Open-Source Angels

Posted on November 18, 2007
Filed Under Business and Investing, Cool Technology |

Intuition tells us that it is hard to sell something that anyone can get for free.  Yet freely distributed, open-source (hereafter abbreviated FDOS) projects make money for their developers and others on service, custom development, implementation, training, advertising, t-shirt and book sales, and all manner of other things that grow out of the project.

For those who contribute to FDOS projects but are not profiting, there are ways of giving to the community while simultaneously profiting.  Professors do this all the time; they freely give information, but if you need a lot of their time you enroll in their classes, hire them as an expert witness, as a consultant, etc. 

Profiting from FDOS projects does not require quitting the day job.  Patrons are sometimes willing to fund open-source projects, and they are looking for developers who will take interest in their projects.  A patron is not the one-dollar donator who clicks a PayPal link.  Some patrons simply want to see a piece of software exist, or add it to their personal blog, and they will pay for it.  More often they are a business or non-profit using an open-source framework to support their operations.  These patrons advertise their need in forums, or they silently wait and hope that someone will develop the features they need.  With some initiative and marketing skills, they should not be hard to find.  A business might need modules, themes, integration, or training.  If they need to integrate one open source project into another, migrate from one to the other, or develop a project from scratch, all the better.  Useful, long-lasting projects and tools can build one's reputation in the community and elsewhere.

Investors and venture capitalists sometimes want an interest in open source enterprises.  The hubris of tech-sector investors leading into 2000-2001 demonstrated that investors should exercise caution investing in new technology.  The technology sector crash hurt or destroyed some promising companies using open-source development models.  But the fact that listed stocks fell so quickly did not dry up private investment.  Seven years later investment in open-source models is strong, if cautious.  The stories making news are million or billion dollar deals; but when the big guys are eating cake, there are little guys sucking crumbs off the floor.

A small team or one-person shop will clearly have trouble finding an investor.  But if they have any business savvy they will find projects that people want badly enough to pay for.  A start-up can operate just like a custom programmer, albeit one who releases his or her work for peer review, posts security updates, and offers the software to a wider audience.  It is an "ivory tower" approach to custom programming. 

Some businesses will see the benefit of releasing their sponsored code for peer review and wider use.  Others never will.  Those who understand can enjoy positive PR by association with a popular project or module.  They will benefit from the peer review process, not having to rely solely on the security expertise of a local IT company.  Wider use of the project means that the project will stay updated without the business paying to have updates programmed.  The project will most likely stay patched, and a strong project will evolve into a multi-platform product with modules, themes, and other publicly accessible features that will benefit the original patron.

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