1. How to Organize and Fund
Free Culture Projects
Kevin Shockey @shockeyk
Founder, Mis Tribus

2. What?
Free culture projects often fail
due to a lack of resources.

3. So What?
By focusing on raising funds and resources,
a project can increase its' chances
of survival

4. Why me?

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:
- 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. Eric Ries – The 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
 One Blogger post triggers:
- 5 automated social messages on 5 different accounts
- 3 Twitter accounts
- Linked In
- Financing Freedom Page on Facebook

12. NW St Johns Bridge

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
- Projects need to convert users into contributors

16. State of FLOSS?
 Projects in growth, maturity, and decline 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. What Can 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?”

21. General trends for mature projects - Linux

22. Apache

23. MySQL

24. PHP

25. Open Source

26. GPL

27. General Conclusion
Most popular projects, open source itself, and free software are ALL in decline!

28. Emerging Technologies Dominated by FLOSS – Linux Cloud

29. NoSQL

30. Hadoop

31. Growth Projects
They are clearly in the growth stage of their adoption

32. SW Hawthorne Bridge

33. Google Scholar Advanced Search
 Google version 0.7, circa 1996?
 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.)

34. 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

35. “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

36. Two Distinct Stories
 Strong growth by open source. 2012 may be the most important year ever
 Free software has received limited researched attention:
- Out-published by a margin of 8 to 1 by open source.

37. 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. Most Famous Bridge

39. SourceForge Research Data Archive (SRDA)
 Many tables archived from February 2005 to present
 Data includes any churn in any count of: active users, projects, messages, etc.
 Slides

40. Observations
 User base is still growing, but it's slowing down
 There is a sharp increase in the number of new projects
 And the number of new packages are also up
- But:
- Releases are down
- Number of files are down

41. Is GitHub Eating SourceForge's Candy?

42. SourceForge and GitHub Smackdown
 Four comparisons
- Number of Users
- Number of Academic Papers
- Number of Repositories
- Bonus
 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

43. Round 4 – Source Code Repository Usage

44. Another Bridge

45. 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

46. What is Open Source Failure?
 A project that is unable to grow a community beyond the founder.
 A project that fails to ship anything.
 Abandoned projects

47. 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

48. SourceForge Projects
 324,000 projects
 268,554 projects with only 1 developer (83%)
 Only 21 projects with > 100 developers

49. Developers Per Project

50. 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

51. 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

52. Irrelevance is Your Enemy

53. Thought Experiment
 Put the following non-profits in order of their revenues:
- Apache Foundation
- Free Software Foundation
- GNOME Foundation
- Mozilla Foundation
- Perl Foundation
- Wikimedia Foundation

54. Breaking Bridge

55. Free LOSS
Section Two – How to Organize
and Fund Free Culture Projects

56. 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 __________________

57. Resources = Time = Opportunity
 Most projects fail
 They fail due to a lack of resources
 What resources?
- Community
- Contributions
- Participation
- Money
- Attention

58. 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

59. Fund-raising Alternatives for Startups
 Bootstrapping
 Seed funding
- The 3 F's
- Dumb money
- Equity investment

60. Examining Popular Foundation Revenues

61. Foundation Metrics
 If they are a 501(c)(3), they must file publicly their financial statements
 IRS Form 990 or 990EZ

62. 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

63. 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

64. Case Study: Apache Foundation
Apache Foundation Revenues
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$-
2006 2007 2008 2009 2010

65. 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

66. 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

67. 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

68. 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

69. 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

70. Mozilla Foundation
2011 Annual Report (sort of)

71. Mozilla Versus the World

72. Free Software Foundation Drill Down
 Primary channels are:
- Website
- Email
- Conference participation
 Little or no social media

73. 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

74. Another Bridge

75. 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

76. 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 market will be worth $50 billion in ten years
10. Our projections are conservative (Kawasaki, 2012)

77. Fund-raising Best Practices
 Build a Foundation
 501(c)(3)
 Establish a Fund-raising Program
 Obtain Grants
 Corporate Donors
 Community

78. Best Practices for Startups
 Build something interesting
 Innovation Accounting
- Testing
- Methodology
 Team
- Talent
 Leadership
 Use Web2.0 and Cloud Computing

79. 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)

80. Setting up a 501(c)(3)
 Supporting documentation:
- Formal articles of incorporation
- Create corporate bylaws
- Appointment and record of every board meeting and action.
 Financial data
- Financial statements
- A current balance sheet
 Open to foreign corporations
- Donations are not exempt

81. IRS Application
 Form SS-4 – Employer Identification Number
 IRS Form 1023 – Application for Recognition of Exemption
 IRS Form 2848– Power of Attorney
 Organizations must usually file a form 990 (or 990-EZ) every year

82. 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

83. 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 (*)

84. 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/ (*)

85. 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

86. Finding Private Foundation Grants
 Other 501(c)(3) Organizations
- Private Foundations
 The Number One Complaint of Foundations:
- People do NOT do thorough RESEARCH!
- If you do NOT qualify – do NOT apply!
- When in doubt, reach out...
 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.

87. 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

88. 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

89. Total Giving By Top 100 US Private Foundations (June 2012)
$18,498,784,792
$46,900,000,000

90. Why Corporations Give?
 Creating programs to use company employees as volunteers
 Forming partnerships
 Promoting the corporation
 Gaining cost effectiveness
 Creating a win-win situation

91. Best Practices for Corporate Donations
 Create list of corporations
 Identify A-list prospects
 Personal contacts make a difference
 Stay in touch
- Add to social network
- Engage with your network directly (Thank you, RT, posts)
 Don't take “No” for an answer

92. Corporate Solicitation Kit
 Current list of board of directors
 Mission statement
 Budget information
 Purpose of funding request

93. Most Common Forms of Corporate Support
 Cash
 Matching donations of employees
 Employee time
 In-kind

94. The Power of the Crowd
Crowd Funding &
Sourcing

95. Contributions From the Crowd
 Crowd funded
- Crowd funding platforms
- Donations
- Merchandise
- Customers
 Crowd source
- Bugs, testing, documentation, code, design
- Governance

96. 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)

97. Kickstarter
56% of all projects fail!

98. 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%
Over all Aver age 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

99. 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%

100. Kickstarter Best Practices
 You're already a 501(c)(3) non-profit
 You have an existing brand, fan base, or personality
 Extensive pre-launch preparation
 Social networking:
- 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
 Kickstarter platform:
- Your project explanation is clear and concise
- Imbalance between offer and value
- Getting too greedy

101. Kickstarter Best Practices
Crowdfunding forces a proof
of concept before the product
hits the shelves:

102. 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

103. The Crowd as Donor?
 In 2009, the Giving USA Foundation reported individual donations were $217.79 B
 Of a grand amounts donated, the top 5 types 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

104. 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

105. Why we give, or don't
 Different kinds of giving, and therefore different explanations
- People who are religious give more
- People who plan donations, give more
- People who have more, don't necessarily give more
- Senior citizens who volunteer live longer

106. How giving makes us feel
 Experience internal satisfaction, the “warm glow”
 Helper's high, which increases our feelings of self-worth
 Some research links oxytocin to generosity:
- Amygdala has oxytocin receptors
that control feelings of safety

107. Crowd Sourcing = Building Community
 Who ever has the biggest social network wins
 Build-Measure-Learn
 Using Social Media

108. The Art of Community

109. Final Bridge

110. Transmedia Production and Lean Startup Mashup
 Max Strategy
 Big Data
 Innovation Accounting
 Expert Systems
 Machine Intelligence

111. Transmedia Production and Social Media
 Caves
 Supermarkets
 Rain Clouds
 Better To Give

112. Afraid Of Caves?

113. Caves Are Like…
=

114. Social Media Is…
 The Unknown
 Dark
 Scary
- Most of your customers are in there
- And they’re probably talking about you!!!

115. Filled With Treasure

116. Unusual Characters

117. Just Do it!

118. Do Whatever It Takes
 Hire a guide
 Get some tools
 Learn the ropes
 Talk to people

119. The Internet Is…

120. Social Media Is Like A

121. 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

122. ∞ 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

123. Social Media Is Not…
About
You!

124. 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

125. 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

126. Final Suggestions
 Those who use social media will learn what works
 Break it down:
- 3-5 simple tasks
- Do them daily
 And…

127. Grow your Network!

128. 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...

129. 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

130. Cutting Costs
If you can spend less time marketing,
recruiting, and networking…
Spend more time producing

131. 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

132. 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

133. Questions & Discussion
Thank You!
kevin@mistribus.com
@shockeyk
@mistribus
@_ff12