Monetizing Open Source with Peer Richelsen (Cal.com)

Discover the secrets behind monetizing open-source projects with Peer Richelsen, co-founder and CEO of Cal.com.

In this episode, Peer shares his journey from a frustrated calendar user to a pioneering entrepreneur raising over $30M to create Cal.com, an open-source scheduling platform. 

We explore the challenges and strategies involved in building an open-source business, including the dynamic where large corporations benefit from open-source tools without contributing back, and how the top 1% users play a crucial role in making this type of business sustainable.

Peer shares the importance of recognizing product-market fit and how it led to a successful launch on Product Hunt. He emphasizes the value of community contributions and provides a candid look into the transition from a paid-only beta to fostering a tight-knit community. 

By comparing different community dynamics and discussing platforms like Slack and Discord, Peer reveals the strategies behind building a dedicated user base and how to manage growth effectively.

Gain practical insights on monetizing open-source software through nuanced strategies that balance free and paid offerings. Learn from case studies like Tailwind and Cal.com, and understand the challenges of self-hosting software. 

Peer also delves into the intricacies of setting global salary benchmarks for a distributed team and aligning investors with the company’s vision and values. 

This episode is a treasure trove of lessons on building a sustainable, community-driven business while maintaining a solid foundation for future growth.

Chapters

• 0:00 Monetizing Open Source Business Strategies
• 6:31 Building a Successful Open Source Project
• 16:36 Building a Community With Open Source
• 28:04 Monetizing Open Source Software
• 41:21 Benefits and Considerations of Open Source
• 57:17 Global Salary Policy for Remote Teams
• 1:08:52 Remote Work and Company Culture
• 1:20:30 Building a Business With Good People

Transcript

Peer Richelsen: 0:00

You see this landing page of an open source library and it says used by Facebook, Netflix, Amazon, right, and then you scroll down and you see donations by Steve and Anna and you're like what? Like how is Steve and Anna donating and Facebook and Amazon and Meta and everyone's using this for free and no one donates back To me. That's the opposite of of the strategy of open source. It's almost like a social welfare system where the top one percent of customers should pay for the bottom 99 and if you can figure out a way to do that, now you have a free product. People love it, they start using it, they share it with others, they share it with enterprise companies, enterprise companies keep paying. Free product gets better and as long as you can get this cycle going, you're always in a better shape than trying to monetize the bottom 99%, which is really hard.

Ariel Camus: 1:01

Welcome everyone. This is Ariel Camus, and you are listening to the Only Thing that Matters the podcast where I interview successful founders to deconstruct their path to product market fit and uncover the principles and frameworks behind their success. My guest today is Peer Richelsen, the co-founder and CEO of Cal. com. Peer has raised over $30 million from Cal. com and has built an open-source scheduling platform for individuals, teams and builders, offering a more flexible solution than traditional calendar tools. In this episode, we dive into the key strategies for building and monetizing a successful open source business leveraging a community of eager contributors to achieve product market fit, embracing the open startup movement. And the principles of building and managing a distributed global team. We also discussed his strong opinions on offering global salaries.

Ariel Camus: 2:09

I hope you enjoy this conversation a lot With all of Peer Richelsen . Hello Peer, it's so good to have you here. Thank you so much for joining us today. We got to know each other, like during the COVID times, supporting each other through those, you know, difficult moments of adapting our work, our companies, our way of approaching work, and a lot has changed since then and I look forward to catching up with you today on everything that has happened with you as an entrepreneur and your company, happened with you as an entrepreneur and your company. Um, let's start with that, like, can you give me a little bit of? Uh, yeah, what is cal? Um, if you, when you explain it to people, how do you explain what it is?

Peer Richelsen: 2:52

yeah, yeah, first off. Uh, you were hosting office hours doing covet and everyone was like anxious as, and so you, you kind of like ease the pain, I guess, of COVID and pandemic, so thank you for that. Ariel was hosting founder meetups online, which is fun. What is Cal? I would say what Cal isn't. It's not a calendar, as may it sound like. We're not a cron alternative or Vim Cal or Amy, we don't do any calendar UI.

Peer Richelsen: 3:29

I'm incredibly happy we're not doing that because I think it's there's so much micro interactions with a calendar and people think, oh, it's just a calendar, but like it is a very, very long and strong, like long roadmap to get to a point where people are like, okay, this is nice.

Peer Richelsen: 3:48

So we only do the scheduling part and we do the scheduling for individuals, for teams and for builders. And we just recently launched the builders part where, if you want to build anything with Cal. com, you want to build a marketplace, you want to build a SaaS tool that has a scheduling component, a telehealth platform where users are booking users. It's very different to all the other scheduling tools that want to connect my calendar with my customers. So that's called Cal. com platform and that's a more developer focused tool where you get like a set of apis and front-end sdks and ui kits. So really we're doing both the consumer facing kind of scheduling tool where you as an individual sign up and it makes it super easy. The same way I joined your link to to book this podcast, um, so that's like one one part of our business. And then recently last uh, last monday we launched a developer focus one perfect and and it makes a lot of sense.

Peer Richelsen: 4:55

I think the approach you took to launching first the b2c side, the consumer side, um, the way that I think about it, at least in the current product that I'm building, is it allows you to just have to satisfy one stakeholder and then, once that's incredibly good, then you can move to the B2B side of things, for example, and they're also more homogeneous, right Like, the type of customer reaching out that signs up for a consumer-facing product is a generic person who wants to do meetings right, it's very different than a developer who has 5, 10, 20 different ideas of where they want to build this in Like, the platform product has inbound from anywhere from, as I said, like, healthcare to hiring marketplaces or ADHD coaches or group violence sessions. Right Like it's such a different market. Each customer, each lead is such a different beast than reaching out to every founder to do their fundraising with Cal. com. Right, like, that's a little bit easier to start with in the beginning.

Ariel Camus: 6:08

Makes total sense and I'll ask the question that I know you're well prepared to answer, and it's how is this different from Calendly? Right, and I know that is probably part of the origin story of the company. I would love to hear how it is different and how did cal come to to be what it is today yeah, no, I mean hands down.

Peer Richelsen: 6:31

I was a calendar user for many years, which is also why I'm still very, very much interested in this industry. I think it's very hard to just look at the market and start to do something that someone else does If you don't know the background, like the context right, like you need to become an industry expert. And when we met, I was building leanhirecom I don't know if you remember and that was a marketplace to connect remote, actually founders for initially founders only with remote companies, only with remote companies. And I always keep telling the story how I used Calendly as a scheduling infrastructure to make the meeting happen. Right, so very easy product you would. During the onboarding flow where you create your account, there was a string input that sounds like copy paste your Calendly link and then, if we find a company, we just forward that link to that company in the email.

Peer Richelsen: 7:26

So very easy stuff, so very simple prototype. But as we got more traffic and more people, we realized that A, we don't see if a booking happens because it's a black box, right, you just send the link and they don't report it back. And second, people may not have a Calendly account. They copy it and paste it with a typo. They forgot to upgrade their account, so their link is a 404 and needs an upgrade. And others are just straight up not willing to pay for it or they don't want to use it, but they still want to use your product. And so after a while I was looking into the market and to me, having been in the industry for so many years, I know that open source solves that issue. Whenever you want something more custom that you can integrate into your product that's more sustainable and long-term and you can make changes and make you really feel like it's your product.

Peer Richelsen: 8:24

I always look for open source projects and alternatives or repositories and I went on Google and asked for, like Calendly, open source, like that's literally it, and I was hoping to find a popular GitHub repository and just start cloning it and couldn't find it. And the same way, I couldn't find it. There was many posts on Happen News and Reddit of other entrepreneurs or developers asking the same question, right and so if you're an entrepreneur and you see other entrepreneurs struggling to find a solution that they really need, like these threads have like hundreds of messages like no, I don't know a solution, but let me know if you find one. Right, like if you find that type of product and you have that pain yourself, I think that's like basically a light beam shining on you telling you to like you should probably start looking into this direction. So I just started an open source repository, really with no intent to commercialize it.

Ariel Camus: 9:28

I still was running lean, higher as a business, um, and then eventually that github repository just gained more traction than the initial business how, how did, how did you validate or how did you decide that something that was an open source repository with no monetization behind it, with, I guess, uncertainty on well, to a certain extent, uncertainty on the willingness to pay? I guess there was some certainty because people were paying for it candidly and that's cool. But maybe the type of people looking for an open-source alternative had lower willingness to pay, not just need for more versatility. So what did you do to say, okay, let's check if this could be a business?

Peer Richelsen: 10:20

Well, it's good if people reach out to you and ask you for like hey, how can I pay you? That's always a good sign. Did that happen? Yeah, I mean we've had like after launch, by the way. So we launched on Product Hunt Product went absolutely crazy. Product of the day, big one yeah, like 2,000 something upvotes, probably one of the most upvoted products by now, I agree, something upvotes probably one of the most upvotes upvoted products by now.

Ariel Camus: 10:46

I agree that that's really um, I see products of the day going with like 500, sometimes like like 91 000 votes and, yeah, like 2 200 200 yeah, and so that is.

Peer Richelsen: 10:56

That is a sell shock right to me as a founder, to my co-founder who you know actually worked on on 90 of that prototype at bailey, um, and but also that makes a. That has a reason why it's so popular, right, because people are craving and looking for it, um, and so, yeah, we from day one we even had like larger corporations reaching out. Um, none of those deals like converted in the early stage because your product is just very horrible and shit, but some of them we converted a year or two years after. But when you build something that has just a sell-shop moment and we talk about this in YC also a lot of finding product market fit is like you know it when you have it and you can't really describe it otherwise. And product market fit typically also comes with a commercial market fit typically.

Ariel Camus: 11:48

Yeah, when, when you did the launch, I think that was like April 2020.

Peer Richelsen: 11:55

2021, I think 21. Yeah 21. You were in the Thomas. Now, right, that's it.

Ariel Camus: 12:02

Yeah, yeah, your anniversary Actually, yes, very close.

Peer Richelsen: 12:05

Which day?

Ariel Camus: 12:06

of April, was it, do you?

Peer Richelsen: 12:07

remember. Yeah, let me open my product. I'm not sure we should celebrate. That's funny.

Ariel Camus: 12:14

It happens to me all the time as an entrepreneur, we I know there's so many anniversaries Exactly, and we're so focused on the future and the next milestone and we forget to celebrate the past. But we also fail, I think, very often to celebrate the, the little victories of the moment because we're always chasing something else, and it's such a big um lesson for life, right like the importance of celebrating every step, because I don't know, at least to me, there is no guarantee, especially as an entrepreneur, that there is a big destination out there.

Peer Richelsen: 12:43

So you better enjoy the journey, otherwise you're setting things up for failure 100 absolutely um so where do I see that 15th of april, wow, okay, so really on the day two days ago again yeah, and we did. We did launch on the 15th of april again. So, wow, that's nice. I mean we always try to launch on the 15th, but I didn't know it was actually also the same day, so oh, pretty cool oh yeah, so you, you recently had the 4.0 launch and okay, I, I get, I hadn't paid attention to the specific dates.

Peer Richelsen: 13:15

That's a cool one, um if you go back in time, every major release is on the 15th, even the minor ones. So we launch every month on the 15th, even the minor ones.

Ariel Camus: 13:24

So we launch every month on the 15th. It reminds me to the way that Apple used to do releases. I think having a date that forces you, that rallies the entire team to make something amazing happen, I think it's a very powerful thing.

Peer Richelsen: 13:37

It's the best thing we ever came up with. And, to be honest, we actually and I got a little bit of heat by some engineers, but, like we also do our versioning as Calvary I don't know if you've heard of it. So, semba is, when you have a breaking change, you make a major update. So you like inform people that you know if you go from 3.0, 4.0 is a breaking change. I never liked that because I don't think the average person cares, nor you know, sometimes you ship something and you don't know it's a major breaking change.

Peer Richelsen: 14:09

And so there's many things where I'd rather make sure we don't have any breaking changes ever and we've been very backwards, compatible in the past and then really focus on have a yearly cadence. So if I look back, if I see someone out in the wild using Calicom 3.0, I know, okay, that's a year ago, right, it's much easier than 3.74.56659. I'm like, is that a breaking change? I don't know. And so, and from a marketing point of view, you just make it so much easier to communicate, like where's the state of the product? And you know, after 12 same firefox is like version number 27 or something like. You just know if a product is mature and I, I, if we tell people every year we launch a major release and and it's at 5.0, they know the product's five years in the making, so it's like roughly five years um.

Ariel Camus: 15:00

So we? We spend so much time often focused on the features, on the technical side and we forget that we have to sell right.

Ariel Camus: 15:07

And sometimes very simple messages even if in their simplicity is where the key is right, and just not complicating the versions, but also using them in your advantage to be able to sell. It makes total sense. Let's talk about selling. You mentioned that often with product market fit comes some kind of a commercial success as well. At which point, before or after you launched officially Product Hunt, the first version, you started seeing revenue. How were those early days of actually starting to charge for the product?

Peer Richelsen: 15:40

Yeah, we actually made revenue before we gave people access to the product. It was very interesting. It was a time where we had launched the website, we had launched a prototype, but it was barely functional really, and we almost oversold our vision on the landing page of more of a promise market fit than a product market fit, where we know we could build these things. We just haven't gotten the time yet to to ship these, and so we had kind of like these, um, uh, angel donation almost, where it's like, um, like a, a pre-sale race, really right, like a pre-sale of the product. And so, I my surprise, we've done like a decent amount of money, like a decent amount of revenue. Before we had certain things ready, which is great because the revenue graph goes from, you know, zero to something rather quick.

Peer Richelsen: 16:36

And the second thing we did is we started with a paid offering only. So when we released the beta, after like two, three weeks after product, and we we had it paid only, which means you, in order to use the product for free, you would need to self host. So it's always an option, even up to this day. It's an. It's an option with a easy docker file. But, um, we wanted to really work with people who care, and that's the one who pay you right, they care and they give higher quality feedback. They stay around longer they they are, they want to be early, they want to be you know, user id number 37, right and and brag about it. And so we had this really small niche, maybe like a couple hundred people that really loved the product, and then we just closely worked with them. We invited them into our Slack channel. We had this big monolith Slack channel, so we had a community mixed with our core team. We had no separation.

Ariel Camus: 17:49

These were contributors to the codebase, or some of them were just suggesting.

Peer Richelsen: 17:53

Customers, contributors, fans.

Ariel Camus: 17:57

They didn't need to pay for that. They just needed to be committed to making the product better.

Peer Richelsen: 18:01

Yeah, yeah, and so one interesting metric was just to see how the community grows. Because if you're an open source, you want to make sure that you have a good developer and community ecosystem, and so having everyone in Slack decreased the amount of friction to talk to people. You have a general channel where everyone's asking questions and then if someone has an issue, I can make a new private group with an engineer from our core team with that customer right. So it's really easy. Immediately stopped, like immediately started breaking. Once we had like 3000 people in the channel, because now it's like the wild west and it's like it's really horrendous for larger communities. Um, I do like the idea from like zero to 200 people. Um, it's, it just feels magic to like have everyone in one channel and kind of like be working on this together.

Peer Richelsen: 18:58

But, um, after a certain stage, we just move to discord. Um, frankly speaking, I don't even like discord nowadays. I think it's a hot mess of notifications. I, I don't think it's, and it doesn't help with seo, it doesn't help with searchability. People ask, keep asking, the same questions over and over again without doing any research. I, rather I might be moving off of discord in the next couple of weeks or months.

Ariel Camus: 19:24

Makes sense, but in this initial zero-to-one stage, being able to talk to your customers as YC, pounds over and over on us. It's so, so, so important, and you can do that because it's a small little volume of people. But do you think this can also work for non-open source companies? How will you do it differently, if any difference, if you are not an open source company?

Peer Richelsen: 19:53

Well, I mean, I think there are examples of large communities that are not open source. I think Raycast comes to my mind. They are like a bit of a hybrid where all of their app store extensions are open source. Um, because they they they had the correct analysis that that, um, github is the best place to build apps on, like integrations. Um, the core product, raycast, is not open source, so I would not put them in a open source bucket, but at least they have a very, very active community and ecosystem.

Ariel Camus: 20:27

Because I guess the commonality is not open source but you have people building stuff for the product and I think that allows them to have this very closed, tight-knit community where you can talk to people very closely.

Peer Richelsen: 20:40

Yeah, and what they've found out is by empowering people to make it super easy to build apps. The same way, google and Android and iOS try to make it easy for you to build apps. I mean, that's everyone's incentive really to make it as easy as possible. So I think they found a good way to have their marketplace on the web while still owning, being the gatekeeper of what goes in and what not. I mean, ideally I'd love to have Raycast fully open source, but I don't think that's going to happen. Other communities yeah, I mean any company that is community driven in the first place, right, like companies like On Deck, maybe companies like yours. You probably want to have a community.

Ariel Camus: 21:26

Yc is, at the end of the day, a corporation, a VC firm, absolutely and for those of you that might not have gone through YC and I would love to hear your experience, pierre. But like having access to Bookface, the private community for YC founders it's crazy the value that I get from that, like almost every day of my life. It's insane, and I think it's the only email that I open religiously is the daily digest of what's happening there.

Peer Richelsen: 21:55

What's going on? I don't know if your experience is similar. Same. Yeah, it is after all these years and all these new people and people complain about our batch W19, that it was too large. It was the largest batch, I think, up until then, and they were like, oh, what if this reduces the quality.

Ariel Camus: 22:18

But I think YC has always been it's just more quality people, really, it's more of good, and so, uh, quality hasn't really decreased ever and that's really hard for a community to grow it's really hard to do and I guess you got a taste of the opposite as you scale into getting people that probably show up to the discord server just to get support and not because they're invested in making the person better, and spam and scams and insane expectations to an open source repository, like they demand you to reply within five minutes because they didn't install npm before and they run.

Peer Richelsen: 22:57

They run npm and it doesn't work. And you're just like bro, like come on, like I have to do stuff, you know, yeah, there are better places to ask about it or figure that out.

Ariel Camus: 23:07

But uh, yeah, it's hard.

Ariel Camus: 23:09

It's hard unless you like spend a lot of time and I guess there is um probably a disproportional amount of value that you can get from something like that in the very early days. Because, you know, I think there is something really important about, uh, your story, the story of cal, is that it was a need that you had right and that gives you insights into the what makes the product successful. That it's much harder to get if you're building something for a target audience that you're not part of. But even when you are part of your target audience, there is always variability and I think being able to talk to them in a very direct way, um, it's super important. I I've had to go through the painful process of having to like try to schedule calls with people for interviews, um in in maybe moments where I didn't spend as much time building that community, and it's so much harder to engage people and you can try to offer, you know, money, vouchers, discount stuff, but it feels so different when you had invested in the community and they just want to reciprocate the value they're getting from being part of the community. But just spending time with you and telling you stuff, like, I think, if you can generate that, that's amazing and I can clearly see that as one of the advantages of open source and I would love to get a little bit deeper into open source. I think that's something fascinating that you bring into the world of how to build companies.

Ariel Camus: 24:31

I think probably for a lot of people, and especially like for some entrepreneurs, they might think wait, but if I give away, you know my code, the whole thing, how can I really make money with this? And I wanted to read a quote from a quote that you wrote. I wouldn't be surprised. And it said like going head to head as a SaaS company against existing market leaders is a fool's errand. Hence we are doing something similar. We are doing similar things in a fundamentally different category open scheduling and there is a concept like the open source, the open sort of that I would love to go a little bit deeper into with you. We started talking about it, but in your experiences, what are the, the, the advantages and the disadvantages? Why going open source?

Peer Richelsen: 25:16

yeah, um, so I actually I don't know know why I removed my blog on my personal page, but I used to have a blog post that said like to open source or not to open source? And I had, like this what is this again from Shakespeare, the posture. And I don't agree with the idea of just looking at Cal. com and applying everything we do to an entire different product, slash industry, because it's not like, let's pretend open source is a technology, right, whenever a new technology comes around. There's two types of entrepreneurs, right, the ones that have an existing problem and now they're like oh, what if this technology can solve this? Right? And then there's the other type of entrepreneur and I don't want to be rude, but most of them are less successful with whatever they're doing, and they take a look at a technology and they and they try to come up with a problem like what can I solve with this technology? And so you and once you this is courtly, you know like as a, as a hammer, everything's a nail and um, and you start to let's say, oh, I like I get dms of people saying I want to start an open source company, but I don't know what to work on. I'm like that's not how you approach anything. That's the same problem you have with crypto, the same problem you have with AI. It's like I want to build an AI company but I don't know what to work on any ideas. I'm like you're clearly looking at the wrong picture and the thing always goes back to the problem, right, like I had a problem and I could only solve it with open source. If you have the same problem that you can only work, solve with open source, you're in a great business and so when and also if that's a great market, it's a big market and it's probably also commercial market then you're in a great place.

Peer Richelsen: 27:21

The projects that I find hard to monetize and even open source is kind of famous for lack of funding, which I partly disagree with but there are projects that are just really really hard to monetize. A programming language is very hard to monetize because you and me, we would never pay for React, we would never pay for JavaScript, we would never pay for Nextjs, we would never pay for a more advanced router. Developers fucking suck when it comes to paying. They make six figures, but paying five bucks a month for React to use them sounds ridiculous. For good reasons you wouldn for React to use them sounds ridiculous, for good reasons, right? You wouldn't pay to use English.

Peer Richelsen: 28:04

It's just such a core thing, fundamental thing, and so I think if you head out and you build a better React, you better know what you're doing. I think Tailwind is an amazing example how they've probably made a million dollar business by now because they understood very early on we can never monetize the fundamentals. We need to build on top of these fundamentals and package them up and sell them to people who really care. And you know, tailwind UI is all of their pre-built components for a one-time fee. Maybe they have a subscription by now, but to me that's clever. And so there are ways to monetize these more fundamental, lower level things. I'm pretty sure if Facebook cared, they could find a business model for React. I'm happy they don't. Please don't commercialize React, really. But so long story short, as long as you know what problem you're solving, I think you will be able to monetize it, and as long as you have an added service or added product on top that uses your fundamentals, I think you're in a good place.

Ariel Camus: 29:25

Why will someone pay for using CAL instead of just using the free open source version like self-hosted?

Peer Richelsen: 29:34

Well, that probably goes back to every self-hosted product. Running software has limitations and issues and it's time consuming keeping things up to date. Secure your own servers I mean, most developers nowadays don't even run their own servers anymore Like we use the cloud or we use serverless or we use whatever comes. Whatever you know gets us to success. I think a lot of people underestimate the saving power of self-hosting. I typically say self-hosting is more expensive. Even the enterprise license we sell for self-hosting. So Calicom is an open core. We have a 95-ish percent open source github repo and then there is, I'd say, five percent of the code base is enterprise only and these are like audit logs and and fcim and and all of that like workspacing and stuff. You as a hobby engineer or even as a small startup or agency, never need you. You will never need these products. You wouldn't even know they exist really.

Peer Richelsen: 30:43

So these 5% we monetize. We require you to have a license, but you can have it on the SaaS plan for free not for free without setup or you can self-host, but the self-hosting license is actually kind of pricey. So if people reach out to us and say, hey, I want to save money, but I want your enterprise license, we typically tell them like, I don't think you're the right customer and so self-hosting is never really a way to save money really ever. It's more about being in charge of your own data, making changes, changing every line of code, being on your own upgrade schedule. Some people don't want to upgrade. That's perfectly fine, as long as they patch the vulnerabilities, security issues, and so I think, instead of taking open source as something that's cheaper than other companies, you change the perspective on like this is more than other companies give you so if let let me try to summarize this to see if I if I get it right what you're saying is that by making it open source, you get way more people to contribute to making the product awesome.

Ariel Camus: 31:58

You have this community of highly engaged users that you can learn from. That can help improve the product. Then for many of them, in the early stages, it's expensive to run their own servers or to even host the open source version on the cloud, because you have to maintain that and that takes focus away from your core business, which is not scheduling. However, as the companies grow and maybe they do have, you know, a larger team, they can afford, like you know, and then it's compliance, so it's actually a need.

Peer Richelsen: 32:31

At that point you say, okay, we are open source, but we will reserve, uh, strategically, a series of features, uh, that you will have to pay a license for, so that we don't get the largest clients, who are the ones that can pay the most, actually getting this for free, completely correct yes, 100 and um, if you look, if you take a look back at the, the dark side of open source this has happened so many times where, um, you see this landing page of an open source library that does something, converts a to b, and it says used by facebook, netflix, amazon, right, and then you scroll down and you see donations by steve and anna and you're like what, like how Steve and Anna donated and, and Facebook and Amazon and Meta and everyone's using this for free and no one donates back. There's no commercial engagement whatsoever. Um, to me, that's that's the opposite of of the strategy of open source.

Peer Richelsen: 33:36

To me, I think the top one percent is really like. It's almost like it's like a social welfare system where the top 1% of customers should pay for the bottom 99%. And if you can figure out a way to do that, not only do you have a amazing free product, right, like, our free product will always be more of more high quality than any one of our competitors, because we have this big, strong enterprise pipeline that just subsidizes everything. Right. And it's a vicious circle because now you have a free product, people love it, they start using it, they share it with others, they share it with enterprise companies. Enterprise companies keep paying free, product gets better and as long as you can get this vicious cycle cycle going, I think you're always in a better shape than trying to monetize the bottom 99, which is really hard makes a lot of sense.

Ariel Camus: 34:28

Otherwise you're like failing to capture most of the of the lessons there right and have you had any case or maybe do you know of anyone that that did this wrong? And by trying to charge they end up, like you know, getting their community mad and destroying that precious community. All of all the time, of course.

Peer Richelsen: 34:48

yeah, I mean, um, I think, uh, I I big fan of docker and its founder. The founder was our yc partner and solomon and they had and they had a similar issue where they went after consumers and enterprise and I think eventually I don't remember fully, maybe I'm wrong, maybe you need to correct me in the show notes, but I do think that they sold part of the enterprise business to another company to do all of that stuff and then they doubled down on the consumer facing and they tried to charge a monthly fee for developers. And every developer was like, well, fuck you. And again, that's the perfect example why you would probably not pay for React per month to use React, because for them, docker is just a scripting language to run containers. They don't understand what it means to you, know what the value is behind it. So, yeah, that definitely happened. I don't know if Docker went back. I think they went back and focused on enterprise again. To me, that just makes so much more sense because every engineer eventually works at a larger corporation anyway. So like, if you can win the engineer, you win the enterprise. Like that's just how it works.

Peer Richelsen: 36:02

There's other examples there's tons of open source companies that change the license and try to bully you into whatever getting a license. I'm really not a fan of these delayed open source licenses that have popped up. You know where they say it's a commercial license, but in two years uh, versions two years older are open source. Like me, as a maintainer, I never want my community or any customer to be on a version that's two years ago.

Peer Richelsen: 36:33

Two years ago we launched like two years ago is fucking dark shit. Like if we had this license, we would not have been open source up until this point. And and then now people are allowed to use the two years old code base that's full of bugs, full of vulnerabilities, full of issues. They would spam my discord channel about bugs that we've already fixed. Like I don't know who came up with that type of concept, but you're basically saying like a big fuck you to the whole community saying like everything's commercial, you can still contribute. And then in two years, you know when everything's, when we're already, you know, far away in puppy land, you can use the leftover crumbs, I suspect that is a solution to a different problem.

Ariel Camus: 37:24

I'm speaking out of intuition here, but that once you are far ahead but you have customers that don't want to migrate to newer versions for whatever reason, and you can't afford or don't want to, like you know, bother maintaining the older versions or like keeping the backwards compatibility, you have to say, okay, sorry I can't help you, but at the least I can open source this. I look good on paper and you get to maintain it for me. And who maintains this will?

Ariel Camus: 37:51

also help me with the other clients that have this old version. Um, otherwise I like it sounds like a really bad way of creating an open source company if you start just with that version.

Peer Richelsen: 38:02

None of these companies, in my opinion, should call themselves open source companies, because they're not open source first. They are open source second, and that's also fine, but I think you want clarity. Also, how do you even keep track of what two years has gone? Do you need to check in? I need to wait one more week and then something gets open source the feature that I need that was shipped in one week, like, come on, like, nobody keeps track of that.

Peer Richelsen: 38:28

Yeah, my, my philosophy has been um, everything's, even the commercial parts, are source available, right, like, you can look at them, you can copy them, you can change them For a commercial use. You need a license. Now what happens? We have like a little bit of a DRM check that like pings one of our endpoints and sees if you have a license key inside your environment variables and if it's a valid one, it returns true. If it returns true, your component gets unlocked and you can use it. So, obviously, any engineer that was born in 2000 or in the 90s knows how to remove drm. That's like the easiest stuff ever. You just remove that function.

Peer Richelsen: 39:07

Um, and we specifically have comments about, like, if you remove this without a license, you're violating the license. It's a copyright issue, yada, yada, yada. Of all these three years. This has happened once that I I'm aware of, and I reached out to the founder. Um, the founder wasn't even aware. They hired a third-party contractor who clearly didn't give a shit, um, and they rectified rectify that issue. And um, my point of view is, the types of people who violate your license are the ones who will never pay for your product in the first place, and so if you give it to them for free, you just need to be okay from an ego point of view. People are using your commercial stuff, but don't be offended by the fact that you're making less revenue, because you would not make that revenue in the first place right, you're not losing.

Ariel Camus: 40:00

You are not losing business, you're not losing anything.

Peer Richelsen: 40:03

I have never seen a well never say never. But it's very, very rare that a large corporation such as the companies we sell to actually go into the code base, remove drm, open them up to millions of litigations, potentially, like that engineer gets fucking fired if the cfo or this, the, the gc, finds out about that. Absolutely so you're in a hot mess and it's way easier for you to ask procurement to get a license key than to spend an entire day removing drm and doing all of this illegal, literally copyright illegal stuff. Um, and so I never woke up and be like oh what if Amazon takes out our DRM? I don't think that's ever going to happen really no, no, no.

Ariel Camus: 40:47

It doesn't make sense for those large companies to do something like that.

Ariel Camus: 40:50

I completely agree, and I think the good news for anyone who is considering starting open source is that you have now a lot of like companies. I can I can think right now, like github, for example, having you know publicly traded company that you know is has an open source model from the beginning, super successful, um, but I'm curious about and I've never had to go through this myself. I'm curious if you have some kind of like framework. Maybe we can come up with it together. For how do you make the decision? Like you said before, you don't start open source and then figure out what to build that is open source. You find the problem and then you decide does open source make sense for this product and this solution? How do you make that decision? How do you like evaluate, for example, will I make more money by being open source and by being, you know, not non-open source? Like will I be more successful by any definition like? How do you make that that decision?

Peer Richelsen: 41:49

yeah, again, I think it really boils down back to your, your industry, um. We and knock on wood were very fortunate that we're working on a product that a lot of enterprise and highly regulated industries and and um, just larger corporations like desperately need um, and so we've always had a good sales um habit and muscle of selling like six-figure contracts early on um and and and so, and these are deals that we are winning because we're open source right.

Ariel Camus: 42:24

Why is that? Why open source allows you to win contracts.

Peer Richelsen: 42:27

For compliance, for compliance, for they need it on-prem. They want to self-host. They also want to look through the code. They have their own independent contractors that they hire for code audits and security vulnerabilities. And open source Even Elon Musk has said it publicly in an interview is known to be the most secure technology because you have a million developers.

Peer Richelsen: 42:50

I don't know how many times our README has been opened, but it must be over a million times and we have like 500 contributors and a dozen third-party researchers that try to find holes in our code base. It's one way to reverse engineer an API and try to find vulnerabilities, but if you actually see how people have written code, it's so much easier to be like okay, there's a check missing, I can get into the system. So after three years, we've had no breach of anything. We even have people who started implementing a more advanced encryption authorization system than before. We've had a community contributor adding 2FA factor login just because he was like, hey, I think this could be fun. And I'm like, yeah, let's do it.

Peer Richelsen: 43:44

And so you know, when I say open source makes better products, I firmly stand by it, because there's just so many things that an engineering team can build and all of the rest typically gets thrown into a roadmap that you will never look at again. The classic backlog problem. When the backlog is is public and and you may even start incentivizing certain things with bounties, with algoraio and some other companies and products, you start to see where you know the the Pareto of like 20, 80 80 20 rule. Right, like your team works on the 80 percent of the most important things, but the last 20 percent will never be done. Well, now you have a community that does the last 20 percent, and these are small PRs, bug fixes, vulnerabilities, even small features that are not really of high priority, but it's. It's nice to have them for a bunch of people, and so I would say open source builds the better products, but also the more secure ones as a side effect.

Ariel Camus: 44:48

Really, I want to go back to the, this idea of like being able to work on stuff that you wouldn't work otherwise. I'll get back to that in a moment. I want to maybe recap or summarize something you said before so that it's clear. Maybe there is more that you want to add to this.

Ariel Camus: 45:04

I asked you like why will someone decide to open source? And there are a lot of benefits, right, and but one you said makes a lot of sense also because connected to the business side of things is that if you have companies that are highly regulated, uh, or, you know, massive in size, which also are have companies that are highly regulated or massive in size, which also are the companies that can also afford paying the most, they will be more likely to need, for compliance reasons and also for auditing processes, to have the self-hosted version, and open source facilitates or actually makes that possible, makes that possible right. So that is a great, I think, way to think about it, because it's aligned with the type of customer, enterprise, customer that will allow you to capture a lot of the business value, so it's terrific. Is there any like principle or indicator that you should not go open source? Like going open source will be a big mistake.

Peer Richelsen: 46:01

Yeah, I'd say there are a couple. I think to really make a business work in open source. It's a bit of a I wrote about this at Cal. com slash about as well. When you're, let's say, when the SaaS business captures 50% of revenue, the open source version captures 1% of revenue. I said this before 1% pays for the 99%.

Peer Richelsen: 46:32

If your market is too small to and you multiply your market by 1% and you come up with a total revenue of, I don't know, 500K or a million, it's really hard to go beyond that Because you reach your total market cap really quickly if you only monetize 1%. I mean, I don't know how much the total market cap of Tailwind CSS is. It's every JavaScript developer really, every developer, web developer, really. So that's a huge time, it's a huge market and I don't think they have 1%, even Probably a half a percent maybe. So be aware that when you build something in the open source, it cannot be an open source marketplace to buy and sell fish. It's not a market where you can monetize 1% of enterprise sales. There's no enterprise company that sells fish as a marketplace that needs a highly customized open source marketplace to buy and sell fish, right. So, of course, just an example. But be aware, when you choose to be open source, try to find the largest market of your interest, because it's going to be hard to monetize Not hard, but you will probably disregard 99% of the market to make revenue. And also, if you don't have a, we actually introduced a free plan after we felt comfortable with our product and comfortable with our support, because you also want a free SaaS tier because otherwise the alternatives people are self-hosting and you don't want to cannibalize your own traffic. Really you want to make it the same offering. People have self-hosted. You should have hosted just for ease of use, and I don't like it when people say it's paid only on hosted and then it's like here's the red lead to host yourself and no one ever does that really.

Peer Richelsen: 48:32

So my recommendation is if you are interested in open source, well, first you've got to have a really really big problem that you can only solve with open source. Best um examples are emails. Everyone uses email, um, maybe video calls maybe you want to build the largest video conferencing tool? Um, maybe you want to build um the next uh, spotify, I don't know, doesn't make much sense to be open source, but maybe with AI you have a new way of generating. Maybe it's an open source Spotify that's powered by AI, where you have open prompts and people can share their prompts publicly and you can make music together and stuff like that.

Peer Richelsen: 49:15

So at any given time, Cal. c om is very different to all of its pre-processors. Right, it's, it's a successor, it's different, it's, it's, it's um, it's better in my opinion. So if you build something open source, have a big market and try to be better, you have to be better. If you're just, if you're just a free, open source alternative to something, you'll always be a free, open source alternative that fucking sucks. You won't raise funding, you won't hire the best team, you will never build the best product and I think that's kind of like the open source 1.0. That's just been a like.

Peer Richelsen: 49:50

Compare LibreDocs with Microsoft Docs or Microsoft Office it's a clear loss. Or Thunderbird Mail knock on wood has been great back in the days, but it's just not a good client if you compare Thunderbird with Superhuman or even Gmail, to be honest. So you kind of really want to double down on building the best product, regardless whether you're open source or not, and by building an enlarged industry, by capturing 1% of the revenue, you end up product, regardless whether you're open source or not, and by by building in a large industry, by capturing one percent of the revenue, you you end up building a good business and that leads you to to build the best open source project awesome thanks for sharing all of that and it's interesting, and probably somehow connected, that uh, you're not just an open source company but also an open startup and you have this like uh, you have a lot of data about the company publicly available in the website.

Ariel Camus: 50:45

How did you get to that? And, by the way, I'll make it well anyway. No, go ahead. I would love to hear your perspective on this.

Peer Richelsen: 50:53

How do we start? Yeah, pretty much day one really. Me and my co-founder, we sat together we said, well, we're already sharing code. Of course, it's hugely inspired by other companies. Uh, open startup is nothing we've invented. There's a. It was actually more popular in the indie hacker bootstrap space, which is kind of interesting because all of them went back to like removing their open pages. If you take a look at all the famous bootstrappers on Twitter or Xcom, they all, kind of like removed their data. I've always been a big fan. It made me feel closer to the company. I felt more invested.

Peer Richelsen: 51:30

If you're into sports, you care about all the statistics of how many defense a person had, how many scores, how many assists. Right, like, that's just interesting. If you're into sports, you want to know everything about your team. To me, having an open source project, you're already sharing code. You're already sharing your issue backlog, your communications, your Slack. Everything's open, everything's public.

Peer Richelsen: 51:56

It feels more alien to then keep stuff for yourself, right? Especially when it comes to shared success. Right, you want to showcase your community? Hey, this is how it's going. Here's where all your energy.

Peer Richelsen: 52:11

You know like, remember people who are working on open source. They do it on a weekend, because they really want to work with you. They really want to improve and improve their own product. So what's better than going back to them and telling them hey guys, hey, everyone, listen we've grown 40% month over month. Here's all the data. I think there's nothing more exciting about that than contributing to a project but also seeing its success in real time. And then the open startup, open salary policy that's something, I'd say, that is even more controversial than sharing numbers. That is also something we haven't invented. I mean, nothing's really invented in 2024. Some of it is still with AI, so Buffer and some other companies were sharing the salaries for a long time. I've always been a huge fan of transparency within companies. We could have easily just made this internally right, and that would have been already a dramatic step for most companies.

Ariel Camus: 53:17

That's what we've done for like five, six years. And it's a huge game changer internally. Appspot I think it's another company that does that, but they have an interesting philosophy on why not sharing salaries particularly, and I think the principle is we can share everything except stuff that is not just ours to share, and if I share someone else's salary, I'm sharing information that is not just ours to share, and if I share someone else's salary, I'm sharing information that is about the person and it can have implications Like I want to make this up, you know, like family members or friends, knowing they make a lot of money going to them and asking

Peer Richelsen: 53:51

for something and I and I always found it very interesting To interrupt you here We've never forced people to do that. We, we've clearly said it is an opt-in policy. Uh, there's no peer pressure. Even if you feel like it, there's no negative connotations if you don't do it, nobody really cares like within the team. But if you, if you want to be part of this movement and you're fine with it. I think so far we've only had three people who did not share their salary for like undisclosed reasons.

Ariel Camus: 54:23

Whatever reason, yeah, yeah, exactly. Do you still share it internally in those three cases? No, no, no, not even internally. Fair enough, yeah.

Peer Richelsen: 54:32

Okay, and so it's. I mean, the manager knows who hired them, right? Yes, of course, but no, I think it's people and I got a lot of negativity from investors or other founders that said like, oh yeah, this is cute in the early days, but this will not scale with you. That doesn't even go into the whole global policy, global salary policy, which is even more fringe and controversial in my opinion.

Peer Richelsen: 55:01

So what I've learned over the past three years is global policy, global salaries, public global salaries, um, or, the best way to keep fairness. It's the best way to fight racism, gender, gender um, what's it called? Uh, pay gaps, wage gender, pay gaps is that what it's called?

Peer Richelsen: 55:22

yeah, yeah, um discrimination among whatever, yeah, any, just it. Really it's impossible for me to hire a junior engineer at this rate and another junior engineer at another grade. Um, but there's no way I can be racist to one or the other. Uh, because it's all the same. Like for you to make more money, you need to become a mid-engineer, senior engineer and, uh, lead engineer eventually. Um, it's, it's more fair.

Peer Richelsen: 55:56

When it comes to work equals money. You know, we all have this concept of like if I work, I make money, if I work more, I make more money. If I work better, I make more money. How is it that remote companies and it?

Peer Richelsen: 56:09

I understand that not every salary works in every country, but to me, the fact that a junior, fresh software engineer who's written the first line of React comes straight out of uni in San Francisco gets an internship for a hundred grand, and then you have a senior engineer in India making maybe 75 or 50, half of the revenue, and you all come together in a retreat in Portugal, on both sides of the world, and one person makes twice your salary, just because they were born in a high expense state. Cost of living yeah, as a manager, I should not care what your cost of living is If you cannot make it work, don't apply for my company. And like this is where this is. This is all public. Like sure, we discriminate against people in the Bay Area, but also, truth be told, there's work outside of the Bay Area, that's fantastic, and that is.

Ariel Camus: 57:09

That is because the benchmark salary use is too low for the Bay Area, but it's probably very high in almost every other place. Exactly which market do you use as a reference?

Peer Richelsen: 57:23

We kind of have a combined, mostly because me and my co-founder are spending time between New York and Europe, so we kind of took a New York and Europe salary and like took the average really.

Ariel Camus: 57:35

So it's like between in on the ocean kind of, and so but you use your the two founders kind of reality to then set the benchmark for everyone else in the team. Yeah, yeah, okay.

Peer Richelsen: 57:48

Okay, okay, perfect, and we also use pave to like make sure it's not outrageously low, outrageously high. But, truth be told, probably 60 to 80 percent of our team make way more than their market rate and what does that mean? You attract the highest quality of people in those markets, right? Like, compensation is a key factor for incentivizing the team, but also hiring quality people is a key factor for incentivizing the team, but also hiring quality people. If I have the choice, let's say you take 150K or maybe 300K total comm, including equity.

Peer Richelsen: 58:22

If you get a junior engineer in the Bay Area and you get the most senior, diehard engineer in another country, like, who do you hire as a manager? You probably hire the best person, right? Um, and so that's been, that's been something where, uh, we've had just amazing success and also from an ethics point of view, um, that person the bay area will find a job, that they will always be fine, they, they will find a job, they will find find an internship, they are fine. And also, even if you end up hiring them at like 250, they are like six months away from getting a better offer from Netflix. So it's just not an interesting market for me, and same thing probably also true for New York a little bit different, but that person you hire at 150, that's four times the salary of the local market is incredibly loyal, incredibly incentivized, incredibly senior, incredibly smart, incredibly interested in your company, and that's the talent we want to attract.

Ariel Camus: 59:30

really, one of the common arguments that I've heard, for example, from the founder of GitLab, against having this global salary is that it goes against and I think this is a very subjective thing and I would love to hear your thoughts on this business purely as a business because you are overpaying on one side, meaning that that's money that you cannot spend on hiring other people that could allow the company to grow faster, get bigger, capture more business value, and so it's also detrimental for everyone in the company because at the end of the day, especially if you're giving equity to people, people will end up owning a chunk that is much smaller. Like how do you rationalize, uh, your decision against an argument?

Peer Richelsen: 1:00:20

do they also give less equity to people in cheaper, in low-cost countries? I don't think so um, wow, okay but then, then, what the fuck is that even? What does that even mean? Like you get compensated for your work, right, and that's the principle of work. Like if, if, um, if you work in germany and you hire a job, you get hired for a job, your next person should earn the same money, right, like yeah, I think, by the way, it's job, right it is.

Ariel Camus: 1:00:51

is it's the business side versus the principles, right? No, I understand.

Peer Richelsen: 1:01:00

But to build a business is just a combination of people you hire, really Like it's just a team of people you hire, and if you try to see your team from a cost analysis, not from an impact analysis, I think you're already in the wrong boat. Just be honest For me, to save money, I hire one person less. It doesn't make sense. Let's say you have 10 people. They all make 100 grand just for math Simplicity.

Peer Richelsen: 1:01:33

To cut everyone's salary by 10%. It's much easier, grand, just for for math simplicity, to to cut everyone's salary by 10. It's much easier to just let one person go right. So much easier. Like get, I think my future company reduces the amount of of c players. That that's the one that dragged down the company, not the mental model of like. Oh uh, you know that that you said of like it drags everyone down. It drags everyone's compensation down. No, get rid of bad performers first and have more room for high performers. And you know, I don't think this global policy speaks against high performers.

Ariel Camus: 1:02:09

Really, if anything, you attract high performance in outside of the bay area locations no, I agree with that, but I think the argument is not so much that you attract bad performers, but then you, because you can hire fewer people, you end up with, uh, suboptimal capacity to grow the business, which means why?

Peer Richelsen: 1:02:28

would you be able to hire less people, Like if I have a global salary that is below SF market? I have friends who run in-house SF companies with four engineers and they spend a million dollars a month in costs.

Ariel Camus: 1:02:43

And I'm like why would you do that? And I think that is the unmeasurable upside of building businesses outside of the Bay Area right. In today's world. If you adopt a more remote, friendly policy, little policy, you're going to attract amazing people who are around the world without having to compete in this crazy market in the Bay Area. Of course there are other disadvantages of not being in the Bay Area. I've lived there for like six years and there are advantages, right.

Peer Richelsen: 1:03:10

It's amazing to be there? Yeah, absolutely, but it's amazing for founders.

Ariel Camus: 1:03:14

Let's be honest, it's amazing for founders to be there. Yes, it's a horrible place to hire people.

Peer Richelsen: 1:03:22

But also to live. Listen if I hire an engineer, look at our team. People live in Spain, italy, argentina or some of the most beautiful places. We also have a bit of a nomad stigma to us but, like people, are able to choose in our company where they want to be without a pay cut. If someone moves from and this happened many times I think we've had nine people in total that have moved countries many times. I think we've had nine people in total that have moved countries from London to New York, from San Francisco to Manila, you know all the way on the other side of the cost spectrum.

Peer Richelsen: 1:04:00

I've moved five times. Since then. We've had a team member who went from India to Dubai, which is a really, really stark contrast. And all of this because we have a steady global salary income. It empowers people to be in charge of their life, and life also means where you live. Right? If we had a localized salary for India, we would always lock people into that local market. They can move a city, maybe, but they will never move from India to Dubai.

Ariel Camus: 1:04:35

Why wouldn't they move to Dubai?

Peer Richelsen: 1:04:36

Because the salary just doesn't empower you to make that move. What if?

Ariel Camus: 1:04:39

you adjusted the salary to Dubai, if they moved to Dubai?

Peer Richelsen: 1:04:42

Well, okay, then this person has to call me as a manager and the typical manager says sorry, that's out of budget, like maybe next year, Okay, so it gives you less control.

Peer Richelsen: 1:04:51

It's different. Empowering people means there's no gatekeeper empowering empowering people means you're in charge, you can. You can live your life. Here's how. Here's how. Like guardrails. Like you, you probably have a tough time. It's not impossible, but you have a tough time to live on 150 in new york or in san francisco, right, that's just. You know it, but it's not great. But if you fly to Argentina now and you have a US salary income, you're going to have a great life. So make a choice, really.

Ariel Camus: 1:05:23

So you are accepting the trade-off of like there are places that are outside of our. You can still move to the Bay Area, but I'm not going to be able to like pay you a salary, then you will get a more competitive salary. You, that means you're willing to say no to people that want that, or you or not. I cannot adjust yourself in that way and you're willing to lose people because of that reason. But that's fine because of all the other advantages that you gain on the other side bear in mind.

Peer Richelsen: 1:05:48

Bear in mind we we don't have the. We have this global policy for for pay bands for junior engineer, mid-engineer, senior engineer. Um, maybe junior designer, mid-designer, senior engineer. We've never hired more than one designer, but our team is mostly engineers. When we hire a head of something, now that's a different tier, right, that's a and.

Peer Richelsen: 1:06:11

And the truth is now, your, your salary comp changes. Because when there's great upside when it comes to engineers, let's say, in in eastern europe or india or latin america, chances are the vp of sales, the head of engineering's the uh, you know, vp of technology. They are in other parts of the world, they are closer to where the economic innovation happens. They are probably in the Bay Area, probably New York. So now you need to readjust your thinking of okay, what's my total time of employees and what's the best salary for that one? So, yes, I'm not saying we're cheaping out, but will be, we are and we will be paying salaries that make sense in other geographics, right, so there is a chance that a vp of engineering makes more money than someone else because the total time of where we can hire this person is much smaller, right, but is that?

Ariel Camus: 1:07:09

adjusted by the tier, the seniority, or also do you adjust there like if you find the perfect vp of engineering in san francisco, will you pay higher than because that's in san francisco?

Peer Richelsen: 1:07:23

well, we would still look at the total time of where we can hire a cfo and it's it's kind of like all right, if the time is big, the average is in the middle, right. If the time gets smaller, you probably get smaller to the higher end of the market. So your average is in the middle, but at a higher rate, yeah. So if suddenly your time of hiring is just SF and New York, you cannot go below New York, really Right. So now you have to adjust your salary band for this type of region you can hire from.

Ariel Camus: 1:07:57

we still don't care about the region, but it's just very unlikely that you hire a VP of finance in whatever Denmark possible, just rare right, I've been there and I understand that, like we also at Micros have like open salaries just internally Everyone knows them we do adjust partially to cost of living, to adjust for persons in power. It's a different philosophy that we're discussing, but one of the first things that I noticed as we're starting to scale was that the more senior side, like it again, as you said, it's a smaller uh pool of people in the world.

Ariel Camus: 1:08:38

Yeah, exactly, and and that also gives them more, uh, negotiating power, and we do not negotiate right because these aren't the salaries in our calculator. Uh, that means we need to like, proactively adjust for that reality. So you, it is what it is. Do you use PAVE also for senior compensation?

Peer Richelsen: 1:08:57

We do PAVE. We do use PAVE quite a lot. We never take it as face value, right? Because if everyone starts using them then it kind of defeats the point, because PAVE is a market index and if everyone indexes into PAVE it's kind of like you know. I mean, that's typically how.

Ariel Camus: 1:09:18

Yeah, vicious circle.

Peer Richelsen: 1:09:19

Yeah, vicious circle, yeah yeah, yeah, no, I mean we always make a reality check, but PAVE is a good estimate for sure, especially because PAVE has different regions. So a lot of times we just take an average out of all regions and so if SAP is 250, UK is whatever and 250, New York is 150, and then the United Kingdom is maybe 100. And you merge it all together, you get a pretty good grasp of what you can do as a total comp, Gotcha Okay?

Ariel Camus: 1:09:52

perfect, it's up.

Peer Richelsen: 1:09:55

Yeah, well, go ahead, go ahead. Yeah, I think I think we will. I'm not cheaping out on this. I think we will have you know, vp of finance, and eventually, as the company grows, that I just have to be in the Bay Area or maybe have to be in New York if you go public at the New York Stock Exchange. But again, this is not communism. This is not like everyone makes the same money. This is clearly not how it works. This is pure capitalism. But fair right, where you paid money, it sounds so funny how paying for work for, like, equal work, equal pay you know that used to be a banner when people went to the streets, right? I don't think that's controversial. If you pay equal work with equal pay, I don't think that's controversial.

Ariel Camus: 1:10:33

If you pay equal work with equal pay, I don't think that should be controversial at all no, I, I think even you can argue uh, in favor against it from a business point of view, and I don't think there's like a perfect definition, but at the end of the day also, the cool thing about being a founder is that you get to build the kind of company and culture that that you want, and you don't need to get everything right to be successful. You need to get a couple of things right at any given point, and the rest you get to decide how you want to shape it, what's the kind of company and people you want to work with, and I think that's as you said. You're still within the boundaries of capitalism, of supply and demand. Even if you pay here, but the market is demanding this, you're not going to get anyone, but within that you can then make up your own rules, and I think that's a pretty powerful, amazing thing.

Peer Richelsen: 1:11:19

It's really cool. Yeah, I think a lot more about my company building than product building. I mean, I'm a product person like a diehard product person, but also, you know, I think a lot more about how does it impact culture, how can we keep our culture and how can we grow as a team and win together. And all of these ideas I think a lot of people initially don't think about, and so if you can buy yourself a little bit of headspace, and think about that, I think it takes you very far.

Ariel Camus: 1:11:51

I've had this observation that companies that go remote, like fully remote, fully distributed, especially across different, very different time zones there's a need for them to be much more structured on their company building efforts, Because if you don't establish some of those best practices from day one it's pure chaos, right, and you get out of companies like like, get lab as well.

Ariel Camus: 1:12:19

I'm seeing in your company, I'm sending my company and it's a difficult trade off because at the beginning what you need to be doing is, you know, executing, finding product market fed, talking to the customers. And it's very easy to forget on crafting, not just the writing of it but the essence behind the values of your company, the mission of your company, the guiding principles of how you will make decisions, how you will compensate, how you will hire. But because you don't get the chance to be in person with the team and have this really tight feedback loop of how the company culture is evolving, If you don't base your decisions on these more established principles, things can go really bad pretty quickly. I don't know how it's been your experience about it.

Peer Richelsen: 1:13:07

I think I do agree, when you hire people who've never worked remotely, I do agree, when you hire people who've never worked remotely, you need to. There's a lot of like an upskilling curve just to like understand how to work asynchronous and work in a remote environment. People I hear a lot of times on Twitter when there's many ways to do a remote company wrong. Right, like, if you try to mimic the office experience, if you try, if you think we've had X amount of meetings in person, let's do them in zoom. We'd never do zoom calls, which sounds odd, but like we not never, but like we try to really reduce it down and maybe a 10 minute standup versus a one hour long brainstorming session. Like empower people to write good spec, think on their own, come up with a good plan, post a plan and then have other people comment on it has been so much more efficient and healthier for your like, work-life balance than being in a eight hour long zoom call grind fest. And I think that's why people hate remote work. It's not the remote work per se, it's the constant Zoom calls that kill you. I couldn't do that either.

Peer Richelsen: 1:14:20

And then there's the other side, where managers are not being taught how to work remotely and they try to micromanage and they don't understand the dynamics between different time zones and how to work asynchronously and there's all kinds of different people think that team building things that you need like Friday games on a Zoom call. No one wants that really. I think what we've seen work for us and we check our company morale religiously. We have a HR person who does interviews of how people feel, how stressed they are, how they feel like the morale is in the company, how they if the excitement is, are they excited about the work they do and do they get recognition? So all of these points. We also publish every survey every month on telecomsopen. So if you want to see the data, it's really cool to see it.

Ariel Camus: 1:15:17

We'll definitely put the link in the episode notes.

Peer Richelsen: 1:15:19

Yeah, and so that helps for me as a founder, because you're not only building a product, you're also building a company, and if the company morale tanks, the product quality tanks, and so that's been great and so that's been great. But I think the way to solve that morale is to work on more exciting things, to give people room for it, to not micromanage them, to I mean, of course, everything about like mental health and not burning out and having off time, deload and all that stuff. That's common knowledge. But then also to choose your own friends. I think that's a really, really important one, because when you have an in-office company, your co-workers are in person and you have to get along with them.

Peer Richelsen: 1:16:00

If there's a co-worker you don't like personally, you'll have a bad time. If I work remotely, I just don't interact as much with people, and that's good and that's also bad. It's good if it's a professional engagement. It's it's um, it's bad when you think you have to be a friend, like a close friend, with your remote worker, because you you will never be, you'll never be as close to a remote colleague on a personal, social level than to your neighbor who's across the street or your best friend. And so we have the policy make your own friends. Hang out with your friends, take the time. I don't play video games with your friends. Invite them over, um, because that's the ones you choose. I me, as a founder, I should not be choosing who you should be friends with, right I.

Ariel Camus: 1:16:49

I think that's the. The double edge of the double edge, sort of remote work, is that it gives you so much freedom to control how you work, if done well, that it's risky, if you don't know how to work remotely, to spend the whole day working, be in the house alone and then continue to expect, because you come from like a non-remote work, that you will get your socialization from the job interactions yeah, so I completely agree with that.

Ariel Camus: 1:17:17

The only thing I would say but it's not about friday, you know virtual beers, it's um. There's a lot of research that shows that teams that have high levels of like that allow high levels of vulnerability, for people feel the psychological safety to you know, express how they're feeling, that they can connect emotionally with each other, that they can give negative feedback to each other without you know being hurt or reacting in a defensive way, are much more likely to make you know better decisions, to drive better innovation and so on. So as long as you are creating intentionally elements of the culture that will foster that vulnerability, I think you're fine. I agree that that doesn't mean it has to be a zoom call. Where you like, play video games yeah, yeah, yeah, no for sure.

Peer Richelsen: 1:18:00

I. I mean again, that's also where the hr person comes in and we've hired that person. When we were 20 people, um, like 27 also, it's like not that crazy, but, um, I think, as you approach 20, I think someone said like every, like every time you go, and intervals of seven, so like seven people, 14 people, 21 people, like something breaks, um, I find that very interesting. And so, at 20, 20, 21 people, we, we made the decision to bring on someone in full time to not only deal with onboarding, offboarding and sending people laptops and all that stuff, but also just to be more of a coach.

Peer Richelsen: 1:18:41

This person has a bachelor, I don't know master in computer, not computer science, in sports science, not computer science, sports science. He's been a personal trainer for many years, so he knows the athlete point of view right, the, you know training, you need to train, you need to rest, you need to, you know be the best version, and. But that person also offers personal training to our team members. So if you want to do sports, if you want a training plan, if you want a workout plan, he will do check-ins with you, he will write the plan, he'll look at the diet.

Peer Richelsen: 1:19:15

I like it it's amazing, uh, I think at least half of the company is using it, um, and, and that gives you a much closer connection also to your, uh, your yourself, but also to the, the coach you have, um, and so for me, you know, it's all connected right, like work-life balance, mental health, workout, good food, good diet, good um, workouts, um. I think if you, if you can ingrain that into your company culture, it's much easier to sustain the loneliness and pain of remote work that can happen as well, and and the the grind that they grind to build a company which is super, super hard, right absolutely um, yeah, I

Ariel Camus: 1:20:00

you're sharing a lot of things about your company that to maybe someone new or someone less familiar might seem like very kind of like, um, kind of counterintuitive, like uncommon. Like you are remote, global salaries, open source, open startup. You share a lot of data and at the same time, you have been very successful at raising capital. You raised, I think, 7.1 on your seed. You raised 25 on your. Your series say amazing investors behind that. Has any of them like complain, not complain as in, like hey, this might give you troubles in the future? I was like hey, you need to change. Has someone challenged from these investors? You know, group challenge some of these like unique things about, about cal I don't think so.

Peer Richelsen: 1:20:53

We were very diligent when we raised funding to attract people who bought into the vision. We've had a investment memo but we also had a company values and visions memo.

Ariel Camus: 1:21:04

separate have you published that one. By the way, I've seen the memo but not the.

Peer Richelsen: 1:21:10

It should be on our handbook.

Ariel Camus: 1:21:12

If you want, we can share them in the notes that would be terrific.

Peer Richelsen: 1:21:16

It's handbook. cal. com. And then on the left side there's a vision statement Perfect, like filtering before is always easier than convincing people after. So, like, get good people on your team, I think, is the hard part. The rest comes after. I don't think anyone has ever challenged that. If anything, alexis Ohanian has been a fantastic board member, really supporting us with anything we do. We both share kind of like the future outlook of less people in an organization that are empowered by good leadership and AI.

Peer Richelsen: 1:21:55

As funny as it sounds, but the typical software engineer today gets probably five times more done than a couple years ago, not because of AI, but also better tooling and better tools, better software, better frameworks and all that stuff. So I think I find it very unlikely for us to have 200 engineers anytime soon. It just doesn't sound right. And even if we are a series B, series C, series D company, I think I'd rather have a small team that gets a lot of shit done by having this culture that we have today. Again, remember we've gone from zero to version 4.0. Small team that gets a lot of shit done by having this culture that we have today. Again, remember we, we've gone from zero to version 4.0, with like almost a quarter million in bookings per month, with a team of like 12 engineers, right, um, that's, if you can get there, you can get to 100 million, like you.

Ariel Camus: 1:22:49

You just can absolutely at the end of the year, showing the investors that whatever you're doing is working right and, of course, if something is not working in the future, they will adjust. You will cross that bridge when the time comes. But I think, a very important lesson for anyone especially think a lot about like new entrepreneurs that might be wondering, like you know, is this weird will, like this, break the business and and the lesson there is like wait, you do get to choose which kind of company you want to build, which kind of culture, which kind of people you want to attract, and not just your team members but also your investors. And saying no to investors who are not aligned with your vision for how to run the company. It's an important step and it's hard to do, especially if you feel like tight on capital, but I personally believe that it's better to say no to capital. That will be very painful in the people because it's really hard to get a divorce from an investor.

Peer Richelsen: 1:23:45

No matter how bad your burn is, do not raise from the mafia. Like, just don't you really want to keep your kneecaps, really and this is, of course, a more visual picture but there are people who you just don't want on your team and, and you know, no matter the desperation, I think I've learned in the hard way that like it's better to shut down a business than to to keep it alive with the wrong people, because every day you, every day, you'll not be happy about that decision and from that on it only gets worse, because now you have new expectations, right, like raising more money from bad people. Not only you bring on bad people, but you also raise the bar of expectations because now they have expectations and they want to. You know a thousand X their money. So I would rather really just and it sounds hard, but I would rather just shut down the business than raise for bad people.

Ariel Camus: 1:24:39

I'm of the same opinion.

Peer Richelsen: 1:24:40

And then start a new. And then it's as funny as it sounds, as sad as it sounds start a new business, good people, right, it is very it's a very privileged thing to say. But also, you know, I've been at a point where you have no funding and you just need to put in the hours and bootstrap and, you know, get get to a point where you are in a good position to make good decisions. Um, a good product attracts good people, right? Good, good, good businesses attract good people that's such a common mistake, right?

Ariel Camus: 1:25:12

It's like thinking I need to attract capital so that I can attract, so that I can build a business, instead of like I need to build a business so that, I then gain the privilege of needing the money to build the business further right. But it's the other way around.

Peer Richelsen: 1:25:30

It's always the other way around.

Ariel Camus: 1:25:32

It's been fascinating to get to know Cal and your approach to building the company and the culture. It's fresh, it's different in many ways and I think that's the key here. It's like to expose people to many different ways of building companies and building businesses to show that there's just no one single path and you get to choose them, and I'm really grateful for you sharing your journey and your approach and also excited for other people to learn about it. So thank you so much for dedicating us this time, thank you for having me Adil, thank you so much for tuning in. Your support means the world to me. If you enjoyed today's episode, please consider subscribing and leaving a review. It's one of the best ways you can help this podcast get off the ground and help more entrepreneurs like you. Thank you.