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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?"
What were the special challenges or obstacles faced?
/. responses ... Work *hard* on finding yourself customers, harder than you want to, even ...
Finding customers. NEVER underestimate how important this is to the success of your company.
All other problems, and yes there are many with relation to OSS in general, are insignificant.
So many startup guys get rolling, only to be void of life 4 months later because they weren't daily working on getting clients on board who will pay the bills and provide lifeblood to the rest of the company.
Sounds obvious, but I just wanna point it out before it gets lost in the
; -- the corruption of government starts with its secrets. a truly free people keep no secrets. --
Tax forms from the IRS are free. But many people pay someone (who knows what they're doing) to fill them out for them.
I have been working on this project for the pass two years on allowing independent music website a way of selling individual tracks to their users. But after a year of no real bites i decide to turn it up a notch and make it my own business. Which is now . The transition is a whole lot different and a whole lot more stress. You have to be able to hang on and fight for your dreams. Make sure you look for the most efficient ways of promoting your product. Join Newsgroups and etc.... Starting up a business is very difficult so don't expect a cakewalk. Your competition doesn't nee any more competition so you are going to have to be creative in your product and how you market it. I wish i could find forums and website that help guide you through this process but i can't find any right now but if any one knows of any let me know.
So in a nutshell, good luck. But if you start generating any money on your project, a fellow developer can download the source and make it a policy to undercut your support pricing by 20%. Many customers will stay with you because of additional benefits provided (they like the service better, they like you personally, etc.), but some might switch, too.
Can't be said enough. How many times did we all hear about a dotcom that was gonna do just fine because they had exactly *1* customer who was playing sugar daddy (trans: had a piece of the action) and they swore up and down that they were gonna sign a second customer any day now?
Technical knowledge alone won't get you half what you need. Team with a sales person. Just like there are born geeks in the world, there are born salesman. The sort of guys that see free stuff and just instinctively think "I can sell that 12 different ways, I can sell the service I can sell the support I can license the trademark I can merchandise the logo...." You should be able to at least get out of the starting gate with a good salesman on your team.
Then you'll need somebody with business savvy to start making it look and act like a real company and not just a guy with an idea and a guy selling that idea.
Good luck!
www.HearMySoulSpeak.com
By making your work open source, you let your biggest competitive advantage, the fruits of your intellectual labor, slip through your fingers. Consultants who have offices closer to customers can compete with you to provide support, integration services, and development. Seven guys from India who share a one bedroom apartment and will work for $7/hour can compete with you. If your software is even reasonably well documented, competent software engineers all over the world will be able to add to it, modify it, and support it for their customers.
Your best bet is to come up with a new product, make it closed source, and get paid like the guys who sell WinZIP, WinRAR, UltraEdit, Vedit, FTP Voyager, FTP Serv-U, etc.
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
Yes but remember MOST of those people paying to have their taxes done do NOT have itemized deductions or the complexity of corporate accounting to worry about.
MOST of them could actually spend 30mins and do them themselves with no prior experience and only the information that accompanies the form.
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.
I admit that I'm MUCH more familiar with the PocketPC market than the PalmOS market. However, here's two business models that seem to have worked well in the PocketPC market (at least among the hardware vendors I know and have had machines from: Hitachi, LG, Audiovox, and HP):
1. Get on their Shareware Catalog. Almost all third party vendors (I doubt you could do this with Palm, Inc. but Handspring and Sony spring to mind, and I'm sure there are others) want to differentiate their product by having more prebundled software come with it, and one way they do this is with a shareware CD that has setup programs all ready to go and linked into the (usually HTML) CD documentation.
2. Lower the cost of the OEM license until it doesn't make sense for them NOT to do it. $1/copy would do the trick- especially if you point out that they can really increase sales because your product makes their hardware compatible with a LOT more systems. They won't blink at giving up 1/100th of their profits to you if you increase their market share by a few million machines.
SJW: a person who perceives an injustice, and while correcting it, commits a greater injustice.
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?