From open-source to a unicorn with Milin Desai, CEO of Sentry
Error tracking and APM (Application Performance Monitoring) tool Sentry was founded as an open-source tool in 2008, a solution to the frustration its founder David Cramer felt because he had had to talk to 10 sys admins to get access to logs he needed to fix if he broke something in production.
Cramer launched Sentry as an open-source product, and there was never much discussion on whether that was the right way to go, not even when Chris Jennings joined Cramer as co-founder.
The idea for Sentry has always been to bring that solution to as many developers as possible, and the open-source route was the only way. Sentry is now used by 4 million developers, has been bootstrapped for a long time, and has raised 217 million dollars in six funding rounds. We’ve talked to Sentry’s CEO, Milin Desai, on the journey from open-source project to unicorn company on and off the Infobip’s Shift Miami conference stage.
Desai describes himself as a “developer who moved to the dark side, which is the business side,” which makes him the perfect person to discuss open-source as a business model and how to turn open-source projects into unicorn companies.
Bring value + be affordable = developers will choose to pay
Sentry founders, he shares, just wanted to get the solution to as many developers as possible. They just started building it in the open and for the community.
Desai: The product had to be open-source. The reasoning was: If we deliver value and do it well, people will want to pay, one way or the other.
We make sure our service is always accessible and affordable, and because it’s so affordable and so easy to use, developers choose to pay us. The other option is to run it yourself, but then you have to set it up, upgrade, and maintain it. Why worry about all that when you can pay just 29 dollars a month not to have to? That’s the equivalent of five Starbucks coffees.
“Just be open-source, and millions of developers will use your product” is easier said than done, especially now when hundreds of open-source tools and products compete for engineers’ attention. How do you get the hearts and minds of developers?
How do you create a community around your product?
We chose not to go for maximum dollars, and we went for maximum adoption.Milin Desai, CEO, Sentry
There is no easy formula, and it is hard to do.
One thing is crucial, the product has to bring value to engineers. Are you building just another library that’s nice to have but not essential, or is it something critical that significantly moves the needle for them?
There’s no magic trick to getting to developers. If they find your product useful, they will use it and talk to other developers about it, and your product will spread like that.
Also, get their feedback and listen to them, show them you’ve heard it – you won’t be able to fix everything right away, but you can acknowledge it and show the community you’ve listened to them. There is no other magic tool!
The business model of open-source
Sometimes it takes years of building the community and building the right product with that community. Sentry was bootstrapped until raising 1.5 million $ in 2015.
Desai: There is no secret to building a sustainable business with an affordable open-source product and, even if it wouldn’t make you millions in revenue from the start, there is one metric to tell you if you’re on the right track: the number of users.
We’ve always had the philosophy of growing sustainably. It’s a simple business; if you’re spending too much, not making enough revenue, and not growing fast enough – you’re in trouble!
It comes back to if you’re delivering the value in the first place and if you understand the value you’re delivering. You won’t make millions from the start, but you will grow.Milin Desai, CEO, Sentry
We’ve had thousands of customers to sign-up for Sentry daily, so there was no doubt we were delivering value. If you’re not, of course, no one will use it, and no one will pay for it, and you’re in trouble.
Packaging, not pricing, is crucial
Founders, especially the ones with engineering backgrounds, often think pricing is crucial for building a sustainable company from a tool they’ve made to solve their pain points. Desai disagrees:
Desai: It’s packaging, not pricing! Founders should spend a lot of time figuring out what should be included in what plan, making sure the product’s main value is included in the entry-level plan, and what would drive someone to level up.
Milin Desai, CEO, Sentry
If you get the packaging right, you can always change the price. Packaging is super hard to change!
What if an enterprise customer shows up with a big check and a request to build a few features just for them?
Sentry’s motto is to never build for a few but to build for many. We’ve been in situations like that, and we turned them down because it did not fit what we had in mind for the company and the product.Milin Desai, CEO, Sentry
We need to talk about funding open source
Desai agrees with Kelsey Hightower’s take that the open-source movement is and has to stay the source of innovation in tech. They also agree that the industry still needs to fully figure out how to turn open-source projects into sustainable businesses.
Desai: There is so much talk about open source, but we need to talk more about how we will fund the open-source. When we solve that, the pace of innovation will accelerate even more.
Many companies still habitually use numerous open-source projects and libraries without a second thought about their sustainability.
There is still a problem in open-source of developers contributing their time and expertise, and nobody’s paying them. Large companies are using many open-source products and not contributing financially, and I would say they’re abusing open-source. When using OS products, you must think about how you will give back.
Many big companies, hyper scalers, use a lot of open-source libraries without ever thinking about whether developers maintaining them are paid or not. We have to hold them accountable for such behavior. They get the most value from the open-source community and rarely give back.Milin Desai, CEO, Sentry
But Desai thinks we’re on the right track to figuring out the business of open-source:
Desai: Some companies give back through regular donations or by employing engineers who develop open-source projects they share with the community.
At Sentry, we encourage engineers to work on their open-source side projects, and we pay extra to our engineers who contribute to libraries that we use or let engineers decide which project they want us to donate to. The idea of giving back is an easy one for us.
We became what we are because of the open-source community that supported us. Sentry’s CEO will also share more in detail at Shift Zadar on how Sentry has used their product to grow into a software company used at 95,000 organizations and a vibrant community of 4 million developers.
To hear more about Desai’s thoughts, check out the recording of his fireside chat with Ivan Burazin.