Struggling to find an open source business model


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Kiwi PyCon 2011, Wellington, Struggling to Find an Open Source Business Model, Grant Paton-Simpson, Open Source Python projects, After more than 45,000 downloads, the open source Python project SOFA Statistics has netted $90 (not $90k, just $90). This presentation will explain strategies tried so far, and the options available to open source projects.

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  • At the heart of this talk is a puzzle: A seemingly successful open source application Plenty of users in a range of business and research institutions A business model based mainly on modest payments for support But … the business model hasn't been working And as a result, I'm now planning to make a proprietary “Pro” version Topics for discussion - is there a realistic alternative in this case? And when might pure-play OSS be good business?
  • A Python software application Open source Produces reports, charts, statistical analyses Works with Excel, CSV, MySQL, PostgreSQL, SQLite, Google Doc Spreadsheets, ODF spreadsheets, MS SQL Server, MS Access Runs on Windows, Mac, and Linux
  • A positive contribution (satisfying to share something that helps lots of people across the world) The challenge – could I do it? Ability to gain a global profile on top of which a business can be built Can operate with very low expenditure – low risk of losing money Preference for openness
  • Merchandise Books Customisation Integration Charity-ware Being bought out (even 0.01% of the MySQL buyout would net US$120K) NB potential effectiveness of business model depends on product and context
  • The Bee-Keeper model Bees are meant to make honey The Bee-keeper's job is to keep bees happy, healthy and safe Bee-keeper sells honey to customers SOFA Problem I make nearly all the honey There are few bees There are no customers The bears scoff everything! (no criticism of bears of course – I have only contributed money to a tiny percentage of the open source projects I rely on) Whatever the reason, no income = no business model
  • “ In my mind, an entrepreneur is like a kid playing with his first shortwave radio. He takes it home and turns it on, and what does he hear? Nothing. Static. This might be demoralizing. So he tries a different frequency. Nothing. Static. And this might be demoralizing again. Until his mom wanders by and plugs in the antenna on the radio, and suddenly, he picks up the ghost of a station! It sounds like it's far away, and they seem to be speaking -- what is that language they're speaking? Never mind, it's a station! ...”
  • “ As the business progresses, you start trying to turn all the various knobs on your fancy radio set in order to get better reception or to find a station you like. And fortunately, in business, we founders have a lot of knobs to play with. There's price. Location. Employees. Marketing. Advertising. Return policies. Trade shows. Products. Search-engine optimization. ... At this moment, a founder who is incapable of careful morale management will think to himself, Maybe a career in HR management isn't so bad after all. Meanwhile, the determined founder will start playing with the dials -- rethinking the menu, trying new promotions, and adjusting prices. And what he'll find is that, just like the tuner on a radio, certain aspects of a business can be off by only a little bit and then, one tiny adjustment, and BING! The thing starts working.” [Emphasis added]
  • Matt Assay reluctantly concluded that pure-play strategies don't work for everything. Started promoting Open Core as a viable alternative.
  • Keep the Community Edition 100% open source Keep supporting and improving Community Edition Add extra features to a proprietary extended version Keep price low (student discounts etc) No loss to community users
  • Unable to find a successful pure-play OSS business model after 2 years Substantial project Thousands of hours coding, documenting, making video, packaging etc 30,000 lines of code Not just a small utility Taken on big challenges (i18n, cross-platform) Not “cripple-ware” Providing free support and documentation to community Can't continue to prioritise SOFA work if no income (4 children to support). No tenured position to fall back on So Open Core it is
  • Struggling to find an open source business model

    1. 1. Struggling to Find an Open Source Business Model
    2. 2. The Puzzle
    3. 3. SOFA Statistics
    4. 4. SOFA Overview
    5. 8. Output is HTML
    6. 9. SOFA Architecture Linking Importing SQLite MySQL MS Access PostgreSQL SQL Server Excel CSV Google ODF Python scripts ready to glue together HTML with Javascript and dynamic images. Printable and web-ready. Display within SOFA GUI
    7. 10. Dojo Javascript/SVG Toolkit for Charts
    8. 11. Matplotlib (and Boomslang) for Auxiliary Charts
    9. 12. wxPython for Cross-platform GUI Toolkit
    10. 13. The Popularity/Revenue Puzzle
    11. 14. Always Together?
    12. 15. Popular enough for Revenue?
    13. 16. Global Downloads – A Positive Picture 65,000+
    14. 17. Reviews – A Positive Picture “ My hope is that this program becomes an adopted industry standard of sorts, mentioned in everyday conversation by organization workers the world over. And, given its free and multi-platform nature, ... this hope of mine may not be an unrealistic one.” John Knight. Linux Journal
    15. 18. Some Very Encouraging Responses
    16. 19. Videos being viewed and embedded
    17. 20. Wide range of users Professor of Children’s Health in US Geotechnical researcher in Israel Lead Researcher in an Asian genetics lab Nutrition teacher in French part of East India Agricultural statistician in New Zealand Small fruit company researcher Brazilian University student (estimated 1/3 of all users are students) Freelance researcher in Sweden Aid worker Malawi
    18. 21. Verdict – project seems popular enough
    19. 22. The Struggle for Revenue
    20. 23. Monetisation <ul><li>Surely must be possible to sell affordable support to at least 0.5-2% (apparently a common rate for single-vendor commercial open source firms) </li></ul>
    21. 24. Warning Notes “ When you play the role of market spoiler it’s much easier to be famous than rich.” Dave Kellog (Technology commentator, former CEO of MarkLogic) There’s heaps of people out there that have said “Wow, the app store’s a goldmine. I’m going to get on this”. Reality is a bit harder. Knowing what will work and what won’t is just as hard as it is for any other business. Perhaps more so, because there’s so much competition. Just look at how much duplication there is out there in the app market. I’ve got a friend who sends me ideas for apps every now and then. In almost every circumstance, somebody already has something that does it, and I just send him the link back.
    22. 25. Success and Developer Business Success
    23. 26. The goal - profitability
    24. 27. Current reality …
    25. 28. Total Income (over 2 years) $100 (less Paypal, taxes etc)
    26. 29. Finding an Open Source Business Model
    27. 30. Why an Open Source Business Model?
    28. 31. Successful OSS Business Models
    29. 32. Android – Google advertising
    30. 33. Red Hat – Enterprise Guarantees
    31. 34. Mozilla – Sugar Daddy
    32. 35. Moodle - Partnerships
    33. 36. Eclipse - Competitors
    34. 37. Acquia – unique expertise
    35. 38. MySQL – Dual licensing
    36. 39. Other options
    37. 40. More Business Models
    38. 41. The Bee-Keeper Model
    39. 42. The Bears and the Honey
    40. 43. Just keep “twiddling the dial”? Joel Spolsky and the Importance of Persistence and Morale
    41. 44. Twiddling the business dial ... You can be one small change away from success (if you don't give up too soon) … how-hard-could-it-be-start-up-static.html
    42. 45. Experiments Version 1.0 Release
    43. 46. After 2 years the verdict is in
    44. 47. Reluctant Conclusion - Pure play doesn't always work “ Add closed extensions to the core, still 100 percent open source project. Customers get full access to the source code to view and modify it. The user community loses nothing, but the company adds a compelling reason to pay it money for those ... that otherwise won't or can't.” [Emphasis added] Matt Assay A time to reap, a time to sow: A phased approach for open-source businesses
    45. 48. Pro Version / Open Core Model
    46. 49. Controversial “ This is not a good idea, you have to choose another business model …. SOFA is an excellent tool. But pro version will kill the project, because free users fall on a second-class citizens category. Sell statistics books based on SOFA, or t-shirts, but don't sell the software.” Anonymous feedback “ [V]ery few people who complain about the open-core model have actually tried building a business using any of these models. I suggest you go and try it for yourself.” James Dixon, CTO, Pentaho
    47. 50. Money for Work is Fair Enough Need feeding, clothing, educating etc
    48. 51. Questions/Reactions ? ? ? Your thoughts: <ul><li>Is there a realistic alternative in this case?
    49. 52. And when is pure-play OSS good business? </li></ul>