This is definitely interesting and insightful, especially the lead-gen aspect of investing in OSS with the prospect of future leads. Kind of like a16z investing in PandoDaily - surely that won't provide a legit return, but it will give high visibility into the ecosystem.
However, I disagree about the Github portion.
The Github investment was the perfect type of investment. They conquered the consumer side of the market, they knew their customer acquisition cost, were growing quickly and were profitable. It was the perfect example of just pouring gasoline on a fire to accelerate things.
The next logical step is to move into the enterprise, which they have been doing. I suspect that their customer acquisition costs into the enterprise are just as low as the consumer side - because they will have internal advocates from the same developers that either have a free/paid account on the consumer side.
So it is the perfect, de-risked, investment for any investor. A16Z happens to be cream of the crop, so they were lucky enough to get that deal.
Aside from that...OSS companies actually do make a lot of money. See Sun, RedHat, etc. Selling enterprise versions and support can be VERY lucrative. The only way to do that is to grow significantly and become a major player in the industry - which npm was slowly getting there, with the investment it did accelerate that likely. So I don't think they would see it as a loss-leader just to build out a funnel for future deals. That was likely just a bonus, or even "down-side protection" as it were.
However, I disagree about the Github portion.
The Github investment was the perfect type of investment. They conquered the consumer side of the market, they knew their customer acquisition cost, were growing quickly and were profitable. It was the perfect example of just pouring gasoline on a fire to accelerate things.
The next logical step is to move into the enterprise, which they have been doing. I suspect that their customer acquisition costs into the enterprise are just as low as the consumer side - because they will have internal advocates from the same developers that either have a free/paid account on the consumer side.
So it is the perfect, de-risked, investment for any investor. A16Z happens to be cream of the crop, so they were lucky enough to get that deal.
Aside from that...OSS companies actually do make a lot of money. See Sun, RedHat, etc. Selling enterprise versions and support can be VERY lucrative. The only way to do that is to grow significantly and become a major player in the industry - which npm was slowly getting there, with the investment it did accelerate that likely. So I don't think they would see it as a loss-leader just to build out a funnel for future deals. That was likely just a bonus, or even "down-side protection" as it were.