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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
                          of survival
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
 - Freedom
 Cloud computing and proprietary platforms, like iOS, are:
 - Reducing awareness of FLOSS contribution
 - Reducing interest in freedom
O'Reilly Home Page (06/16/2012)
Disclaimer




                  Some of this class
                Is based on theories
             I'm currently researching
                           And using
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
Software Development Project Methodologies
 Waterfall
 Microsoft Solutions Framework
 Rational (IBM) Model
 Open Source
 Expert Programming
 Agile/SCRUM Development Method
 Lean Startup
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
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
Bridge
Assumptions
 Free Culture
 Project Execution
 Project Funding
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
“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
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)
Top 10 FLOSS Hall of Fame
1.     Linux Kernel
2.     GNU Utilities & Compilers
3.     Ubuntu
4.     BSD
5.     Samba
     (Top 10 Open Source Hall of Famers. (2009). http://mstrb.us/zjn6zK)
Top 10 FLOSS Hall of Fame
6.    MySQL
7.    BIND
8.    SendMail
9.    OpenSSH & OpenSSL
10.    Apache
Measuring FLOSS
 Through search, Google Trends
 Through search, Google Scholar
 Through investigation, Mining SourceForge.net Repository
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
What SEO Tells Us
 Many Thanks to Stephen O'Grady and his SEO research, which he shared: “The State of
  Open Source: Startup, Growth, Maturity or Decline?”
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 Mathematics” subject area
 - Year to Year (eg; 2012 to 2012, 2011 to 2011, etc.)
Open Source Academic Papers by Year
900




800




700




600




500


                                                                                                                      Direct Results




400




300




200




100




  0
      2012   2011   2010   2009   2008   2007   2006   2005   2004   2003   2002   2001   2000   1999   1998   1997
“Open Source” vs “Free Software” (since 1983)

900



800



700



600



500



400



300



200



100                                                                                                                                                             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
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.
Academic Paper Questions
 Has research on “open source peaked?
 Why isn't anyone researching “free software?”
 Has “open source” obscured the importance of free software?
Most Famous Bridge
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
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 SourceForge's Candy?
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
Possible Conclusions
 Certain aspects of open source are in decline:
 - Open source has moved beyond technology maturity
 - Cloud computing and apps are more popular
Another Bridge
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
Open Source Failure
 A project that is unable to grow a community beyond the founder.
 A project that fails to ship anything.
 Abandoned projects
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
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
 Geographical dispersion management through an extensive testing culture
 FLOSSD experience in accepting and handling the environmental limitations
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
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
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 do?”    (Ries, 2011)
Questioning Assumptions




            “In fact, piercing the reality distortion field
                   is quite uncomfortable. ”   (Ries, 2011)
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?
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 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 __________________
Resources = Time = Opportunity
 Most projects fail
 They fail due to a lack of resources
 What resources?
 - Community
 - Contributions
 - Participation
 - Money
 - Attention
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
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
Why Do People Give?
1. Belief in the cause
2. Recognition and honor
3. For a tax deduction
4. Family tradition
5. Religious beliefs
6. Joy
7. Guilt
8. Fear
9. To make a difference
Why we give, or don't
 Experience internal satisfaction, the “warm glow”
 Helper's 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, don't 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
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




$150,000.00




$100,000.00




 $50,000.00




       $-
              2006   2007              2008        2009   2010
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
Case Study: Apache Foundation
                     Apache Foundation Revenues

$600,000




$500,000




$400,000




$300,000




$200,000




$100,000




    $-
           2006   2007              2008          2009   2010
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
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
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
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
  America Online's 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
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
Mozilla Versus the World
Free Software Foundation Drill Down
 Primary channels are:
 - Website
 - Email
 - Conference participation
 Internet Marketing
 - Discover the niche communities
 - Adding value to relationship
 - Earning trust
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
Another Bridge
Top Ten Startup Fund-raising Lies
1. All we have to do is get 1% of the market
2. We filed patents so our intellectual property is protected
3. Our management team is proven
4. The large companies in our market are too big, dumb, and slow to compete with us
5. Our product will go viral
Top Ten Startup Fund-raising Lies (Continued)
6. Hurry up because our other investors are about to do our deal
7. No one else can do what we're doing
8. Several Fortune 500 companies are set to do business with us
9. Jupiter says our marker will be worth $50 billion in ten years
10. Our projections are conservative   (Kawasaki, 2012)
Fund-raising Best Practices
 Build a Foundation
 501(c)(3)
 Establish a Fund-raising Program
 Obtain Grants
 Corporate Donors
 Community
Best Practices for Startups
 Build something interesting
 Innovation Accounting
  - Testing
  - Methodology
 Team
  - Talent
 Leadership
 Use Web2.0 and Cloud Computing
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)
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
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
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
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 (*)
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/ (*)
How Can Grants Fund A Project?
 Must be able to align project's 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
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!
Top Private Foundations by Giving (June 2012)
1. Bill & Melinda Gates Foundation - $2,486,342,209
2. Walton Family Foundation, Inc. - $1,479,636,053
3. Genentech Access To Care Foundation - $587,337,392
4. Pfizer Patient Assistance Foundation, Inc. - $569,495,443
5. GlaxoSmithKline Patient Access Programs Foundation - $555,867,032
Top Private Foundations by Giving (June 2012) - Continued
6. Abbott Patient Assistance Foundation - $482,610,604
7. Ford Foundation - $424,695,000
8. Johnson & Johnson Patient Assistance Foundation, Inc. - $416,443,559
9. Sanofi-aventis Patient Assistance Foundation - $392,778,999
10. The Bristol-Myers Squibb Patient Assistance Foundation, Inc. - $392,567,134




$7,787,773,425
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 corporation
 Gaining cost effectiveness
 Creating a win-win situation
Best Practices for Corporate Donations
 Create list of corporations
 Identify A-list prospects
 Personal contacts make a difference
 Don't take “No” for an answer
 Stay in touch
 - Thank you
 - Add to social network
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
 Purpose of funding request
The Power of the Crowd




                         Crowd Funding &
                                Sourcing
Contributions From the Crowd
 Crowd source
 - Bugs, testing, documentation, code, design
 - Governance
 Crowd funded
 - Donations
 - Merchandise
 - Customers
 - Crowd funding platforms
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)
Kickstarter




              56% of all projects fail!
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
Kickstarter Failure Analysis
Funding 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%
Kickstarter Best Practices
 You're 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
Kickstarter Best Practices



                             Crowdfunding forces a proof
                             of concept before the product
                                   hits the shelves:
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
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
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 Intelligence
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 – 32,000,000
 YouTube – 3,000,000,000
∞ 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
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 trust?
 With trust comes permission
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
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, Tumblr, Hi5, & MySpace...
 All the small networks:
 - About.Me, Paper.li, PhotoBucket, Pinterest, Wikia...
 All future social network systems...
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
Cutting Costs




                If you can spend less time marketing,
                recruiting, and networking…
                Spend more time producing
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
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
Questions & Discussion



                         kevin@mistribus.com
                                  @shockeyk
                                  @mistribus
                                      @_ff12

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Financing Freedom Slides - Final

  • 1. How to Organize and Fund Free Culture Projects Kevin Shockey Founder, Mis Tribus
  • 2. What? Free culture projects often fail due to a lack of resources.
  • 3. So What? By focusing on raising funds (resources), a project can increase its' chances of survival
  • 4. Why me? Computer Science, Math, Financials, and Software Development
  • 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. O'Reilly Home Page (06/16/2012)
  • 7. Disclaimer Some of this class Is based on theories I'm currently researching And using
  • 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. Software Development Project Methodologies  Waterfall  Microsoft Solutions Framework  Rational (IBM) Model  Open Source  Expert Programming  Agile/SCRUM Development Method  Lean Startup
  • 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. 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
  • 13. Assumptions  Free Culture  Project Execution  Project Funding
  • 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. “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. 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. Top 10 FLOSS Hall of Fame 1. Linux Kernel 2. GNU Utilities & Compilers 3. Ubuntu 4. BSD 5. Samba (Top 10 Open Source Hall of Famers. (2009). http://mstrb.us/zjn6zK)
  • 18. Top 10 FLOSS Hall of Fame 6. MySQL 7. BIND 8. SendMail 9. OpenSSH & OpenSSL 10. Apache
  • 19. Measuring FLOSS  Through search, Google Trends  Through search, Google Scholar  Through investigation, Mining SourceForge.net Repository
  • 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. What SEO Tells Us  Many Thanks to Stephen O'Grady and his SEO research, which he shared: “The State of Open Source: Startup, Growth, Maturity or Decline?”
  • 22. General trends for mature projects - Linux
  • 24. MySQL
  • 25. PHP
  • 27. GPL
  • 28. Emerging Technologies Dominated by FLOSS – Linux Cloud
  • 29. NoSQL
  • 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. Open Source Academic Papers by Year 900 800 700 600 500 Direct Results 400 300 200 100 0 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997
  • 34. “Open Source” vs “Free Software” (since 1983) 900 800 700 600 500 400 300 200 100 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. 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. Academic Paper Questions  Has research on “open source peaked?  Why isn't anyone researching “free software?”  Has “open source” obscured the importance of free software?
  • 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. Monthly additions of users is slowing down
  • 40. User base is STILL growing - Just over 3 million users
  • 41. Sharp increase in the number of projects
  • 42. Number of packages is also up.
  • 43. Number of releases are down
  • 44. Number of files are down.
  • 45. Downloads are generally rising - Extreme variances are unexplained
  • 46. 3.6 Million in January 2009 *
  • 47. Is GitHub Eating all of SourceForge's Candy?
  • 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. Possible Conclusions  Certain aspects of open source are in decline: - Open source has moved beyond technology maturity - Cloud computing and apps are more popular
  • 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. 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. 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. SourceForge Projects  324,000 projects  268,554 projects with only 1 developer (83%)  44,446 “viable” projects (14%)
  • 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. 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. 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
  • 60. Build Measure Learn (Rabbit Hole)
  • 61. Build A good design is one that changes customer behavior for the better.(Ries, 2011)
  • 62. Modeling If we do not know who the customer is, we do not know what quality is. (Ries, 2011)
  • 63. Questioning Assumptions “What if they don’t care about [fill in the blank] in the same way we do?” (Ries, 2011)
  • 64. Questioning Assumptions “In fact, piercing the reality distortion field is quite uncomfortable. ” (Ries, 2011)
  • 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?
  • 67. Free LOSS Session Two – How to Organize and Fund Free Culture Projects
  • 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. Resources = Time = Opportunity  Most projects fail  They fail due to a lack of resources  What resources? - Community - Contributions - Participation - Money - Attention
  • 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. 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. Why Do People Give? 1. Belief in the cause 2. Recognition and honor 3. For a tax deduction 4. Family tradition 5. Religious beliefs 6. Joy 7. Guilt 8. Fear 9. To make a difference
  • 73. Why we give, or don't  Experience internal satisfaction, the “warm glow”  Helper's 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, don't 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
  • 75. Foundation Metrics  If they are a 501(c)(3), they must file publicly their financial statements  Form 990 or 990EZ
  • 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. 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. 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. 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. 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. 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. Mozilla Foundation 2011 Annual Report (sort of)
  • 83. Mozilla Foundation Drill Down  July 15, 2003 - The Mozilla Foundation is born with a $2 million start-up support from America Online's 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. 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
  • 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. 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
  • 89. Top Ten Startup Fund-raising Lies 1. All we have to do is get 1% of the market 2. We filed patents so our intellectual property is protected 3. Our management team is proven 4. The large companies in our market are too big, dumb, and slow to compete with us 5. Our product will go viral
  • 90. Top Ten Startup Fund-raising Lies (Continued) 6. Hurry up because our other investors are about to do our deal 7. No one else can do what we're doing 8. Several Fortune 500 companies are set to do business with us 9. Jupiter says our marker will be worth $50 billion in ten years 10. Our projections are conservative (Kawasaki, 2012)
  • 91. Fund-raising Best Practices  Build a Foundation  501(c)(3)  Establish a Fund-raising Program  Obtain Grants  Corporate Donors  Community
  • 92. Best Practices for Startups  Build something interesting  Innovation Accounting - Testing - Methodology  Team - Talent  Leadership  Use Web2.0 and Cloud Computing
  • 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. 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. 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. 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. 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. 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. How Can Grants Fund A Project?  Must be able to align project's 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. 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. Top Private Foundations by Giving (June 2012) 1. Bill & Melinda Gates Foundation - $2,486,342,209 2. Walton Family Foundation, Inc. - $1,479,636,053 3. Genentech Access To Care Foundation - $587,337,392 4. Pfizer Patient Assistance Foundation, Inc. - $569,495,443 5. GlaxoSmithKline Patient Access Programs Foundation - $555,867,032
  • 102. Top Private Foundations by Giving (June 2012) - Continued 6. Abbott Patient Assistance Foundation - $482,610,604 7. Ford Foundation - $424,695,000 8. Johnson & Johnson Patient Assistance Foundation, Inc. - $416,443,559 9. Sanofi-aventis Patient Assistance Foundation - $392,778,999 10. The Bristol-Myers Squibb Patient Assistance Foundation, Inc. - $392,567,134 $7,787,773,425
  • 103. Total Giving By Top 100 US Private Foundations (June 2012) $18,498,784,792 $46,900,000,000
  • 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. Best Practices for Corporate Donations  Create list of corporations  Identify A-list prospects  Personal contacts make a difference  Don't take “No” for an answer  Stay in touch - Thank you - Add to social network
  • 106. Most Common Forms of Corporate Support  Matching donations of employees  In-kind  Cash  Employee time
  • 107. Corporate Solicitation Kit  Current list of board of directors  Mission statement  Budget information  Audit information  Purpose of funding request
  • 108. The Power of the Crowd Crowd Funding & Sourcing
  • 109. Contributions From the Crowd  Crowd source - Bugs, testing, documentation, code, design - Governance  Crowd funded - Donations - Merchandise - Customers - Crowd funding platforms
  • 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. Kickstarter 56% of all projects fail!
  • 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. Kickstarter Failure Analysis Funding 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. Kickstarter Best Practices  You're 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. Kickstarter Best Practices Crowdfunding forces a proof of concept before the product hits the shelves:
  • 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. 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. Crowd Sourcing = Building Community  Who ever has the biggest social network wins  Using Social Media  Build-Measure-Learn
  • 119. The Art of Community
  • 121. Transmedia Production and Lean Startup Mashup  Max Strategy  Big Data  Innovation Accounting  Expert Systems  Machine Intelligence
  • 122. Transmedia Production and Social Media  Caves  Supermarkets  Rain Clouds  Better To Give
  • 125. Social Media Is…  The Unknown  Dark  Scary - Most of your customers are in there - And they’re probably talking about you!!!
  • 129. Do Whatever It Takes  Hire a guide  Get some tools  Learn the ropes  Talk to people
  • 131. Social Media Is Like A
  • 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. ∞ 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. Social Media Is Not… About You!
  • 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. 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. Final Suggestions  Those who use social media will learn what works  Break it down: - 3-5 simple tasks - Do them daily  And…
  • 138. Grow your Network! got permission?
  • 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. 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. Cutting Costs If you can spend less time marketing, recruiting, and networking… Spend more time producing
  • 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. 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. Questions & Discussion kevin@mistribus.com @shockeyk @mistribus @_ff12