From bazaar to market: conceiving a sustainable business model

Proposition for a sustainable business for SDG market

Introduction

The open source model is a great way of distributing knowledge in a completely unbridled way. The main issue faced by this model is financial sustainability. As our market seeks to solve this issue for a wide array of projects it needs to think about its own sustainability too. In this article, I will review existing business models used by open source projects and propose a fitting model for our project.

Open core models

Various Open Source businesses, as opposed to projects, opt for an open core model. Where, as the name implies, the core of the project is open but the company running it develops additional functionalities that one has to pay for and those are generally kept proprietary otherwise they cannot justify having you pay for it. This model characterized most of the early open source businesses. It is kind of a pretty natural business model and relatively easy to put in place. The obvious flaw of this model is the conflict between developing the functionalities of the open project and developing the proprietary project for revenue.

Support and services

Another commonly found model is the support and services model which often implies dual licensing. A company decides to license its product as open source where you generally have to build and support it on your own or with help from the community. While they also offer a second license that comes with additional services such as customer support, debugging, consulting or other added value services. This kind of model has worked well for Red Hat the used to be the highest valued open source company now owned by IBM. A flaw of this model is that it can lead developers to develop in a non-user friendly way such that they actually have customers. Of course, that is also counterbalanced by the market.

Other models

SAAS is one of the most recent entrants in the open source business model. Companies like WordPress or Github work like that for example. They deliver a platform on which you can access their project hosted for different price tiers. This is apparently the most “risk-free” business model since it doesn’t put your business directly at odds with your community. The only risk, however, is being surpassed by a bigger or better cloud service provider. Companies like Redis, MongoDB, and Elastic have to work the line between open source and proprietary to protect their business precisely because of that exterior risk.

Our model

The most evident business model for our market is clearly one of software as a service. My proposition has to do with the way our developers’ market functions inherently. The aim is to provide financing to projects but also provide investors with data so that they can make sense of such projects. My idea is that we could sell investment packages based on the data we collect. The great advantage in that is that we have a vested interest in making the platform better for our users. Both in terms of user retention and in terms of quality of the data obtained from various projects. So, on the one hand, we would sell these collected investment packages and on the other, we could sell direct access to the data for companies that want to develop their own investment packages. That will let us see other investment firms as partners or clients and not as competition. We then have two revenue models that can combine to make us sustainable.

SDGs

Furthermore, regarding the original SDG component of the market. In my opinion, it should be our responsibility to foster projects that work at one of those goals free of charge. We could have the large platform for all kinds of projects and the one for SDGs primarily where the API would be free to access at all times. The open data would further increase sustainability. This idea goes hand in hand with that of having a developers.market and a sustainable.developers.market as Sofia mentioned in her branding proposition.

Community

In order to best respect our community, I don’t think it is going to be sufficient to just remunerate our developers with tokens. This is inherent to our project but might also apply to other projects on the market. The realities of our project are such that in order to really be decisive we will need to leverage the community as best as we can. Hence also the motivation of token remuneration. The only problem with that is we are the first to operate with such a mechanism and the value is not yet totally clear. This is why I think that a percentage of our revenue should be linked with the tokens delivered this will lead to people really seeing value in the tokens and not just a speculative value. We could either decide that all revenue is shared using this token mechanism or a fixed percentage of our revenue which would give us more control. We could revise this amount every fiscal year or so. Another possibility is to deliver stock options depending on the tokens.

Conclusion

All in all, there are many ways we could go about turning this project into a sustainable business, but in my opinion, the sale of investment packages and data model would lead to the best outcome both for our business and our community.

Sources:

https://opensource.com/article/17/12/open-source-business-models