Your Technical GTM Blueprint: Navigating the Transition from Open to Closed Source with Graphite 💰
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Graphite, a NYC-based startup revolutionizing AI developer productivity, recently secured an impressive $52M Series B funding round. I sat down with co-founder and CEO Merrill Lutsky to discuss a critical decision in their journey: the strategic shift from open to closed source. This transition didn't just reshape their technical architecture—it fundamentally transformed their entire go-to-market strategy. The open source versus closed source debate remains central to strategic planning for many startups, particularly in software development. Through Graphite's journey, Merrill offers nuanced insights that highlight critical considerations founders must weigh when building developer tools: balancing transparency, speed, community engagement, and monetization in today's competitive landscape.
From Open Source Roots to $52M Series B: An Interview with Merrill Lutsky
When Merrill Lutsky co-founded Graphite, the decision to be open source initially wasn't so much a philosophical choice as a practical necessity. With just three engineers and without formal security certifications, Merrill knew that developer trust had to be earned directly through transparency. Graphite, built as a command-line tool for managing stacked pull requests, targeted engineers at larger companies—teams quietly adopting tools without official approval. Open source offered immediate visibility, reassuring these users that the software was secure and trustworthy.
"Early on, open source was a great shortcut to developer trust," Merrill reflects. It accelerated adoption, eased distribution, and lowered entry barriers, quickly getting Graphite into developers' workflows.
However, as Graphite scaled, Merrill began noticing the constraints of open source. The anticipated benefits, such as community-driven integrations and contributions, weren't materializing—largely because Graphite didn't inherently lend itself to broad external collaboration. Instead, the team faced the challenge of maintaining a high-quality open source project: managing careful versioning, thoughtful deprecations, and extensive community stewardship, all of which slowed down innovation.
"Open source stewardship can limit your agility," Merrill explains. "You either commit to doing it exceptionally well, or you recognize it's not the right path." For Graphite, prioritizing rapid iteration and product evolution became paramount. When launching the web-based dashboard, Graphite shifted to a fully closed-source, managed cloud service. Soon after, even their initial CLI tool followed suit, closing its source to facilitate faster development cycles and more frequent, substantial improvements without the friction of open-source governance.
Merrill acknowledges that this decision didn't come without trade-offs. "There was disappointment, particularly among indie developers accustomed to open source norms," he says. But for Graphite, clarity of focus became a defining strength. The company explicitly targeted fast-moving, closed-source development teams facing challenges scaling code review, who valued efficiency and robust tooling over community-driven openness. The result was a powerful alignment between product, customer profile, and monetization strategy.
While Merrill sometimes wonders about the alternate path—staying fully open source to foster wider adoption of stacked PR methodologies—the chosen route has paid dividends. Closed-source allowed Graphite to refine its business model quickly, build deeper enterprise relationships, and confidently move into monetization.
"Going closed source forced us to think seriously about sales and marketing from day one," Merrill shares. This transition reshaped Graphite's approach, driving them toward traditional SaaS growth, enterprise adoption, and sustainable revenue generation. The company swiftly built sales teams and refined its go-to-market strategy to effectively engage multi-thousand-person teams using Graphite daily.
Today, Merrill believes that the debate between open and closed source is shifting, especially amid rapid advancements in AI. Speed of innovation, value delivery, and responsiveness to rapidly changing developer needs have become more critical than source code visibility alone. His advice to other founders wrestling with this decision is straightforward: clearly define how open-source benefits align with your business goals, consider the complexities of community stewardship, and remember, it's far easier to start closed and open later than vice versa.
"In the end," Merrill emphasizes, "the goal is to deliver maximum value rapidly, sustainably, and thoughtfully—whether your code is open or closed."
Merrill's journey with Graphite underscores the evolving nature of software development and business strategy. His reflections provide valuable lessons for entrepreneurs navigating similar paths, highlighting the importance of deliberate choices and adaptability in building a successful startup.
☎️ Call for Startups
Are you a pre-seed technical founder figuring out your initial GTM approach? I'd love to swap notes on early-stage strategies that work. Whether you're still validating product-market fit, landing your first design partners, or setting up your initial sales motion, reach out at priyanka@work-bench.com. Have experiences from your 0-to-1 journey worth sharing? I'm always looking for authentic founder stories to feature in upcoming articles.
Priyanka 🌊
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I’m a Principal at Work-Bench, a Seed stage enterprise-focused VC fund based in New York City. Our sweet spot for investment at Seed correlates with building out a startup’s early go-to-market motions. In the cloud-native infrastructure and developer tool ecosystem, we’ve invested in companies like Cockroach Labs, Run.house, Prequel.dev, Tern and others.