Lessons from Joseph Jacks

Joseph Jacks, a prominent venture capitalist and a staunch advocate for open-source software, has shared a wealth of knowledge through his writings, interviews, and public appearances. As the founder of OSS Capital, he has been instrumental in shaping the narrative around commercial open-source software (COSS).

On the Future and Dominance of Open Source

On the trajectory of open source: "We think instead of software eating the world, which is kind of true, we think something more important and more kind of disruptive is actually happening, which is that open source... is eating software itself at a rate that is faster than software is eating the world." [1]
The inevitability of open source: "Over time, open source eats everything." [2]
The shifting paradigm for companies: Rather than asking “why should we open source our code”, these companies will be asking “why shouldn't we open source our code?” [2]
The expanding reach of open source: From Netflix to Uber to social networks to payments systems–all software verticals will become open source because the benefits of making your software open source outweigh the costs. [2]
The value of open innovation: "Software developed in the open with a high-touch collaborative model means the pace of innovation is inordinately greater than proprietary models due to immediate and rapid feedback from users." [3]
The future of enterprise technology: "Open source software is reshaping enterprise technology." [4]

On Commercial Open-Source Software (COSS)

Defining a COSS company: Jacks suggests a more accurate name for what people typically call an "Open Source Company" is a "Commercial Open Source Company." [5]
The appeal of COSS: "Why Commercial Open Source Companies are awesome." [5]
The investment thesis: OSS Capital is the "first and only venture capital firm focused exclusively on open-source software." [6]
The contrarian view that paid off: "To say that open source companies would be a thing, where there's going to be like tens of billions of dollars getting invested in that category sounded insane five years ago. It sounded like totally crazy." [1]
The holistic impact of open source on business: "It's much more holistic it's kind of like you know fundamentally different on kind of all Dimensions. it changes everything it changes you know culture and hiring. and go to market and business models." [7]
Capitalism and open source: "I believe capitalism is the most effective means to foster positive behaviors, and commercial open source startups are ideally positioned to spur innovation in this space." [8]

On Investing and Conviction

The essence of conviction: "Conviction and Belief are essentially synonyms. To be convinced of something is to believe in it. This means that conviction is extremely subjective, qualitative and personal." [9]
The dual belief in founder and idea: "For me, I must both believe in the idea and the person behind the idea. I've actually never invested in just a person without deep clarity and appreciation for the idea as well." [9]
Identifying the obsessed founder: "To reach conviction about a person requires me to believe the person is absolutely maniacally obsessed with the idea they are working to manifest into reality. They can't not do it. They lose sleep over it. It is not work, it is their purpose." [9]
The investor's own obsession: "I must also be infected with the idea myself such that I want it to exist as badly or maybe in some cases EVEN MORE badly than the founder themselves." [9]
The importance of decisiveness in founders: "The best founders I work with are extremely decisive and take in new data constantly, iterating on that new data and improving what they are doing very rapidly, what almost feels like in real-time. This process should be like breathing." [9]
Shooting for high returns: "We're going to shoot for 100x. and we're going to accept nothing less than 50x." [6]
The necessity of long-term holding: "You will not make money unless you're patient. and you hold for multiple years at an animal." [6]
The scale of opportunity: "The opportunity set is enormous — at a minimum 500 times the entry price of what I'm paying. Ideally 1,000-10,000 times." [9]

On Technology and Innovation

The Four Freedoms of Free Software: Jacks emphasizes the fundamental importance of the four freedoms defined by Richard Stallman, which grant users the freedom to run, study, redistribute, and distribute copies of their modified versions of a program. [10]
The profundity of the Four Freedoms: "I would put them up there with like you know some some physics. level you know uh loss so things like gravity or energy and stuff like I I would put them I would put them close to certain things like that." [10]
On the evolution of AI: The new world of artificial intelligence with non-deterministic models like Llama and ChatGPT is fundamentally different from traditional software. [11]
The significance of Bittensor: "We believe Bittensor represents the most vibrant community and network focused on accelerating decentralized and truly open AI for… Read more." [12]
The potential of decentralized AI: "Joseph is an early pioneer in open-source development—the key force behind decentralized AI." [13][14]
On Kubernetes' potential: In its early days, he believed for Kubernetes to reach its full potential, it MUST be a community-driven project. [3]

Learnings from Joseph Jacks' Journey and Experience

The power of blogging: Jacks' extensive blogging about commercial open source helped him learn more about the market and solidify his investment thesis. [1][7]
The genesis of KubeCon: He founded KubeCon, which is now the world's largest cloud-native computing conference. [4][15]
Early enterprise Kubernetes: He founded Kismatic, the first enterprise-focused commercial Kubernetes company, which was later acquired. [4][15]
The value of timing: "I was extremely lucky with timing." He acknowledges the role of market conditions in the success of raising his first fund. [1]
Differentiating users from customers: He stresses the importance for COSS companies to differentiate between their users (of the open-source project) and their customers (who pay for commercial offerings). [5]
Community contributions are an indicator: "External contribution to open source projects is a very good indicator of uh the fact that you've built something that people resonate with and they care about." [11]
Open Core Summit: He created the Open Core Summit, a vendor-neutral conference for the COSS ecosystem. [16]
The importance of principles: When starting OSS Capital, he "wanted to preserve the principles of open source and really like deeply like integrate them into the way we do into into our investment thesis." [6]
The challenge of building a COSS company: He acknowledges the inherent challenges in building a commercial open-source company. [5]
Freemium vs. Open Source: He discusses the distinctions between freemium models and true open-source models. [5]
Standing on the shoulders of giants: "We would not be here without Richard Stallman we would not be here without his brilliance. and what he invented and and and you know maybe some would say arguably discovered." [10]
The nuance of "open source company": He points out that companies themselves are not a technology and therefore cannot be "open source" in the same way software can. [11]
The role of a founder: He highlights the immense responsibility of a founder, stating "very few people are really prepared. and ready for that kind of uh that kind of Journey." [11]
The power of a clear thesis: Focusing exclusively on COSS allows OSS Capital to have "a lot of clarity." [7]
From salesperson to investor: His early experience as a salesperson at Talend, an open-source company, provided him with foundational insights. [7]
The impact of major open-source acquisitions: The acquisition of companies like MuleSoft and Red Hat in 2018 were significant events that validated the market for open-source companies. [1]
The importance of continuous learning: He emphasizes that the best founders are those "who are able to (and do) continuously learn and “level up” their skills and comfort levels to more and more complex environments." [9]
The non-necessity of external contributions for success: While a good indicator, "it's not necessary nor is it sufficient for Success." [11]
The long road to success: It took nearly three years to raise the majority of OSS Capital's first fund, with most of it coming in during the 2021 bull market. [1]
The birth of an idea: The idea for KubeCon was an "obvious idea" that he and others like Kelsey Hightower felt someone just needed to execute. [1]
The value of deep expertise: His partner at OSS Capital, Heather Meeker, is a renowned lawyer specializing in open-source licensing for over 20 years. [7]
The intersection of open source and startups is "strange": He notes the unique and often misunderstood dynamics at the intersection of open-source projects and startup businesses. [1]
On knowledge creation: "The more explanations. you have the more knowledge creation you have uh and the more knowledge creation like the better we're able to like cure diseases and solve problems." [6]
The purpose-driven founder: He looks for founders for whom their venture "is their purpose. They are pulled in, not pushed in." [9]

Learn more:

Lessons from Joseph Jacks

On the Future and Dominance of Open Source

On Commercial Open-Source Software (COSS)

On Investing and Conviction

On Technology and Innovation

Learnings from Joseph Jacks' Journey and Experience

Written by Antoine Buteau

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