The Dual Flywheels of Modern Open Source Commercialization

Open source your core

This is the foundation. Your open source project is your top-of-funnel, your credibility engine, and your moat against incumbents with bigger marketing budgets. It's how developers discover you, evaluate you, and eventually trust you. Don't hold back the good stuff—the core technology needs to be genuinely useful on its own.

The community-to-commercialization path is a well-documented dynamic for open source businesses, especially in open-core and managed-service models.^[1][2]

Build a managed SaaS around it ASAP

Don't wait until you have "enough" open source traction. The SaaS offering validates that real users will pay for convenience, reliability, and support. It also forces you to understand the operational complexity of your own software—which makes the OSS better. Revenue from day one (or close to it) changes how you think about everything.

Keep the OSS and SaaS flywheels spinning at roughly the same speed

This is the hard part. Both flywheels feed each other: OSS adoption drives awareness and trust, which drives SaaS trials; SaaS revenue funds continued OSS development, which drives more adoption.

The balance doesn't have to be perfect, but you need both moving. A thriving OSS project with no commercial traction is a hobby. A SaaS product with a neglected OSS core will eventually lose to someone who cares more about the community.

If one starts spinning faster than the other, redirect effort to compensate

Watch for divergence. If your OSS is blowing up but SaaS conversions are flat, you have a product or positioning problem—fix it before you build a community that never converts.

If your SaaS is growing but OSS engagement is declining, you're extracting value without reinvesting in the ecosystem that created it. Either imbalance becomes harder to correct as you scale. The goal is synchronized momentum, not optimization of one at the expense of the other.

Measuring the flywheels

For OSS, traction metrics include GitHub stars, issues opened, pull requests from external contributors, Hacker News upvotes, Discord/Slack community activity, and conference talk invitations. For SaaS, the best early metric is ADUM (Active Deployments Under Management)—when a human has clicked "Create Deployment" and is getting active value from the service. This matters more than signups because it captures real usage. As you mature, shift focus to traditional SaaS metrics: paying customer count (logos), MRR/ARR, net revenue retention, and churn.

— Ry