Being an Open Company: Watermelon's First Month

First month metrics for Watermelon

• Weekly Active Users: Not measured yet
• $0 in MRR (prev $0).
• New Users 87 ⬆️ (prev 0)
• New GH Stars 65 ⬆️ (prev 0)
• External PR contributors 8 ⬆️ (prev 0)
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Finding Project-Market-Fit

First month into the books and we’ve learned a lot. We released our MVP to the VS Code Marketplace and have been absorbing information like a sponge. 

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Most of the time we’ve been finding project-market-fit. This means generating traction for our open-source tool and quickly iterating on the feedback developers give us. Focusing on user growth and retention initially is what the best companies in the category have done. 

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Having an open-source business has its trade offs but the benefits outweigh the costs. We see it like this: The bad is that we have to build more in order to monetize, and that by itself this is a hard category to monetize. The good is that if we can monetize, we can tremendously scale. By being open-source we’re getting a lot of attention (leads) and we’re also being more transparent with the developer, they can scrutinize our code to see that we’re not doing anything wrong with their code (like storing it). This drives adoption for us. 

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Open-Core as a monetization model

We've decided to use open-core as our monetization model. We will start building proprietary technology on top of our open-source offering this month.

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What this means is that our GitHub integration will be free. Building the best integration of Git with VS Code will take us very far. We can add value to teams who develop software solely with this integration. 

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Then, other integrations such as Slack which is the one we’re building next, will be charged. Our hypothesis is that by integrating information from other knowledge sources, we will be able to provide mission-critical value to larger engineering teams, therefore monetize this. If developers get to know us first thanks to our GitHub integration, they can later upsell us to add more integrations to make their lives easier. 

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Focusing on GitHub as a community

We're re-focusing our community metrics towards our GitHub repository engagement. Doing so orients us towards getting the benefits (traction) of being an open-source company. We also have to confess that we built a 50+ person Discord community but we haven’t seen great engagement. We wanna try out migrating our community to Slack to see how it behaves. 

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Community is a new moat for open-source companies. Growing this community creates a sense of momentum and signal that a technology is becoming a new technological standard. Because of this, community members are less willing to evaluate an alternative. 

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There is no single best metric for evaluating the strength of a GitHub community as a moat. We’re choosing the number of non-employee contributors per month since it’s the one that’s harder to game. It forces us to be more disciplined. 

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Traction Experiments

We have blogged about being an open company and technical Git tutorials. This is working to get installs and also GitHub stars.

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Our installs are also coming from VS Code’s marketplace within the desktop app. We suspect that this is a product of us posting about Watermelon in different communities we are part of plus a little bit of word of mouth. 

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Regarding external contributors, we are getting them by hand. Literally pinging friends on WhatsApp, Twitter, the phone, inviting them for a beer, etc. to help us with this (although some acquaintances have contributed without us telling them). This will give us momentum to get contributors outside our networks. 

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Finally, we tried email marketing. We cold-emailed engineering managers at tech startups with 11 to 50 in headcount. Both the open and the reply rates were poor. We suspect we should increase the headcount and change the role to product manager/head of product to get a better response. 

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What’s Next

• Polish our GitHub integration enough to have someone use it in production constantly, not just once
• Try out a series of small, paid acquisition traction experiments
• Get our first MRR