Insight
Waters: Multibillion-dollar software companies succeed by catching megatrends, not commoditizing incumbents
“History tells us that the largest software companies in the world that get into the hundreds of billion in valuation, that's not what they did. They caught mega trends.”
Disclosure
Waters: Pivotal kept its user interfaces closed source while open-sourcing infrastructure
“One of the decisions we made is we made our UIs closed source. So everything about the infrastructure of the platform is completely open source. And we chose to make the UI and that last mile of experience built off the APIs. Closed source.”
Insight
Waters: Proprietary UI components help open-source companies differentiate in enterprise procurement
“Procurement is exceptionally good at pricing a certain kind of thing, which is labor per hour. So I've seen very large software contract orders and procurement will actually pick on the labor per hour because that has a near comparable. And so when you start t…”
Insight
Waters: Upselling support for active open source deployments is unsustainable
“If you're coming in and upselling support only, and they're already installed, And all you're upselling is the support model. That's going to be a lot more difficult because they already have it running. They already have it working at their scale. And all the…”
Insight
Waters: Enterprise software startups should target $400k to $1.5M annual contract values
“I think a hundred is too low. Like I would try to get to. 400 to 1.5. And the critical thing that happens at that is not that you extract more money. It's actually that you can be a better advisor. Like you can actually put talent on the ground and you'll find…”
Insight
Waters: Open source companies fail by selling support instead of targeting C-level buyers
“So many open source companies have died because they transact around the edges with like director level or technician level with, for support. And they never got to the CTO, the CIO and true strategic account control like the big players had.”
Opinion
Waters: Red Hat benefited from a rare Unix-to-Linux platform shift
“Red Hat kinda got lucky and find a commoditizing change, which was Unix to Linux. That's an rare event to have a major, you know, chip system re platforming see change.”
Assertion Not checkable as stated
Waters: Enterprise buyers use open source to guard against Oracle lock-in
“So what buyers are trying to escape from, and one reason they want open source as a Protective measure, even if they don't use it, is the right to keep using their software without paying more and more for it every year. Companies like Oracle have been out the…”
Insight
Waters: Avoid founding closed-source software startups without a unique niche
“So I would probably not start a closed source software company today unless I had a very niche novel idea that I felt no one else would try to do because quickly there'll be an open source alternative to what you're trying to do if you do not open source it.”
Assertion Not checkable as stated
Waters: Early MongoDB sold $4,000 support contracts to thousands of users
“And I remember meeting MongoDB when they were early in their rise and they were selling, you know, a 4000 dollar support contract to thousands of users.”
Insight
Waters: Open source 'dog piles' destroy potential for $500M revenue
“If you're in an open source dog pile, as I mentioned in order of caution, it's especially rampant. That can actually drive your entire upside of ever being a half billion dollar a year software company. Like your probabilities go down really hard.”
Assertion Contradicted
Waters: Sun lost hundreds of millions overnight making OpenSolaris free
“Well, what happened was that overnight, like hundreds of millions of dollars of revenue evaporated.”
Insight
Waters: Open source is now a required buying criterion for enterprise IT initiatives
“Open source is now both a necessary part of almost any major software company strategy because it's a buying criteria that, you know, enterprises have for major new initiatives.”
Insight
Waters: High enterprise software pricing reflects outcomes and trust, not support
“It's expensive because you know, the trust model of enterprise buyers is you're really going to take care of them, advise them, ensure outcomes. You're not just providing support.”
Insight
Waters: Open source communities must align with enterprise buyer priorities
“Community development's really important, but if you just develop a little community, and it doesn't change a CIO, a CTO, anyone that's writing as serious as checks priorities, like by definition, you didn't build a software company that had an opportunity to …”
Assertion Supported
VMware bought open-source SpringSource for over $400M
“SpringSource is like the most popular Java programming framework in the world, bought by VMware for pretty famous money, over four hundred million dollars as an open source project.”
