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Funding Open Source, The Hard Way

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A systemic approach to finding funding for open source for not just 1 project, but 1000 projects.

From a Django Under the Hood in Amsterdam, November 4 2016. (Video of talk: https://www.youtube.com/watch?list=PLQdy7QUATciZ4V3g3iCTnG5fvkZkuNGyg&v=HokXBjDS_UA)

FOOTNOTES:
Slide 3: Graph is not actually real. Instagram’s estimated revenue is 16,000 times that of Django’s. Instagram estimate based on http://fortune.com/2016/01/25/instagram-3-billion-business-this-year/, Django's based on https://www.djangoproject.com/fundraising/.
Slides 5 and 6: http://david.heinemeierhansson.com/2013/the-perils-of-mixing-open-source-and-money.html
Slide 8: https://github.com/pybee/paying-the-piper/blob/master/README.md
Slide 20: https://www.youtube.com/watch?v=SAc0vQCC6UQ
Slide 23: http://www.citylab.com/cityfixer/2015/02/americas-infrastructure-crisis-is-really-a-maintenance-crisis/385452/
Slide 24: https://www.djangoproject.com/fundraising/
Slide 27: This cycle is not without precedent. Modern nonprofits in the US only came about after the Industrial Revolution. Nouveau riche criticized for spending in unfocused ways. Andrew Carnegie and others called upon their peers to embrace philanthropy, which capitalized the nonprofit sector.
Slide 30: Without clear metrics or vocabulary to talk about project needs, any response to this question is purely subjective.

Thanks to Marc Tamlyn and Russell Keith-Magee for early feedback on this talk.

Published in: Software

Funding Open Source, The Hard Way

  1. 1. Funding open source, the hard way @nayafia for Django Under the Hood
  2. 2. @nayafia You don’t do open source for the money
  3. 3. @nayafia Django’s projected revenue: $200,000 (2016) Instagram’s projected revenue: $3.2B (2016)
  4. 4. @nayafia On one hand:
  5. 5. @nayafia “Open source [is] an incredible force for quality and community exactly because it's not been defined in market terms….
  6. 6. @nayafia ...in market terms, most open source projects should never have had a chance.” - David Heinemeier Hansson
  7. 7. @nayafia On the other hand:
  8. 8. @nayafia ”As an industry, it's frightening how much of the infrastructure on which we rely on on a daily basis is maintained by complete volunteers.” - Russell Keith-Magee
  9. 9. What’s wrong with today’s open source funding options?
  10. 10. @nayafia Not just about money but access to money
  11. 11. @nayafia Banks and other lending institutions Venture capital Foundations Endowments ??? Homebuyer, business owner Startups Nonprofits Academia (U.S.) Open source
  12. 12. @nayafia Right now, too much open source funding is ad hoc:
  13. 13. @nayafia Crowdfunding
  14. 14. @nayafia Bounties
  15. 15. @nayafia Tipping
  16. 16. @nayafia Access to institutional capital is important necessary
  17. 17. @nayafia What could we do with all that money in open source?
  18. 18. @nayafia [1] Taking risks with new projects
  19. 19. @nayafia Venture capital allows startup founders to take risks
  20. 20. @nayafia Joyent hired Ryan Dahl to build out Node.js prototype
  21. 21. @nayafia Many major open source projects were started by employees (including Django!)
  22. 22. @nayafia [2] Investing back into existing projects
  23. 23. @nayafia Nearly half of U.S. state spending on roads goes towards maintenance, not construction
  24. 24. @nayafia Thanks to the Django Fellowship, “for the first time in Django's history, we had releases according to schedule (Django 1.8 and 1.9).”
  25. 25. How do we get money into the open source ecosystem?
  26. 26. @nayafia The open source production cycle Open source project Software Producers Users Resources
  27. 27. @nayafia The open source production cycle Open source project Software Producers Users Resources
  28. 28. @nayafia Money is everywhere. Directing it to the right place is hard
  29. 29. @nayafia Best worst question that I get:
  30. 30. @nayafia I have a bunch of money, which projects should I give it to?
  31. 31. @nayafia First, we need to figure out:
  32. 32. [1] Who needs money [2] What do they need money for [3] How to fund them [4] Who should fund them
  33. 33. [1] Who needs money [2] What do they need money for [3] How to fund them [4] Who should fund them
  34. 34. @nayafia Need to define and track two types of metrics:
  35. 35. @nayafia 1. Ecosystem-level metrics (dependency mapping)
  36. 36. @nayafia 2. Project-level metrics (usage, activity, health)
  37. 37. @nayafia Project metrics, by project stage Project Stage Description Example Metrics Incubation Validating concept ● Total pageviews on project ● # of downloads ● Referring sites Growth Users + contributors growing ● Total contributor count ● # of non-author contributors ● # of opened PRs, issues Maturity Large community of users and/or contributors, formalized roles ● # of first time contributors ● Average response time to PRs, issues ● Month-over-month user growth
  38. 38. [1] Who needs money [2] What do they need money for [3] How to fund them [4] Who should fund them
  39. 39. @nayafia Project Stage Description Funding Needs Incubation Validating concept ● Dedicated time to write code Growth Users + contributors growing ● Infrastructure costs ● Code review ● Design Maturity Large community of users and/or contributors, formalized roles ● Dedicated sprints ● Release management ● Community management ● Code review ● Biz dev Funding needs, by project stage
  40. 40. [1] Who needs money [2] What do they need money for [3] How to fund them [4] Who should fund them
  41. 41. @nayafia Should funders give to people, or to projects?
  42. 42. @nayafia Pros and cons of various funding methods Funding Method Pros Cons Projects ● Transparent governance ● Build institutional resilience ● Need legal entity ● Funding restrictions based on legal entity People ● Respects decentralized structure ● Good for one-off work ● Don’t need legal entity ● Can lead to favoritism ● Funding doesn’t transfer if person leaves project
  43. 43. @nayafia If funding projects, centralize efforts (Ruby Together, JavaScript Foundation, Software Freedom Conservancy, OpenCollective, Linux Foundation)
  44. 44. @nayafia If funding people, build up opportunities for individual grants (Mozilla Open Source Support, Linux Core Infrastructure Initiative, Open Technology Fund, Stripe Open-Source Retreat)
  45. 45. @nayafia Still need to figure out: how do projects become financially sustainable?
  46. 46. [1] Who needs money [2] What do they need money for [3] How to fund them [4] Who should fund them
  47. 47. @nayafia Who cares the most about protecting the open source commons?
  48. 48. @nayafia Companies: Need commons for cheap resources + protect against competition, but also beholden to business goals
  49. 49. @nayafia Government: Natural steward of public goods, but risk averse, and many projects are transnational
  50. 50. @nayafia Academia: Sustainable model for R&D work, but don’t innovate at pace of modern software
  51. 51. @nayafia Finding the right funder will probably be the last piece of the puzzle
  52. 52. We’re at the beginning of exciting times
  53. 53. @nayafia Open source project Software Producers Users Resources 1970s-1980s: getting producers to care about open source software
  54. 54. @nayafia Open source project Software Producers Users Resources 1990s-2000s: getting users to consume open source software
  55. 55. @nayafia Open source project Software Producers Users Resources Mid-2000s: startups create outsized returns
  56. 56. @nayafia Open source project Software Producers Users Resources Today’s challenge: getting resources back to producers
  57. 57. @nayafia FIN

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