How to Organize and Fund Free Culture Projects Kevin Shockey - - PowerPoint PPT Presentation

How to Organize and Fund Free Culture Projects

Kevin Shockey @shockeyk Founder, Mis Tribus

What?

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

So What?

By focusing on raising funds and resources, a project can increase its' chances

• f survival

Why me?

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:
• 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

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

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

NW St Johns 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
• Projects need to convert users into contributors

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)

Top 10 FLOSS Hall of Fame

• 1. Linux Kernel
• 2. GNU Utilities & Compilers
• 3. Ubuntu
• 4. BSD
• 5. Samba

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

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?”

General trends for mature projects - Linux

Apache

MySQL

PHP

Open Source

GPL

General Conclusion

Most popular projects, open source itself, and free software are ALL in decline!

Emerging Technologies Dominated by FLOSS – Linux Cloud

NoSQL

Hadoop

Growth Projects

They are clearly in the growth stage of their adoption

SW Hawthorne Bridge

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.)

Open Source Academic Papers by Year

“Open Source” vs “Free Software” (since 1983)

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.

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 any count of: active users, projects, messages, etc.
• Slides

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

Is GitHub Eating SourceForge's Candy?

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

Round 4 – Source Code Repository Usage

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

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

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 1st two conditions reoccurs

SourceForge Projects

• 324,000 projects
• 268,554 projects with only 1 developer (83%)
• Only 21 projects with > 100 developers

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

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

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

Breaking Bridge

Free LOSS

Section 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

Fund-raising Alternatives for Startups

• Bootstrapping
• Seed funding
• The 3 F's
• Dumb money
• Equity investment

Examining Popular Foundation Revenues

Foundation Metrics

• If they are a 501(c)(3), they must file publicly their financial statements
• IRS Form 990 or 990EZ

Case Study: Perl Foundation

Case Study: GNOME Foundation

Case Study: Apache Foundation

Case Study: Free Software Foundation

Case Study: Mozilla Foundation

Case Study: Wikimedia Foundation

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
• perations of the Mozilla Foundation.
• The Mozilla Corporation (abbreviated MoCo) is a wholly owned subsidiary of the Mozilla

Foundation

Mozilla and Subsidiaries

Mozilla Foundation

2011 Annual Report (sort of)

Mozilla Versus the World

Free Software Foundation Drill Down

• Primary channels are:
• Website
• Email
• Conference participation
• Little or no social media

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 market 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)

• 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

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

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
• 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.

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
• Stay in touch
• Add to social network
• Engage with your network directly (Thank you, RT, posts)
• Don't take “No” for an answer

Corporate Solicitation Kit

• Current list of board of directors
• Mission statement
• Budget information
• Purpose of funding request

Most Common Forms of Corporate Support

• Cash
• Matching donations of employees
• Employee time
• In-kind

The Power of the Crowd

Crowd Funding & Sourcing

Contributions From the Crowd

• Crowd funded
• Crowd funding platforms
• Donations
• Merchandise
• Customers
• Crowd source
• Bugs, testing, documentation, code, design
• Governance

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

Kickstarter Failure Analysis

Funding for Failed Kickstarter Projects, by Percent

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

Kickstarter Best Practices

Crowdfunding forces a proof

• f 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 $217.79 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

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

• 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

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

Crowd Sourcing = Building Community

• Who ever has the biggest social network wins
• Build-Measure-Learn
• Using Social Media

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 About You! 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!

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

Thank You!

kevin@mistribus.com @shockeyk @mistribus @_ff12

Questions & Discussion