Slashdot Mirror
Converting an Open Source Project into a Business?
Yaztromo asks: "I'm about to try to make the jump and move my jSyncManager Project from being a time-consuming hobby into a full-time business. I'm hoping to follow the model of other successful Open Source businesses by selling integration, development services and support contracts. Has anyone in the Slashdot community attempted to move their Free/Open Source projects from hobby to business? What were the special challenges or obstacles faced?"
He was just saying that the size of the market determines competitive interest.
If your open source support business (that relies on the product you wrote and GPLed) generates $30,000 a year, that's hardly enough for someone to get excited. (Oh, we could get a 33% market share by undercutting prices and then earn $10,000 this year!)
Things start to happen when the revenue number hits six digits. Then it's time for some bright college student to download the source, study the app and then buy a newspaper ad " Support! Lowest price in town guranteed! Free first consultation!"
For what it is worth, "friction" is economics jargon for anything that prevents markets from allocating resources with the perfect efficiency usually assumed in basic economic theory. Barriers to entry are one source of friction, but anything from information assymmetries, to transaction costs, transportation costs, etc. etc. all contribute to "friction". Part of the hyperbole of the late 90s was that information technology would enable "friction free markets" - but while it did reduce a lot of sources of friction in some markets, it created new forms in the guise of information overload, complexity due to choice proliferation, uncertainty from the speed that products and services became obsolete etc., etc.
I've finally got around to changing my sig
A good small business resource is Score, www.score.org. Lot of good free advise and counseling from a non-profit.
Nope.
Unless you're making plenty enough money to either do or have your taxes done, these guys will prepare your tax return for free.
And if you're low-income and have problems with English, these guys will do your taxes for free.
Heck, go to your closest walk-in IRS office during tax season and an IRS employee will do your taxes for you, for free. Of course, if you've no real need for help (either because you made enough money to easily afford someone to prepare them for you or you are easily able to do your short form yourself) they'll decline to prepare your return. But people with a genuine need and the foresight to make an appointment get helped.
You keep doing what you do best: programming/enhancing your product.
Get a friend from high school (a big mouth usually) as a partner who will be in charge of just promoting and selling your products and services.
Contract an accounting person to show up a couple days a month to do your books, and a lawyer to help you with patents in the future.
Hire some buddies, hire part-time accountants, and get a lawyer...": That sounds like the formula that lead to the failure of so many dot-coms and is a likely way to dig yourself a financial hole into which all of your savings will go.
The first thing that you need is a real business plan. It needs to be based on sound financial analysis which take into account the potential market, marketing costs, labor costs, competition, office space costs, etc. If you can't get a bank or venture capitalist to finance your company, then take advantage of their wisdom and ask for specifics as to where they saw unacceptable risks. Most of them have seen many businesses start and fail and will have a lot of insight. Don't quit your day job just because someone on the Internet told you that you would get rich selling support services for your open source project.
Before you start talking about partnerships, you need to consult an attorney and an accountant. You need to determine what kind of legal protections and tax protections are offered by various corporate arrangements. Do you want to organize as a Sub-Chapter S, Sub-Chapter C, LLC, sole proprietorship, etc? I don't know the answers, but you need to know them before diving into such a venture.
Finally, you need to try to remain objective. This software is your baby. You've invested countless hours in its creation. But you still need to step back and be realistic when evaluating its future and the competition. Looking at your product, it seems to be appeal to a rather limited audience: PalmOS users who wish to sync their handhelds with Java-enabled PCs AND who cannot use, or are dissatisfied with, the free app provided by Palm for that purpose. Sony has just announced that it is dropping out of the U.S. Palm market, leaving Palm as the only significant supplier of PalmOS handhelds. That should be a serious concern to you. What's your plan if Palm goes out of business or stops supplying handhelds to the mass market?