This document discusses strategies for organizing and funding free culture projects. It notes that many free culture projects fail due to a lack of resources. By focusing on raising funds through methods like donations, merchandise, and grants, projects can increase their chances of survival. Successful foundations and projects employ modern internet marketing strategies to build communities and attract financial support through various channels like websites, email, conferences, and social media.
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
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?”
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
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
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
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
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
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
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
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)
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
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
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
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…
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