis of appreciating these companies are fundamentally different as compared to proprietary closed source enterprise software companies are just opera companies in general. We very very strongly believe that commercial open source software companies are fundamentally different functionally in almost every every way as compared to proprietary close or software companies. And so that's kind of another motivator for starting us. As capital is the founders need to be served differently. Sort of support structure is is sort of very different along lots of different dimensions and the company's kind of just grow and evolve in go to market and build build build products businesses also quite differently. So but just to answer your question. I think two thousand eighteen has been a really really remarkable year for large open source outcomes, obviously, get hub being bought by Microsoft meal. Soft having their second exit Salesforce after going IPO after IPO owing last year. Magenta getting acquired by adobe Susa getting acquired by private equity firm. Elastic Cy peo- corvettes getting required by by by red hat. I'll fresco getting getting acquired by private equity firm. We think that there's there's quite a lot of. IPO? Sort of dominoes. If you will that are gonna fall over the next several months, even we think there's probably a couple more a few more between down the end of the year. So that's that's one of the other factors of two thousand eighteen and I guess maybe one last comment in into as an eighteen almost on on a monthly basis like January, February March April may like every single month. We've actually seen a large commercial open source outcome like every single month. So it's been it's been pretty pretty amazing so far as as a year definitely a head of steam going. I'd I want to hear from you on these differences between these types of companies before good into that. I'll talk about yourself and your team. And what makes Joseph jacks, you know, the guy to be the founder and general partner of capital as I mentioned, you have a team you you're not the only one you have a seamless Lomb from micro. You have Heather meeker who've had on change, log shows amongst others. But. What makes yourself well positioned to head up by fun like this? And why are you? So specifically not just focused on us but excited by it and want to put money there and put efforts there. Yeah. That's that's a great question. I mean, first of all say, this this this whole this whole thing kind of happened organically. I've never had like a master plan in my mind to go out and say, I'm gonna go become a venture capitalist like going invest in startups brought for for like for full-time thing. I am. I am Shuji honored like in blown away by the reception that we've had and just on the team either header is really incredible awesome. Nick, why Kevin Wang we have some sort of support support support structure of founders kind of behind the firm in a handful of other folks will be will be making announcements on over the next couple of weeks. But I I'd say that, you know, just to kind of genuinely answer your questions from my own personal standpoint. I I really just been thinking about commercial open source software company sort of dynamics developments and stuff like this for many, many years that was part of why I started maintaining spreadsheet and part of what kind of has drawn me into working at different open source oriented companies whether whether it was talent. Almost ten years ago or or early on it as a sphere kind of working around the Kuban community. I think open sources just you know, fundamentally changing the world will change the world continue to change the world. But I think it for me personally, it really came down to, you know, just just needs to exist. We're at a point in time in history where the sort of investing model or companies that are fundamentally commercial open source companies is I think kind of broken it's not it's not that people can't get funded not sort of a function of funding. The fundable more of like this architecture, this sort of structure needs to exist. And in terms of me myself, like why why would I do this sort of if not me who who was gonna step up and who's gonna actually do it? And so I just sort of thought. Well, no one's really stepping up sort of months. Went by month after month sort of thought us is pretty obvious someone someone should take a shot at doing this. And so I sort of thought if if not me who and then if not now when sort of. Question. If not, you know, right now, it doesn't make better sense to do this next year a couple of years, and then sort of I think I automatically is poked poked on that a little bit more in like now, ultimately became very very clearly the the. The sort of the right thing to do. So. Yeah, that's kind of organically how out things came together. But they mentioned how there are others. Really incredible. She's sort of been leading a lot of of really amusing projects at work and. Initiatives around the legal side of open source software on terms of commercial IP in licensing and things in that area. For almost twenty years. And yeah. We're very very honored and excited to have the team that we have. She wrote a book called the business of open source, which are highly recommend reading. Yep. Of recent some controversial licensing around common clause. I believe she penned that something I thought of when you were saying this was was always thinking about the different types of venture backed or common venture backed ventures. So typical might be a startup which is the same. Bring your idea and customers VC may back you in terms of say an IPO or say an eye on sorry. I'll back up and say ICU world initial Coon offering bring your white paper. And then maybe an open source. It's bring your code and community. Is that fair to say is there some more layers to add on there? Wow. That's interesting. I never I never look at it from those sort of dimensions like sort of code code to coda community to be see white paper ties CEO, and what was the what was the third one. The first one was just bring your idea and customers because like right shark tank is like, you know, what's your idea? What you're on? What your sales, right? I see. Hey. Being your way paper if your way papers clear enough in the your ideas big enough in it's whatever, right. Then maybe here, it's more like do you have code you have community? Right. I think that's an interesting way of looking at. I mean, all of those things not not to not to like, the dentist. I think all those things probably matter a lot in in any in any kind of conversation with either going and doing something and a currency blockchain world, or as a venture capital sort of Korean thing or just as a general startup raising money. Whether it's open source or not, I think for us we fundamentally take a very technical sort of approach and definitely look at the code, and sort of authentic open source nature of of a given company and team and and project, and then sort of reason up from there. So I definitely save a distinction of at least for like maybe white paper to I see oh sort of. Reasoning is is different for sure. But yeah, that's that's that's definitely an interesting. Interesting way of looking at it should also mention while we're past Heather slightly. But before we go completely past other requests for commence episode nine Michael and Nadia had Heather meeker on talking all about open source in the licensing so linked that one of definitely a good one for the archive. Go back in green. And listen to Heather, she has tons of knowledge about this stuff. And for me where I get in over my head just thinking about the challenges of commercial open source is in the the nitty gritty of the entities and the licensing in the legal. And so I think you're well positioned to have her on your team for those things because I mean, you can make or break a business model with those details in that. Right. I think that's absolutely true. So one of the one of the things that were I think we'd be talking about a little bit more as we sort of. Share our perspectives and use of the world in different different things that we believe in. But we think that business model innovation is a really really really critical topic in the world of kind of commercial open source company building. So we have I think it's it's possible to build on your saying anger hound. You know, kind of I see oble visa fundable and just generally open source or sort of general any funding kind of dynamics we think that there's going to be like three or four reasonably well. Understood and implemented is this models for commercial open source software companies, and you can sort of categorize them as you know. Maybe one is the the red hat business model where you don't have any intellectual property that you're holding back. You're just selling support services and subscriptions. And there isn't any sort of proprietary code that you're holding back through close close close source license, kind of license base mechanisms where people have to sign a contract and get access to. A key. And then use the proprietary features. And then there's sort of open core model, which I think we don't really quite yet have industry agreement on in terms of what that actually means. But I wrote a little blog post about this a few months back. It's sort of just defining open core. What that really means and sort of a spectrum, it's not really a binary binary thing than Ben what some of the trade offs are between different approaches. We think open cores another model another business model. Maybe third one is hardware based distribution. So like a kind of source fire for snorts, the IBM fusion detection project, or for example, Cumulus, Cumulus networks. The kind of custom Leonard Lennox based network operating system that Cumulus goes in distributes through like white box. Switch vendors like super, micro and others. That's like more of like, a hardware based distribution model. Those are sort of maybe three a fourth that we're starting to see emerge. But again, we I think we we really strongly believe that that there needs to be even more business model innovation kind of even broader than. These four fourth is potentially the sort of like decentralized network based supply demand dynamics between consumption and the production of our given open source projects primitives either over network or over storage service are what have you? So there's one. Storage network is sort of based on a on a decentralized model called store store j or storage, and they made some announcements a couple a couple months backer a month back around partnering with different storage oriented open source projects or. That sort of decentralized developer oriented business model. So so that you can have more of a fractional alignment of the compensation between the developer consuming a service, and the the author of the of the project producing the service on the network, and and that's also very interesting. But, but I think in you know, we really deeply believe is going to be Steph. I'm going to be more business model innovation, but there should be more business model innovation, and I think the main reason for that the main reason that causes us to have a strong conviction. Here is that we really believe open source software creates or generates orders of magnitude many, many orders of Miami to more value than any constituent can capture and that includes cloud providers. So it cloud providers are building a really differentiated service like say RDS for post grass or my sequel or other say open source databases. But then you also have the vendor ecosystem. And those projects directly building traps competitive, cloud services or competitive products. We we just we just believe that open source software is so widely deployed and sort of so widely permeates the world in so many different environments, and it's you know, it's free to use. So the friction is, you know, basically zero in terms of the distribution cost of of the of the of the code and the project itself that it's actually impossible to calculate this precisely, but we we just believe that there's like sort of a fundamental like math, constant that you could model potentially that sort of will say open source software will always generate and create orders and orders of magnitude more values than any than any constituent in any of those sort of dimensions can capture so cloud providers commercial open source companies like elastic. Like like Cloudera like, many others. And then even even including the creators. And so this is a more controversial topic, even including the authors that they can capture. So we just think like those four business models. If you could sort of categorize them in a way that we have industry agreement are are are necessary. But not sufficient, then we should we should encourage. We should try to move move towards just more business models in general. So at capital, we tend to sort of be be of this sort of inclination that we're not we're not painted around a given business model and generically sort of say, oh, this is the one that works. It tends to be more in textual tends to be more projects civic in in many cases. But. We we know for sure that there. There's a lot of innovation that needs to happen here. And we're going to be very supportive of that sounds like potentially a manifestation finally of the actual developer right is the the open source developer, which is able to generate far more value than they can even capture over proprietary, perhaps maybe maybe one hundred x east like you said at the orders of magnitude, maybe not just an order of magnitude. But the elusive the unicorn tennis developer might just be an open source developer. I think that's true. I think that's true. I mean, what one one way of looking at this is if you if you and this is actually a study where currently working on. So I could give you a quick preview. Some data will be releasing here in some some some research. But if you if you go and survey or interview, say three or four the large commercial open source software companies and I'll just picks out some random ones, I'm not. I'm not not selecting these for any reason other than, you know, just maybe they're good candidates, but say conference. The company behind Apache Kafka say Docker Inc. The company become BB on Docker and the Docker tools, and let's say maybe Cloudera so clutter other company that that's commercializing Dupin recent recently merged with Gordon works. So if you were to go and survey, those companies and say how many people are using those open source projects in in the industry at large. How many end users how many deployments, and then sort of tally up those numbers per company through say, okay? Maybe there's you know, two or three million deployments of Paducah. I'm just kind of picking a random number. It's probably, you know. Smaller might be larger. I'm not I'm not sure for Docker. Maybe it's, you know, five or so million people using the doctor the doctor told chain or Docker Docker container Runtime perhaps for Kafka. Maybe it's you know, hundreds of thousands of of deployments are companies using cockpit. So whatever those numbers are pretty large numbers. Let's say, and then then if you were to ask each one of those companies also how many customers they have how many paying customer entities, they have relative to the number of deployments of those open source projects. It's probably and we've sort of done anecdotal estimations of this. But we actually want to get the hard concrete data to to publish that. So it's useful for the industry and also useful for our founders. But if it's probably likely in in the range of on the low end, a fraction of one percent, not that can actually go and convert over. All the way up to the very high end potentially depending on different constraints situations, maybe three to four percent at the absolute most. And we actually don't think that that's a bad thing. We think that that's totally fine. And and just a function of how open source works in general, you can still build enormously huge successful companies by just converting verse small fraction of users because the value that open source. Creates is always orders of magnitude more than any constituent can capture which is great which is something that I think we should all accept as an industry is just one of the awesome things about open source. This is brought to you by Lynn owed our cloud server choice. It's so easy to get started. And the Lynn dot com slash chains. Long pick a plan pick it this Joe in pick a location and. Leno cloud server. 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It's free to us officials support in enterprise add onto billable works. Once again, go CD dot org slash change. Let's talk about this huge gap is big difference. There's a fundamental difference in many aspects between commercial open source companies and commercial proprietary software companies. And that is why the focus of OS has capital is important because you have specific people like yourself, like your partners who know the difference who get open source and can help guide and invest in those projects. So if you had a breakdown where this chasm is and why they're so fundamentally different helpless understand that. Yeah, that's a that's a really big question. I'll try my best to give you some sort of a concise answer. Maybe in in the context of how sort of building out the the firm in and sort of. Maybe I'll just I'll just constrain that to the first two functional portfolio partners that are focusing on to really core core things that are we believe are very fundamentally different. And and commercial open source software companies as compared to pry teary close source software companies. So if if you look at legal, which which is obviously, there's domain she's extremely knowledgeable. And that's just deep deep experience for for a couple of decades, the legal side of of open source in the business context is one of the most sort of non non standardized, Harry, polarizing complex, and sort of error-prone topics in areas in the industry. And so that's that's probably like the first functional part of of a company that that I could talk about where things are really fundamentally different. So if you can. Bidder sort of a proprietary or closer software company. Approach to licensing. It's pretty simple. It's pretty straightforward. You you you flesh out what you want to build in a design Docker and idea or a napkin or go through whatever product development methodology that gets you to understanding what needs to be lamented. And then you go and build it implemented. And then you find you work really hard to get early designed customers or companies to agree to use your product and give you feedback and probably signed different agreements doing sure that confidentiality is is is maintained. And you know, it's quite a costly process from sort of I highly valued customer to you know, the ten fin the twentieth onwards. It's requires lots of manual efforts with with the licensing side of that though it, you know. That's sort of proprietary company. You don't really think through too many complexities. Terms of the customization of a license or the or the sort of nuances of open source licensing. In fact, if you could actually look at one example, where we have a huge number of startups getting created in fact, mostly software companies and and look at how licensing standardized there. It is actually in fact standardized, and I'll pick on on one really great organization, and I'm not gonna see anything bad. I think they're doing amazing things. But they actually so this is why combinator the Weiss e incubator program in Silicon Valley. What what why combinator has sort of set of standard legal documents that they've sort of distributed out to their their incubator companies companies enlisted in what combinator and they actually do have one for sort of standard subscription agreement for access to software that there, startups, going license and sell to custom. And it's really valuable. I it sort of short circuits the cost and complexity of hiring a lawyer and drafting custom green, and and, you know, figuring out exactly what terms you want to implement because all those things are pretty standardized. Commodore just said, hey, you know, use this template subscription Sast sort of software agreement. Whether it's, you know, an actual SaaS offering delivered over API host on a cloud provider, you're gonna ship, you know, a custom proprietary binary to someone whenever it is just use this license, and it's really helpful. It's sort of. Extremely useful for the for the companies in y combinator because it just gets them going without any friction. There's really dire. Lawyer any Megan oftentimes just get customers to look at that. And it's something that the industry has like sufficiently agreed upon as terms that aren't super complex onerous. That's one dimension. We have sort of standardization of sort of licensing for proprietary close source companies that are building software. Soffer based products. So why why combinator produces something like I think it's on the order of six hundred or so startups per year. So that's that's quite a that's that's that's quite a good reference point on the open source of things though. However, the complexities are astronomical. And so like, you I have to take into account when you open source a piece of software, which licensed, you're going to choose do you choose a patchy do choose the mitt. GPL MP L A Ferro which version of the GPO. Choose what coffee left constraints. Are you interested in in protecting? There's there's a just like a vast array of choices there. However, we've sort of standardized on the open source licensing aspects. So quite a lot of industry around Apache two point, oh being being really valuable, the cloud native computing foundation actually encourages I don't I don't believe it's a hard requirement, but they strongly encourage new projects to use the Apache two point zero license. We also have quite a lot of industry standardization around around the mid season around MP L to which is great which Heather on our team helped right? And was on the team that implemented the MS Mozilla public license version two, and then we also have quite a lot of industry greements on like sort of the trade offs and constraints and the and the reasons why say patchy too is a really good license to standardize on. So let's say. Startup and you say, okay, great. We've got a new project going to release it as an Apache two point. Oh, licensed piece of code. We're going to open up the repo and call it a day, and that's a pretty fast decision. However, when you when you want to build a product around that commercial sort of open source company that that that that that sort of builds on that Apache hatch, even obeys to project you run into all kinds of complexities. It's not it's not it's not a simple matter of saying. Okay. We've got you know, twenty thousand companies using this source project, and we want to go and use the combinator, for example, again, not not on my company, but we're gonna just bolt on bolt on the combinator terms of terms of service and IP warranty indemnification and trademarking and all the sort of template template terms. We're gonna just bolt on that agreement to our open source license and maybe hold backs in code in a private repo. And then just distributed customers. That would not work for for myriad reasons. And so what what what we sort of see with commercial open source licensing in these commercial companies. But we've observed and how there's been very close to this is there are actual fulltime legal teams typically headed up by general counsel, which is a similar role in Terry Soffer companies. But what they do is basically they spend a huge amount of energy and effort. Case by case relative to the projects or the project that the company is based on and they write custom agreements from scratch and the cost and complexity of writing custom agreements for the sort of commercial proprietary bits on top of the open source project, are are very very sort of nuanced and tailored to what kind of product they're building and how they're going to market and what kinds of. Sort of transaction volume looks like in terms of the size of the customer base. How large the deals are how strategic kind of customers are kinds of needs of customers have in terms of the indemnification side of things multiples in the warranties. And this is a huge massive, legal customization that goes into those those agreements, and they're often called MSL essays or master software, license and service agreements. And so we think that on the legal dimension. If so this is like one of the things that we're we're kind of scratching on working on you mentioned comments clause, which which cost quite quite quite an a lot of excitement in the industry, which with which did did did author. I didn't see anything from her. They'll on the response just marking that for sure sure all come back to that. In a second. Basically just just commenting on standardization side of things if you if you look at the opportunity to essentially have a level of standardization. On the commercial like cincy instead of saying Strope and source that we have or the open source licensing part of of projects. So patchy and GPO, let's say being really standardized if we had if you had some industry agreement on the sort of terms and the constraints of how intellectual property is protected for the commercial for the commercial proprietary parts of an open source based product that that would radically. Sort of deliver efficiencies to two large commercial open source companies on one dimension. And it would it would reduce the it would it would reduce the burden and the cost of of frankly, building building product going to market and dealing with dealing with a bunch of other downstream effects that that that come from costly legal legal agreements overhead negotiations, large large contracts, and and many other things that sort of the light the legal sort of how how the legal side of commercial open source company building is very different from the sort of proprietary company buses, very long answer will super Harry, and it's definitely probably the main is probably the main problem space that the people shouldn't help solving right out of the bat or maybe the, you know, as they bring their product to market, it could even they could even. Have implications on how you go about building things. So definitely I mean, huge difference with with proprietary companies license. Very straightforward. Like, you said why see for startups has like a canned thing? I'm sure you can buy off the shelf ones or you can hire a lawyer, and you basically build a license on your done. But for open source corporations are commercial source companies. It's it's a quagmire. So definitely need council. The advice of a place where y'all can bring a lot of value for people getting started is that the bay when you say you're going to give us to know that was a big one. Do you want to dive into another difference? Or should we move forward from the company? I'm happy I'm happy to dive into. So I'll just say top level if you were to sort of stack rank by function, and legal is obviously a really important like super critical function by function by function where these commercial open source companies are fundament. Different as compared to proprietary closer software company. Legal would I totally agree with you legal definitely be at the top of the stack perhaps the second second sort of rung in that stock would be finance sort of how you deal with the counting revenue recognition. Reporting auditing, general PNL management, and and just just overall the finance function. And so we have a Nick Nick white as our portfolio partners for finance, and Nick is really experienced open source company veteran on the finance dementia. He was sort of founding finance -secutive through to the large outcome. So very early on through to the large outcomes of companies like spring source which joined him more of this a company behind spring. Talent where Nick and I worked together many years ago, which which peo- sort of -til middleware company town to the public company now, obviously, he he he he helped consulted a bit with the Horton works. But he was also the sort of founding finance. Finance executive and head at last the company behind last March through to setting them up to PO, which happened very recently Senate Nick has a lot of wisdom and experience there I can go into lots of the reasons why the finance kind of function is very different fundamentally in many ways for open source companies. I mean that that one that one confused me a surprises me because once you get past the licensing, and you now have a model that's working. I would assume for any corporation you have profit and loss works, very similar across all organizations, right or the accounting, you know, the checks and balances so I don't necessarily camp out here for the rest of your time. If you have a hard out here, but maybe just enlighten me on what I miss in here with regards to finances being different. Yeah. That's a good. Really good question. So I'd say that for managing PNL for doing doing doing doing. The sort of duties of finance role in in terms of generally, accepted, accounting, practices, sort of rigor and industry standards. They're just overall, I you know, like legal. I don't I don't think things are radically different. It's it's it's contextual to the approach of applying those functions very differently in commercial open source software companies that that that you start to see a lot of divergence and huge amount of behavioral like uniqueness. So for for example, when you're when you're actually looking. Not managing a budget and an applying constraints and cry Ortiz around where dollars spent for example, and how and how you actually run run a budget and manage. You know, the flow of the flow of money in and out of a company with with commercial open source companies doing a lot of up front. Typically, you're doing a lot of up front. Are Indian development for or forgiven product. And maybe you're also investing pretty heavily in. In becoming really influential core part of the community in the ecosystem around that around that project or the set of projects that that you're that you're building around, and perhaps also maybe you're investing in non product development work, which which is quite different from proprietary companies. And so you sort of recognize and account for those expenditures very differently in an open source company because the value that you'll crew from them is somewhat in directly correlated with your valuation as a business. So it's like you're a venture capitalist. And you're saying, well, we're pouring in. Twenty million dollars into a company, and we expected that twenty million to come out the other end as a business that's generating ten million in revenue, you probably aren't going to have a sort of. Anywhere near the same level of decision. Ing with a commercial open source software company. You might you might sort of relax the constraint of what we're not looking for twenty million in revenue out of twenty million dollar investment. We're maybe we're looking for five million more end users of the prog the project that the company is based on and we want to measure ourselves against spending that capital to achieve those goals. And so it's just it's just sort of the float flow of the investment, and sort of how how the accounting side of things works to to to accomplish those goals is is quite it's quite different. And then also I'll say one thing which is kind of just scratching the surface. It's a much deeper more complex topic. But course, open source software companies the best ones ones at scale, the ones we like researched. And and and sort of observed over the years are geographically distributed, and they're not centralized and fundamentally specialize in one area, and that translates to running the finance function, very very different. Translates. Yeah. It translates into running office office space lease management, the size of leases sort of overall scope of space, send international expansion's ceres, the cost of setting up the subsidiary country, specifically laws there's a lot of things that kind of come out of that. So there's a couple a couple of days to double click on the finance function. But it is definitely one of the things that we think is is is a fundamentally different aspect of of commercial open source companies seeing here too as since you mentioned common clause or comments clause story and just tell me if I'm poke in the wrong direction here, but the connections I've seen that comes close defa Mr. begin with about a month ago. Where you know, who was the relicensing, the the names gap me hate that. What happens here on their readiness Breda's reticence relicensing or some parts of it were the open source sort of the commercially viable open source size of it were licensed under this new comments clause, it credited Stor. It seems that the source code Elise for the license was about a month old wondering Kevin Wang also strategic advisor for you was the open source of that via his company, which is Fossa Heather make grossly was the person. The lawyer who had penned it, and she's also a partner does this capital. And you mentioned the couple times why see in their sort of their way to roll out and make easy legal documents to talk through sort of all you wouldn't do there is that this will orchestrated is at all connected or am. I just reading between the lines here. I would say a lot of those things are connected sort of inter inter related flatly. Maybe maybe just a summarize. Yeah. Maybe just to summarize sort of like a a thought of looking at comments clause, maybe as a steppingstone or building block. There's there's there's there's there's a there's a useful with of I think framing this, which is if you look at the problem, and then reason reason up from there, it's maybe it's easier to understand all the movie parts because there's quite a lot of things happening in this in this area. So I think the pro- the problem can be summarized as we don't have commercial. Open source licensing agreements, we don't really have industry agreement around how implement as protections for products that are built fundamentally on top of a given open source projects or small number of them. Right. And that's where we have all this inefficiency and sort of duplication of effort and a lot of overhead in terms of legal legal effort spent so comments cause was really an effort to protect protect against a couple of things and read reticently has a focus area in in terms of their relationship with cloud providers. I'd prefer to hold off on commenting. They're given that's a pretty hot pretty hot topic. How however yeah. However, the the the general problem space that comments I think is a great building blocks for is is basically trying to get industry agreement on how we can have standardization of some kind or at least some some agreements around. The the legal constraints in the legal terms for proprietary based product that has sort of thin layer of proprietary code or thick layer, potentially even but it's going back to sort of business model implementation on top of an open source project where you already have huge distribution in that open source project, and the base the base the base kind of open source project license is is is agreed upon standardized. Whether it's a patchy GPO, that's kind of general problems base. This is super Shuji complex topic. The way I the way I sort of summarize that there might even be an simplification. But that's the that's kind of like how I look at the at the broad the broad problems. The maybe a real easy. Yes. Or no question might be. This is Collins clause, fundamental to what you're doing with us capital. That's a really good question. And I think what I'll say is comments clause is a good building block. And there's lots of. Benefit to the industry's starting to talk about these these problems with more rigor with with more focus, and I think comments accomplish that whether even even though there's a polarizing sort of dynamic around how you know, certain vendors might before comments caused many others might be against it. I think what's what's happening. What's important is? It's getting a conversation started. And it's it's a really good building block. So on your website. There's four big goals. You have a strategic fifteen year goals and one of those number four is commercial oldest licensed best practices. So this is like a big goal of yours is to help create this similar to the way. Why did with their off the shelf licensing to like let's come around some best practices of how to do? This. You call it kind of a creative Commons for commercial s. And so this is a goal of yours. So tell me if I'm reading correctly what you're saying is right now Commons clause is a stepping stone towards that. It's a beginning point. But it's by no means the end game for the way, you think commercial us companies should move forward. I absolutely hundred percent agree with what you just said. So for sure it's it's it's a really big area. It's it's something that we think is hugely important at like as a big strategic goal like that and comments comes causes a great is a great stepping stone for sure could you just give a quick explainer. Why it so import? I know we covered a bit to put version of it. Like, what is the biggest going to commercial issue that companies face? You mentioned I guess maybe it would take maybe too far potential. But like maybe some rise it what I think is quickly. And then you say I agree with that or no and add to his you need to. But there seems to be an organized effort around hackers that create open source because they're passionate about it. They eventually open source, but a community rotted, everybody thrives conferences kun-bae. Everybody's happy. And then they need to sustain him build a company rod and they do. But then there's threat from cloud providers and other players of his different space, and this is an effort to the stain and build from the creators and originators of a project or community. And this licensing essentially is a pushback against that threat. So they simply protect some very or. Ownership of something not to keep you'll out. But so that they can live and survive. I have my own personal perspective on that. Which is very different. And I tweeted a little bit about pissed. It's very different from the way that Rattus has communicated their intentions behind comments laws, and and I think that as mentioned common causes a building block get potentially be getting some good conversation started. I do not think it's the destination and there's a lot. There's a lot of additional work need to do beyond beyond comments laws to try and really move move. The move the state of the art forward here. I personally do not believe that open source authors or open source companies like elastic Cloudera, many others should be trying to protect against cloud providers. From capturing value that open source offer creates I think that is fundamentally wrong. I'm very. Opinionated here. And the reason I think it's actually wrong is very very well summarized by tweet that Doug cutting who's the creator of we've seen and had Joop sent out. Actually, I want to say a year or so ago, and it'd be really awesome to sort of showcase it in your show notes, but I'll read it out here. And I think it's extremely profound and concise, and I completely agree with it. And so his his comment is it is absolutely insane. And I'm slightly paraphrasing year. But it says it is insane to expect contribution back to open source for Porsche to the benefit from it. And I think that it's very directly related slightly earth on all, but it's directly related to. This topic of trying to prevent cloud providers from capturing value around open source projects because they have no legal obligation. They're actually delivering great user experiences and value to their customers. And they're furthering the distribution of the open source software through their platforms cloud providers have millions of customers. So I don't I don't I don't absorb to this view that we should actually try and prevent the cloud providers. From capturing value around open source. Instead, we should do is try and make open source more widely distributed more widely adopted we should try and push for an open future open source open source future across the whole technology industry across the software industry, and we should try and capture the value in the context of delivering differentiated customer experiences with different approaches. And I think that'll that'll that'll make for a really great future. So too. Maybe transition into the atop this probably much deeper and longer, but we've got about three maybe Ishmael minutes to go through it is that seems to dovetail into maybe the kind of companies enter opens projects you may be funding. So which was the row point of heartcall. We kinda got in the weeds with licensing. And obviously, this is all layered thick and deepen. That's maybe why it's taken thirteen years for some like you and your team to arrive at this table. But. Where are you at with in terms of the types of projects or companies or commercially viable companies are you trying to invest in? What makes them who are they what are they doing? How much you giving whatever you can answer in those questions there. So we start I investment on the first of all Tober actually wouldn't be announced the same day. We announced the firm, and it's it's a company in New York called Dev the deaf community, and they're they're the folks really also folks behind the practical handle on Twitter their social network sort of corollary to me practical dove Twitter handle is aids. Like a read it. But for software engineers, and really awesome community. They open source the whole the whole front site PR workflow for content generation and forgetting gauging developers, and it's really exciting community. So they sort of fundamentally believe that open sources crucial to their to their product. And they're building on on an open source based model. We've done a handful of investment so far done around ten. We're not really announcing details about our our fund for for now. But in terms of the focus area were very very focused exclusively going back to the sort of us in our name around companies that fundamentally depend on an open source project or small number of projects to justify their own existence. And and and that's sort of the definitional constraint that that we're operating under an we're super excited back anywhere. We're not geographic constraints and were very very excited to talk with with folks who contact us and while also reaching out to the teams on on a on a case-by-case basis. Spot for for for people who are interested in learning more chatting with us. There's there's contact info on our website s dot com. Bubble and books can always D on Twitter as well that works to the deal and even on your site. You do have sort of this version of his well redefine. What commercial open source companies really are forgiving company heavily relies on. And or builds an open source project or projects as the fundamental building block justify its core products slash service existence. It is definitional a commercial open source company. So good job undefined. That's the sort of the hard part in most cases, when it's so new and so fresh yet thirteen years later right of or thirteen years earlier thirteen years, whichever lead me won't apply there, but definitions are certainly helpful. Because it it definitely let you draw a line and understand where you're operating where this is new territory just been awesome conversation heaven this. In doing the rest of guitar universe. We'll definitely have questions of the futures will afford to talk with you for them road. And in the closing the close out with or you know, Superfund this is this is a real real thrilled that you guys thanks for having me on same here. Thank you very much. Tuning in this week giving through the show tunes for apple podcast rating review, go into overcast favorites link share with a friend. And of course, think awesome, sponsors and partners hired Lynn owed Ingo CD. Also, thanks to fast, the are bad with partner facet icon to learn more. And we're able to move fast big things here change because of roll bar. Check them out at calm and were hosted on widow cloud servers at Lindow dot com slash change, low support this show. This episode was hopeful myself at covy can g Santo editing was by Adam Clark and mixed in master, by me music is by the ever awesome break massive cylinder. If you wanna hear more episodes like this -scribed or master feed at chiens, well dot com slash master org. Onto your podcast app and search for change master. You'll find. Subscribe get all of our shows as Wilson extras that only hit the master. For listening. We'll see.