How to Organize and Fund  Free Culture Projects         Kevin Shockey       Founder, Mis Tribus
What?        Free culture projects often fail          due to a lack of resources.
So What?           By focusing on raising funds (resources),              a project can increase its chances              ...
Why me?               Computer Science, Math,          Financials, and Software Development
Why now? Declining interest in FLOSS Lingering confusion surrounding free software Lack of unity, more division - Freed...
OReilly Home Page (06/16/2012)
Disclaimer                  Some of this class                Is based on theories             Im currently researching   ...
Key Takeaways from Tutorial Now: - Ideas are easy, execution is hard - Most FLOSS projects fail - Lack of resources Fina...
Software Development Project Methodologies Waterfall Microsoft Solutions Framework Rational (IBM) Model Open Source E...
Tutorial as a Startup Eric Ries – Lean Startup Financing Freedom - “How to organize and fund free culture projects”  - S...
So far...Startup Progress Funding Free Culture:  - Blog: news.financingfreedom.com  - Homepage: www.financingfreedom.com ...
Bridge
Assumptions Free Culture Project Execution Project Funding
Free Culture Assumptions Free culture projects often fail - Never shipping - Unable to attract a community Division make...
“Free” Assumptions Ambiguity between free and open source software In many cases there is a an unequal value transaction...
State of FLOSS? Projects in emergent, growth, & maturity stages State is Mixed - Enterprise recognition - Limited user r...
Top 10 FLOSS Hall of Fame1.     Linux Kernel2.     GNU Utilities & Compilers3.     Ubuntu4.     BSD5.     Samba     (Top 1...
Top 10 FLOSS Hall of Fame6.    MySQL7.    BIND8.    SendMail9.    OpenSSH & OpenSSL10.    Apache
Measuring FLOSS Through search, Google Trends Through search, Google Scholar Through investigation, Mining SourceForge....
Search is relative (Rabbit Hole) Search is a simulation;  - By measuring “reality” we affect reality  - It is a proxy,   ...
What SEO Tells Us Many Thanks to Stephen OGrady and his SEO research, which he shared: “The State of  Open Source: Startu...
General trends for mature projects - Linux
Apache
MySQL
PHP
Open Source
GPL
Emerging Technologies Dominated by FLOSS – Linux Cloud
NoSQL
Hadoop
Another Bridge
Google Scholar Advanced Search Parameters - “Open Source” exact phrase all in title - “Engineering, Computer Science, and...
Open Source Academic Papers by Year900800700600500                                                                        ...
“Open Source” vs “Free Software” (since 1983)900800700600500400300200100                                                  ...
Academic Paper Analysis Growth reversed in 2011, but 2012 will show new growth Free software has not been researched muc...
Academic Paper Questions Has research on “open source peaked? Why isnt anyone researching “free software?” Has “open so...
Most Famous Bridge
SourceForge Research Data Archive (SRDA) Many tables archived from February 2005 to present Data includes any churn in t...
Monthly additions of users is slowing down
User base is STILL growing - Just over 3 million users
Sharp increase in the number of projects
Number of packages is also up.
Number of releases are down
Number of files are down.
Downloads are generally rising - Extreme variances are unexplained
3.6 Million in January 2009 *
Is GitHub Eating all of SourceForges Candy?
SourceForge and GitHub Smackdown Three comparisons - Number of Users - Number of Academic Papers - Number of Repositories...
Possible Conclusions Certain aspects of open source are in decline: - Open source has moved beyond technology maturity - ...
Another Bridge
Project Execution Assumptions Most projects end in failure A successful project organization has emerged FLOSS projects...
Open Source Failure A project that is unable to grow a community beyond the founder. A project that fails to ship anythi...
Open Source Failure A project that is unable to grow a community beyond the founder. A project that fails to ship anythi...
SourceForge Projects 324,000 projects 268,554 projects with only 1 developer (83%) 44,446 “viable” projects (14%)
Developers Per Project
Open Source Success Constant and synchronous communication Consistency in methodological development approach Geographi...
Critical Success Factors Obligatory use of project methodology An extensive testing culture (Lean Startup)  - Build Meas...
An Infinite Marketplace Thousands of new OSS projects every month Thousands of new apps on Android and Apple A hundred ...
Irrelevance is Your Enemy
Build Measure Learn (Rabbit Hole)
Build                 A good design is        one that changes customer behavior                for the better.(Ries, 2011)
Modeling           If we do not know who the customer is,             we do not know what quality is.   (Ries, 2011)
Questioning Assumptions          “What if they don’t care about [fill in the blank]                   in the same way we d...
Questioning Assumptions            “In fact, piercing the reality distortion field                   is quite uncomfortabl...
Thought Experiment Put the following non-profits in order of size of assets (donations): - Apache Foundation - Free Softw...
Breaking Bridge
Free LOSS            Session Two – How to Organize             and Fund Free Culture Projects
Project Funding Assumptions Our software (product) is sufficient to obtain resources - Build it and they will come - Free...
Resources = Time = Opportunity Most projects fail They fail due to a lack of resources What resources? - Community - Co...
Paying for FLOSS Software is “free.” Recognition that projects are highly sensitive to resource constraints Usual metho...
Common Fund-raising Alternatives Bootstrapping Donations Merchandise Grants - Private - Government Seed funding Dumb...
Why Do People Give?1. Belief in the cause2. Recognition and honor3. For a tax deduction4. Family tradition5. Religious bel...
Why we give, or dont Experience internal satisfaction, the “warm glow” Helpers high, which increases our feelings of sel...
Examining Popular Foundation Revenues
Foundation Metrics If they are a 501(c)(3), they must file publicly their financial statements Form 990 or 990EZ
Case Study: Perl Foundation                        Perl Foundation Revenues$350,000.00$300,000.00$250,000.00$200,000.00$15...
Case Study: GNOME Foundation                                GNOME Foundation Revenues$500,000$450,000$400,000$350,000$300,...
Case Study: Apache Foundation                     Apache Foundation Revenues$600,000$500,000$400,000$300,000$200,000$100,0...
Case Study: Free Software Foundation                            Free Software Foundation Revenues$1,400,000$1,200,000$1,00...
Case Study: Mozilla Foundation                            Mozilla Foundation Revenues$35,000,000$30,000,000$25,000,000$20,...
Case Study: Wikimedia Foundation                     Wikimedia Foundation Revenues$30,000,000$25,000,000$20,000,000$15,000...
Mozilla Foundation                     2011 Annual Report (sort of)
Mozilla Foundation Drill Down July 15, 2003 - The Mozilla Foundation is born with a $2 million start-up support from  Ame...
Mozilla and Subsidiaries$140,000,000$120,000,000$100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000          $-  ...
Mozilla Versus the World
Free Software Foundation Drill Down Primary channels are: - Website - Email - Conference participation Internet Marketin...
Assumption Take Aways... Mixed State of Open Source - Acceptance of open source decline is misguided Best projects use p...
Another Bridge
Top Ten Startup Fund-raising Lies1. All we have to do is get 1% of the market2. We filed patents so our intellectual prope...
Top Ten Startup Fund-raising Lies (Continued)6. Hurry up because our other investors are about to do our deal7. No one els...
Fund-raising Best Practices Build a Foundation 501(c)(3) Establish a Fund-raising Program Obtain Grants Corporate Don...
Best Practices for Startups Build something interesting Innovation Accounting  - Testing  - Methodology Team  - Talent...
Build a Foundation Incorporation - Think about SEO first Mission/Vision - Ensure your mission matches up with the charit...
Setting up a 501(c)(3) Choose an available business name Formal articles of incorporation Create corporate bylaws Appo...
IRS Application Form SS-4 – Employer Identification Number IRS Form 1023 – Application for Recognition of Exemption IRS...
How to Start a Fund-raising Program Create a fund-raising committee - 5-7 members Put your fund raising goals in writing...
Finding Government Grants Grants.gov Department of Health and Human Services - http://www.hhs.gov/grants/ National Inst...
Finding Government Grants (continued) National Science Foundation - http://nsf.gov/funding/ National Endowment of the Ar...
How Can Grants Fund A Project? Must be able to align projects needs with needs of the CFP Whether it is research or deve...
Finding Private Foundation Grants Other 501(c)(3) Organizations Private Foundations Best Practices; Be clear about: - P...
Top Private Foundations by Giving (June 2012)1. Bill & Melinda Gates Foundation - $2,486,342,2092. Walton Family Foundatio...
Top Private Foundations by Giving (June 2012) - Continued6. Abbott Patient Assistance Foundation - $482,610,6047. Ford Fou...
Total Giving By Top 100 US Private Foundations (June 2012)                       $18,498,784,792$46,900,000,000
Why Corporations Give? Creating programs to use company employees as volunteers Forming partnerships Promoting the corp...
Best Practices for Corporate Donations Create list of corporations Identify A-list prospects Personal contacts make a d...
Most Common Forms of Corporate Support Matching donations of employees In-kind Cash Employee time
Corporate Solicitation Kit Current list of board of directors Mission statement Budget information Audit information ...
The Power of the Crowd                         Crowd Funding &                                Sourcing
Contributions From the Crowd Crowd source - Bugs, testing, documentation, code, design - Governance Crowd funded - Donat...
The Crowd Funding Battle Royale There will be an estimated 530 platforms by the end of 2012 $280,600,000 raised by CFPs ...
Kickstarter              56% of all projects fail!
Drill Down on Kickstarter Success                                              Success Rate By Category 80.00% 70.00%     ...
Kickstarter Failure AnalysisFunding for Failed Kickstarter Projects, by Percent             0.52% 1.19% 3.89%   22.51%    ...
Kickstarter Best Practices Youre already a 501(c)(3) non-profit You have an existing brand, fan base, or personality  - ...
Kickstarter Best Practices                             Crowdfunding forces a proof                             of concept ...
The Crowd as Customer Merchandise - Make it cool - Make it limited - Use it to drive engagement - Badges (The gamificatio...
The Crowd as Donor? In 2009, the Giving USA Foundation reported individual donations were $217.79B Of a grand total $298...
Crowd Sourcing = Building Community Who ever has the biggest social network wins Using Social Media Build-Measure-Learn
The Art of Community
Final Bridge
Transmedia Production and Lean Startup Mashup Max Strategy Big Data Innovation Accounting Expert Systems Machine Inte...
Transmedia Production and Social Media Caves Supermarkets Rain Clouds Better To Give
Afraid Of Caves?
Caves Are Like…                  =
Social Media Is… The Unknown Dark Scary - Most of your customers are in there - And they’re probably talking about you!!!
Filled With Treasure
Unusual Characters
Just Do it!
Do Whatever It Takes Hire a guide Get some tools Learn the ropes Talk to people
The Internet Is…
Social Media Is Like A
How big is ∞? Facebook – 700,000,000 Twitter – 140,000,000 LinkedIn – 125,000,000 MySpace –19,7000,000 Flickr – 32,00...
∞ Needs Max-Strategy ∞ means you can’t predict: - Who will become a customer - Where you will find them - What products t...
Social Media Is Not…             About              You!
Social Media Is About Your customers: - How do you give THEM more value than you get? - How do you gain your customer’s t...
Using Social Media Doing nothing is not an option Have to answer the critical question: “Now what?” - Engage/Converse/As...
Final Suggestions Those who use social media will learn what works Break it down: - 3-5 simple tasks - Do them daily And…
Grow your Network!        got permission?
The Biggest Social Graph Wins All major networks: - FB, LI, Twitter, & YouTube... All the large networks: - Flickr, Tumb...
Cutting Costs Significantly reduces cost of advertising - Nothing is unacceptable - Cost approaches $0 - Less direct or e...
Cutting Costs                If you can spend less time marketing,                recruiting, and networking…             ...
The Era of Big Data Many accepted business metrics are obsolete Engagement is the only metric that counts now Only a ma...
The Singularity is Coming Sentiment analysis is coming: - HLD: Predicting terrorist activity - CDC: Tracking epidemics - ...
Questions & Discussion                         kevin@mistribus.com                                  @shockeyk             ...
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Financing Freedom Slides - Final

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I've uploaded the slides for my OSCON tutorial "How to Organize and Fund Free Culture Projects." Definitely, the hardest set of slides I've ever had to put together. It combines four months of searching, reading, researching, condensing, simplifying, and writing to get the slides done. Enjoy!

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Financing Freedom Slides - Final

  1. 1. How to Organize and Fund Free Culture Projects Kevin Shockey Founder, Mis Tribus
  2. 2. What? Free culture projects often fail due to a lack of resources.
  3. 3. So What? By focusing on raising funds (resources), a project can increase its chances of survival
  4. 4. Why me? Computer Science, Math, Financials, and Software Development
  5. 5. Why now? Declining interest in FLOSS Lingering confusion surrounding free software Lack of unity, more division - Freedom Cloud computing and proprietary platforms, like iOS, are: - Reducing awareness of FLOSS contribution - Reducing interest in freedom
  6. 6. OReilly Home Page (06/16/2012)
  7. 7. Disclaimer Some of this class Is based on theories Im currently researching And using
  8. 8. Key Takeaways from Tutorial Now: - Ideas are easy, execution is hard - Most FLOSS projects fail - Lack of resources Financing Freedom: - Funding is available - Most popular FLOSS foundations aggressively pursue funding - Success requires a methodical process - Mastery of Internet marketing
  9. 9. Software Development Project Methodologies Waterfall Microsoft Solutions Framework Rational (IBM) Model Open Source Expert Programming Agile/SCRUM Development Method Lean Startup
  10. 10. Tutorial as a Startup Eric Ries – Lean Startup Financing Freedom - “How to organize and fund free culture projects” - Slides - Handout - eBook Supporting Materials - Background - Data - Illustrations (Graphs) - Vision for Maximum Strategy Community
  11. 11. So far...Startup Progress Funding Free Culture: - Blog: news.financingfreedom.com - Homepage: www.financingfreedom.com - @_ff12 - Tumblr: FundingFreeCulture.Tumblr.com One Blogger post triggers: - 5 Automated tweets on 3 different accounts - 3 Twitter accounts - Linked In - Financing Freedom Page on Facebook
  12. 12. Bridge
  13. 13. Assumptions Free Culture Project Execution Project Funding
  14. 14. Free Culture Assumptions Free culture projects often fail - Never shipping - Unable to attract a community Division makes free culture weaker - Contributors must choose - Only able to sustain two or three projects
  15. 15. “Free” Assumptions Ambiguity between free and open source software In many cases there is a an unequal value transaction: - Many use “free” software - Few look for ways to give back to the community - Volunteer - Recommendations - Donations - Merchandise - Services
  16. 16. State of FLOSS? Projects in emergent, growth, & maturity stages State is Mixed - Enterprise recognition - Limited user recognition/support - Finances (resources) are limited (often to just one person)
  17. 17. Top 10 FLOSS Hall of Fame1. Linux Kernel2. GNU Utilities & Compilers3. Ubuntu4. BSD5. Samba (Top 10 Open Source Hall of Famers. (2009). http://mstrb.us/zjn6zK)
  18. 18. Top 10 FLOSS Hall of Fame6. MySQL7. BIND8. SendMail9. OpenSSH & OpenSSL10. Apache
  19. 19. Measuring FLOSS Through search, Google Trends Through search, Google Scholar Through investigation, Mining SourceForge.net Repository
  20. 20. Search is relative (Rabbit Hole) Search is a simulation; - By measuring “reality” we affect reality - It is a proxy, - We humanely can not understand the math involved - Artificial intelligence
  21. 21. What SEO Tells Us Many Thanks to Stephen OGrady and his SEO research, which he shared: “The State of Open Source: Startup, Growth, Maturity or Decline?”
  22. 22. General trends for mature projects - Linux
  23. 23. Apache
  24. 24. MySQL
  25. 25. PHP
  26. 26. Open Source
  27. 27. GPL
  28. 28. Emerging Technologies Dominated by FLOSS – Linux Cloud
  29. 29. NoSQL
  30. 30. Hadoop
  31. 31. Another Bridge
  32. 32. Google Scholar Advanced Search Parameters - “Open Source” exact phrase all in title - “Engineering, Computer Science, and Mathematics” subject area - Year to Year (eg; 2012 to 2012, 2011 to 2011, etc.)
  33. 33. Open Source Academic Papers by Year900800700600500 Direct Results400300200100 0 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
  34. 34. “Open Source” vs “Free Software” (since 1983)900800700600500400300200100 Free Sof tw are Results Open Source Results 0 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983
  35. 35. Academic Paper Analysis Growth reversed in 2011, but 2012 will show new growth Free software has not been researched much - Out-published by a margin of 5 to 1 by open source.
  36. 36. Academic Paper Questions Has research on “open source peaked? Why isnt anyone researching “free software?” Has “open source” obscured the importance of free software?
  37. 37. Most Famous Bridge
  38. 38. SourceForge Research Data Archive (SRDA) Many tables archived from February 2005 to present Data includes any churn in the number of active users, projects, messages, etc. Observations
  39. 39. Monthly additions of users is slowing down
  40. 40. User base is STILL growing - Just over 3 million users
  41. 41. Sharp increase in the number of projects
  42. 42. Number of packages is also up.
  43. 43. Number of releases are down
  44. 44. Number of files are down.
  45. 45. Downloads are generally rising - Extreme variances are unexplained
  46. 46. 3.6 Million in January 2009 *
  47. 47. Is GitHub Eating all of SourceForges Candy?
  48. 48. SourceForge and GitHub Smackdown Three comparisons - Number of Users - Number of Academic Papers - Number of Repositories Round One - Number of Users: - SF (3 Million to 1.6 Million) Round Two – Academic papers - SF (195 to 8) Round Three – Repositories - No correlation for repositories
  49. 49. Possible Conclusions Certain aspects of open source are in decline: - Open source has moved beyond technology maturity - Cloud computing and apps are more popular
  50. 50. Another Bridge
  51. 51. Project Execution Assumptions Most projects end in failure A successful project organization has emerged FLOSS projects are similar to startups Execution is achieved through testing assumptions
  52. 52. Open Source Failure A project that is unable to grow a community beyond the founder. A project that fails to ship anything. Abandoned projects
  53. 53. Open Source Failure A project that is unable to grow a community beyond the founder. A project that fails to ship anything. Abandoned projects...when either of the 1 two conditions reoccurs st
  54. 54. SourceForge Projects 324,000 projects 268,554 projects with only 1 developer (83%) 44,446 “viable” projects (14%)
  55. 55. Developers Per Project
  56. 56. Open Source Success Constant and synchronous communication Consistency in methodological development approach Geographical dispersion management through an extensive testing culture FLOSSD experience in accepting and handling the environmental limitations
  57. 57. Critical Success Factors Obligatory use of project methodology An extensive testing culture (Lean Startup) - Build Measure Learn or your competition will Irrelevance is your enemy - Mastery of Internet and Social Media marketing Create, nurture, and manage a viable community
  58. 58. An Infinite Marketplace Thousands of new OSS projects every month Thousands of new apps on Android and Apple A hundred thousand new e-Books Millions of social media updates - Photos - Videos - Blog entries
  59. 59. Irrelevance is Your Enemy
  60. 60. Build Measure Learn (Rabbit Hole)
  61. 61. Build A good design is one that changes customer behavior for the better.(Ries, 2011)
  62. 62. Modeling If we do not know who the customer is, we do not know what quality is. (Ries, 2011)
  63. 63. Questioning Assumptions “What if they don’t care about [fill in the blank] in the same way we do?” (Ries, 2011)
  64. 64. Questioning Assumptions “In fact, piercing the reality distortion field is quite uncomfortable. ” (Ries, 2011)
  65. 65. Thought Experiment Put the following non-profits in order of size of assets (donations): - Apache Foundation - Free Software Foundation - GNOME Foundation - Mozilla Foundation - Perl Foundation - Other?
  66. 66. Breaking Bridge
  67. 67. Free LOSS Session Two – How to Organize and Fund Free Culture Projects
  68. 68. Project Funding Assumptions Our software (product) is sufficient to obtain resources - Build it and they will come - Free beer will fuel our project Not much is known about how to raise funds effectively - Only one level “information” Funding is an independent function, different from __________________
  69. 69. Resources = Time = Opportunity Most projects fail They fail due to a lack of resources What resources? - Community - Contributions - Participation - Money - Attention
  70. 70. Paying for FLOSS Software is “free.” Recognition that projects are highly sensitive to resource constraints Usual methods available: - Project donation page - Merchandise Missing most lucrative donors: - Corporations - Governments - Customers
  71. 71. Common Fund-raising Alternatives Bootstrapping Donations Merchandise Grants - Private - Government Seed funding Dumb money Corporate Donations 501.3(c) Raise resources not only money - Building community - Creating a platform for donating time
  72. 72. Why Do People Give?1. Belief in the cause2. Recognition and honor3. For a tax deduction4. Family tradition5. Religious beliefs6. Joy7. Guilt8. Fear9. To make a difference
  73. 73. Why we give, or dont Experience internal satisfaction, the “warm glow” Helpers high, which increases our feelings of self-worth Different kinds of giving, and therefore different explanations - People who are religious give more - People who have more, dont necessarily give more - Senior citizens who volunteer live longer - People who plan donations, give more Some research links oxytocin to generosity: - Amygdala has oxytocin receptors that control feelings of safety and fear
  74. 74. Examining Popular Foundation Revenues
  75. 75. Foundation Metrics If they are a 501(c)(3), they must file publicly their financial statements Form 990 or 990EZ
  76. 76. Case Study: Perl Foundation Perl Foundation Revenues$350,000.00$300,000.00$250,000.00$200,000.00$150,000.00$100,000.00 $50,000.00 $- 2006 2007 2008 2009 2010
  77. 77. Case Study: GNOME Foundation GNOME Foundation Revenues$500,000$450,000$400,000$350,000$300,000$250,000$200,000$150,000$100,000 $50,000 $- 2002 2003 2004 2005 2006 2007 2008 2009 2010
  78. 78. Case Study: Apache Foundation Apache Foundation Revenues$600,000$500,000$400,000$300,000$200,000$100,000 $- 2006 2007 2008 2009 2010
  79. 79. Case Study: Free Software Foundation Free Software Foundation Revenues$1,400,000$1,200,000$1,000,000 $800,000 $600,000 $400,000 $200,000 $- 2003 2004 2005 2006 2007 2008 2009 2010 2011
  80. 80. Case Study: Mozilla Foundation Mozilla Foundation Revenues$35,000,000$30,000,000$25,000,000$20,000,000$15,000,000$10,000,000 $5,000,000 $- 2003 2004 2005 2006 2007 2008 2009 2010
  81. 81. Case Study: Wikimedia Foundation Wikimedia Foundation Revenues$30,000,000$25,000,000$20,000,000$15,000,000$10,000,000 $5,000,000 $- 2006 2007 2008 2009 2010
  82. 82. Mozilla Foundation 2011 Annual Report (sort of)
  83. 83. Mozilla Foundation Drill Down July 15, 2003 - The Mozilla Foundation is born with a $2 million start-up support from America Onlines Netscape division FY 2005 - The Mozilla Foundation added $28 million in revenues in royalties August 3, 2005 - The Mozilla Corporation was established to handle the revenue-related operations of the Mozilla Foundation. - The Mozilla Corporation (abbreviated MoCo) is a wholly owned subsidiary of the Mozilla Foundation
  84. 84. Mozilla and Subsidiaries$140,000,000$120,000,000$100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- 2003 2004 2005 2006 2007 2008 2009 2010
  85. 85. Mozilla Versus the World
  86. 86. Free Software Foundation Drill Down Primary channels are: - Website - Email - Conference participation Internet Marketing - Discover the niche communities - Adding value to relationship - Earning trust
  87. 87. Assumption Take Aways... Mixed State of Open Source - Acceptance of open source decline is misguided Best projects use project methodology - Growing a community - Shipping in iterations Financial support (donations, purchases, memberships) is lacking Large difference between public relationship strategies - Most successful projects use modern strategies Niche groups who are content with scratching their own itch - Dogmatic approach to community
  88. 88. Another Bridge
  89. 89. Top Ten Startup Fund-raising Lies1. All we have to do is get 1% of the market2. We filed patents so our intellectual property is protected3. Our management team is proven4. The large companies in our market are too big, dumb, and slow to compete with us5. Our product will go viral
  90. 90. Top Ten Startup Fund-raising Lies (Continued)6. Hurry up because our other investors are about to do our deal7. No one else can do what were doing8. Several Fortune 500 companies are set to do business with us9. Jupiter says our marker will be worth $50 billion in ten years10. Our projections are conservative (Kawasaki, 2012)
  91. 91. Fund-raising Best Practices Build a Foundation 501(c)(3) Establish a Fund-raising Program Obtain Grants Corporate Donors Community
  92. 92. Best Practices for Startups Build something interesting Innovation Accounting - Testing - Methodology Team - Talent Leadership Use Web2.0 and Cloud Computing
  93. 93. Build a Foundation Incorporation - Think about SEO first Mission/Vision - Ensure your mission matches up with the charitable activities you plan for your 501(c)(3) Board of Directors Transparency - Expect to make all of your founding documents public - Required by IRS for all 501(c)(3)
  94. 94. Setting up a 501(c)(3) Choose an available business name Formal articles of incorporation Create corporate bylaws Appoint the initial directors Hold the first meeting of the board of directors Financial data - Financial statements - A current balance sheet Open to foreign corporations - Donations are not exempt
  95. 95. IRS Application Form SS-4 – Employer Identification Number IRS Form 1023 – Application for Recognition of Exemption IRS Form – Power of Attorney Organizations must usually file a form 990 (or 990-EZ) every year
  96. 96. How to Start a Fund-raising Program Create a fund-raising committee - 5-7 members Put your fund raising goals in writing Develop a plan of action Revise your plans - Build-Measure-Learn - Contingency Share your plans
  97. 97. Finding Government Grants Grants.gov Department of Health and Human Services - http://www.hhs.gov/grants/ National Institute of General Medical Sciences - http://www.nigms.nih.gov/Research/ National Institute of Health - http://grants.nih.gov/grants/guide/ - http://grants1.nih.gov/grants/funding/sbir.htm (*)
  98. 98. Finding Government Grants (continued) National Science Foundation - http://nsf.gov/funding/ National Endowment of the Arts - http://www.nea.gov/grants/index.html Department of Defense - http://www.dodsbir.net/ (*)
  99. 99. How Can Grants Fund A Project? Must be able to align projects needs with needs of the CFP Whether it is research or development, the needs can be the same Examples: - DARPANet - The US DoD has spent > $100 million on social network sentiment analysis - The NSF just initiated a multimillion dollar CFP for Big Data projects
  100. 100. Finding Private Foundation Grants Other 501(c)(3) Organizations Private Foundations Best Practices; Be clear about: - Purpose of your program or project. - Type of support that is needed to carry out the project. - Total amount of money that will be needed to complete the project. The Number One Complaint of Foundations? - People do NOT do thorough RESEARCH! - If you do NOT qualify – do NOT apply!
  101. 101. Top Private Foundations by Giving (June 2012)1. Bill & Melinda Gates Foundation - $2,486,342,2092. Walton Family Foundation, Inc. - $1,479,636,0533. Genentech Access To Care Foundation - $587,337,3924. Pfizer Patient Assistance Foundation, Inc. - $569,495,4435. GlaxoSmithKline Patient Access Programs Foundation - $555,867,032
  102. 102. Top Private Foundations by Giving (June 2012) - Continued6. Abbott Patient Assistance Foundation - $482,610,6047. Ford Foundation - $424,695,0008. Johnson & Johnson Patient Assistance Foundation, Inc. - $416,443,5599. Sanofi-aventis Patient Assistance Foundation - $392,778,99910. The Bristol-Myers Squibb Patient Assistance Foundation, Inc. - $392,567,134$7,787,773,425
  103. 103. Total Giving By Top 100 US Private Foundations (June 2012) $18,498,784,792$46,900,000,000
  104. 104. Why Corporations Give? Creating programs to use company employees as volunteers Forming partnerships Promoting the corporation Gaining cost effectiveness Creating a win-win situation
  105. 105. Best Practices for Corporate Donations Create list of corporations Identify A-list prospects Personal contacts make a difference Dont take “No” for an answer Stay in touch - Thank you - Add to social network
  106. 106. Most Common Forms of Corporate Support Matching donations of employees In-kind Cash Employee time
  107. 107. Corporate Solicitation Kit Current list of board of directors Mission statement Budget information Audit information Purpose of funding request
  108. 108. The Power of the Crowd Crowd Funding & Sourcing
  109. 109. Contributions From the Crowd Crowd source - Bugs, testing, documentation, code, design - Governance Crowd funded - Donations - Merchandise - Customers - Crowd funding platforms
  110. 110. The Crowd Funding Battle Royale There will be an estimated 530 platforms by the end of 2012 $280,600,000 raised by CFPs in 2012 Majority are ONLY for 501(c)(3)
  111. 111. Kickstarter 56% of all projects fail!
  112. 112. Drill Down on Kickstarter Success Success Rate By Category 80.00% 70.00% 69.00% 63.81% 60.00% 54.18% 50.00% 48.22% 45.49% Overall Average is 44% 40.83% 39.62% 40.00% 38.30% 35.47% 33.83% 31.86% 30.00% 28.80% 27.29% 20.00% 10.00% 0.00% Fashion Technology Publishing Games Design Photography Film & Video Food Comics Art Music Theater Dance
  113. 113. Kickstarter Failure AnalysisFunding for Failed Kickstarter Projects, by Percent 0.52% 1.19% 3.89% 22.51% 11.19% 0% Funded 1% to 20% Funded 21% to 40% Funded 41% to 60% Funded 61% to 80% Funded 81% to 99% Funded 60.70%
  114. 114. Kickstarter Best Practices Youre already a 501(c)(3) non-profit You have an existing brand, fan base, or personality - Kickstarter does not grow your network it harvests existing engagement Your project explanation is clear and concise - Extensive pre-launch preparation and testing have already taken place Your social engagement platform is working optimally You consistently share valuable status and progress and communicate effectively You maintain constant contact with anyone granting you permission Imbalance between offer and value - Getting too greedy
  115. 115. Kickstarter Best Practices Crowdfunding forces a proof of concept before the product hits the shelves:
  116. 116. The Crowd as Customer Merchandise - Make it cool - Make it limited - Use it to drive engagement - Badges (The gamification of community) Services - The most successful open source businesses model
  117. 117. The Crowd as Donor? In 2009, the Giving USA Foundation reported individual donations were $217.79B Of a grand total $298.42B donated, the top 5 recipients were: - Religion (32%) - Education (14%) - Human Services (12%) - Gifts to Foundations (9%) - Public-Society Benefit (7%) Direct marketing to the crowd is the most challenging
  118. 118. Crowd Sourcing = Building Community Who ever has the biggest social network wins Using Social Media Build-Measure-Learn
  119. 119. The Art of Community
  120. 120. Final Bridge
  121. 121. Transmedia Production and Lean Startup Mashup Max Strategy Big Data Innovation Accounting Expert Systems Machine Intelligence
  122. 122. Transmedia Production and Social Media Caves Supermarkets Rain Clouds Better To Give
  123. 123. Afraid Of Caves?
  124. 124. Caves Are Like… =
  125. 125. Social Media Is… The Unknown Dark Scary - Most of your customers are in there - And they’re probably talking about you!!!
  126. 126. Filled With Treasure
  127. 127. Unusual Characters
  128. 128. Just Do it!
  129. 129. Do Whatever It Takes Hire a guide Get some tools Learn the ropes Talk to people
  130. 130. The Internet Is…
  131. 131. Social Media Is Like A
  132. 132. How big is ∞? Facebook – 700,000,000 Twitter – 140,000,000 LinkedIn – 125,000,000 MySpace –19,7000,000 Flickr – 32,000,000 YouTube – 3,000,000,000
  133. 133. ∞ Needs Max-Strategy ∞ means you can’t predict: - Who will become a customer - Where you will find them - What products they will buy Need to: - Simplify around keywords - Find better tools - Data & AI
  134. 134. Social Media Is Not… About You!
  135. 135. Social Media Is About Your customers: - How do you give THEM more value than you get? - How do you gain your customer’s trust? With trust comes permission
  136. 136. Using Social Media Doing nothing is not an option Have to answer the critical question: “Now what?” - Engage/Converse/Ask/Answer Can’t implement and forget Deliver value
  137. 137. Final Suggestions Those who use social media will learn what works Break it down: - 3-5 simple tasks - Do them daily And…
  138. 138. Grow your Network! got permission?
  139. 139. The Biggest Social Graph Wins All major networks: - FB, LI, Twitter, & YouTube... All the large networks: - Flickr, Tumblr, Hi5, & MySpace... All the small networks: - About.Me, Paper.li, PhotoBucket, Pinterest, Wikia... All future social network systems...
  140. 140. Cutting Costs Significantly reduces cost of advertising - Nothing is unacceptable - Cost approaches $0 - Less direct or email costs - Generate leads (24/7/365) E-Commerce - Potential to sell (24/7/365) - Cost approaches $0
  141. 141. Cutting Costs If you can spend less time marketing, recruiting, and networking… Spend more time producing
  142. 142. The Era of Big Data Many accepted business metrics are obsolete Engagement is the only metric that counts now Only a max-strategy has a chance Mining the Internet for permission Using Artificial Intelligence to predict engagement and permission
  143. 143. The Singularity is Coming Sentiment analysis is coming: - HLD: Predicting terrorist activity - CDC: Tracking epidemics - Big Data - Data Mining - Machine Intelligence A Minority Report Future - Followed and interrupted - Face recognition will track us - We already carry a tracking device
  144. 144. Questions & Discussion kevin@mistribus.com @shockeyk @mistribus @_ff12
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