Grafana Labs Origin Story

Grafana Labs started as an open-source project back in 2014 with three co-founders, including Raj.

Building Culture as a Remote First Company

With 1,200 people working at Grafana Labs, how do you build a culture? It’s definitely harder, but if you’re remote-first, you can build a culture that’s purpose-built to be remote.

If you’re remote-friendly, the pattern many people get into is that the remote employee has a second-class career. They aren’t part of the water cooler conversations or close to the center of power and decision-making.

It’s hard to be remote-friendly. At least, as a remote-first company, you can attempt to fix the culture. You also need to get the team together in person and often. Grafana Labs typically meet 2-3x per year, with the executive team in the same room 5-6x per year.

Approaching Monetization as an Originally Open Source Company

One of Grafana Labs’ users is NASA, but they aren’t a paying customer. How do you approach monetization as an open-source company? They didn’t think about monetization for the company’s first few years. Those were the innocent days with no customers, revenue, or responsibilities.

Their goal was to build really popular open-source software and a community, yet the goals of open source vs commercial ambitions are in stark contrast. Open source is all about value creation, and GTM teams are all about value capture. Balancing those things is hard.

Grafana Labs’ open-source software is used by some of the largest companies in the world who don’t pay them, like NASA. They have almost a million users and about 6,000 customers. That’s less than 1% of the people paying who are using the software.

When they first started raising money, with Lightspeed being the first VC, they had a slide with impressive logos but no customers. The pitch was, “We have all these amazing companies using our software. We’ll figure out how to make some of them paying customers over time.”

They’ve achieved that goal, but the balance is hard. Grafana Labs still has features and capabilities they hold back that appeal to large enterprises, such as things around security and compliance. But they’re still one of the last remaining open-source companies at scale.

Cloud was a big unlock for monetization.

Less Than 1% of Grafana Labs’ Users Pay

The 6,000 to a million ratio is staggering regarding how much usage there is vs. paid customers. How do you drive business around that? It’s a painfully impressive stat, but Grafana Labs isn’t trying to monetize every use case. They want the overall pie to be as big as possible, and their entire business model is predicated on capturing a small piece of what is hopefully an extremely large pie.

It’s not really feasible to make more than a low single-digit percentage of users into paying customers. Many have no real budget to pay, with tens of thousands of users using Grafana Labs for home lab stuff, like monitoring how their sourdough is baking or how their EV is charging.

They don’t want to monetize that community. But when they discover a large global bank using Grafana Labs, that’s where the product strategy comes in. “We’re set up to monetize people who have more money than time,” Raj says.

The 3 Stages of Growth

Grafana Labs has crossed $250M ARR, and going from zero to 1,200 employees was a journey. The way the co-founders looked at the stages in the early days of no funding and a community-focus were:

Step 1 – No sales or customers, only building freely available open-source software.
Step 2 – ??
Step 3 – Profit

Going multi-product is a big deal, and a lot of companies struggle with it.

Stage three was going all-in into the Cloud. Grafana deploys a lot of new features that they develop on their Cloud first before making them open source, the opposite of how you might intuitively do it.

In the early days, all revenue came from visualization. Today, metrics is their biggest product, with the most revenue coming from Grafana Cloud, their SaaS offering.

How Founder Management Styles Change from Zero to 1,200 People


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