Subject: towards a broader definition of an FSB
From: "David Kaufman" <david@gigawatt.com>
Date: Mon, 23 Sep 2002 02:15:53 -0400

i've been reading with great interest the "Successful FSBs" thread.
Simon started the thread as a request to identify and interview some
FSB's "that are in the black" for an article (and tossing out
Activestate as an example of and FSB that was profitable).

not surprisingly much of the ensuing discussion has quickly centered
around whether ActiveState *is* a "Free Software Business" at all, which
leads, of course, to the inevitable question, what is the definition of
a Free Software Business?  what must a business do (or not do), sell
or not sell, say or not say, to be a Free Software Business?

to define a term i think you have to begin by decomposing the term.  to
be a Successful Free Software Business, an organization would have to be
three things:

Thing One: Successful,
Thing Two: a Business, and
Thing Three: a member of that specific subset of businesses known as
"Free Software Businesses" (the exact definition which would seem to be
eluding us)

but before we tackle that big Third Thing, Free Software Businesses,
let's take a look at the other two.  if it isn't successful, it can't be
a Successful Free Software Business, so i'll follow Simon's lead and
accept that "profitable" (receiving more money than one spends) or even
"in the black" (having more assets than one has debt) is as good a
definition as any for "successful" for a business.  if i'm mistaken
here, and anyone does want to debate that the receipt of plenty of money
!= business success, then skip to the end now :-)

it's interesting that we have, here and now, actually questioned the
definition of a "Business", and many seem to feel that there is a type
of business (dubbed a "lifestyle" business) which is not a businesses at
all, for the purposes of this discussion, and therefore cannot even be
*considered* in out quest for Successful Free Software Businesses.  i
object!  while i (can only *attempt* to) define "lifestyle businesses"
anecdotally here as the self-employed, the freelance developers, the
sole-proprietors of their one-person businesses, and the independent
contractors who start, fund and operate their own for-profit operations,
and some small semi-profitable or as-yet-unprofitable groups doing
FS-related work, i think to exclude these from the discussion would be
a mistake, and would do a great disservice to the Free Software
community, many of whom fall squarely into these categories.

the business world does not exclude the small businessperson from
inclusion, so why would we?  in fact, the generally accepted opinion is
that, while the smaller business, and especially the "micro business",
as these lifestyle businesses are sometimes called, may have certain
disadvantages in funding, power, and ability to scale, they also often
have the greater ability to innovate, and to adapt more quickly to
changing technologies and market conditions.  the lifestyle business is
merely the infancy of some businesses, and the goal of others (just to
support their boss-less lifestyle).  while many businesses die in this
infancy, many others grow up.  microsoft and apple both began as
"lifestyle businesses", so the only rationale i can see for excluding
them from this discussion, *or* from Simon's Interviews, is that the
purpose of this discussion (and/or Simon's article) was to locate only
Successful Free Software Businesses that are successful (profitable)
enough, today, to be a) likely candidates for one's stock market
investments, b) suitable employers for developers seeking comfy salaries
and a pension plan, or c) a tenant for your $500/sqft office space
recently vacated by a defunct dot-com, inc. (complete with hot and cold
running coffee, whirlpool jacuzzi and built-in nerf arsenal).

some of us here (and some of Simon's perl.com readers) may very well be
seeking promising stocks, a good job or a stable tenant, but unless
everyone else disagrees with me on the point, i'd ask that "lifestyle"
businesses not be excluded from the definition of Free Software
Businesses, and certainly not from the definition of a *successful* free
software business unless the term is changed to "Large Affluent Free
Software Corporations"

now, the third thing.  if a person or group can be considered a
business, and if it is also profitable, what must it additionally do,
not do, sell or not sell, to be considered a free software business?  is
this different from an open source business?  must it be a "good" open
source business, or can it dual license products both freely and
restrictively and still be a free software business?  can it deal in
other things besides free software and still be a free software
business?  can it sell hardware?  can it do anything other than
*develop* free software?  can it distribute free software for a fee, and
if so, can it use Microsoft Windows to print the CD labels or would that
make it a non-free-software business?  Must all a free software
businesses employees run Linux on their desktops?  at home?  if a "pure"
free software business is one that only makes use of open-source
technologies, can it's employees read restrictively licensed O'Reilly
books on open-source topics? openly licensed books on closed source
projects?

if these seem like silly questions it's because the topic is a bit silly
to the rest of the world.  open source to most, still means free as in
beer.  while it has become a time-honored tradition to fiercely debate
the definition of the term "Free Software", i'll hope we can agree to
allow *that* debate to remain outside the scope of *this* debate.  the
new debate is, if money is the measure of success for a business, but
how does one make money selling something that is free (as in beer)?
this is the purpose of the list.  is the term free software business an
oxymoron?

one answer i heard that i liked a lot was that making money with open
source software is the same as selling another commonly used product
that is freely available elsewhere: water.  it flows "freely" from our
taps, down our rivers and by golly falls on us from the sky.  so why are
users willing to pay over a buck a bottle for H20?  because it turns
out, there are probably a thousand different ways to add value.  to one
customer, convenience is value enough.  to another, the perception that
it is somehow purer than regular free-as-in-beer water makes it work
$1.29.  to others, bottled water is more flexible because you can
refrigerate it and it tastes better cold.  never mind the fact the fact
that you can refrigerate tap water, too, because that would require
buying empty bottles separately.  market research has shown that when
asked the this question, consumers say that it would be too much of a
troublesome cycle to go through, to buy the empty bottles, fill them
with free tap water, refrigerate, drink, and then wash and re-use the
bottles.  it's less hassle to just buy the bottles with water already in
them, drink, trash the empties, and buy more.

for software it goes to the age-old pricing conundrum.  if we charge too
much our customers may not be willing to pay the price, or not be able
to afford it, but if we charge too little, they will think the product
is low quality.  so you charge as much as you think you can
realistically get.

one can develop new software, modify existing software, do custom
development for one-off projects, or try to develop more general purpose
software for distribution to a wider market.  one can sell software
embedded in hardware, cross-platform software, big shrink-wrapped boxes
with little $1000 CD's in them, or plain $5 CD's in loose bins with as
much software on them as they can hold.  you can license it (maybe),
support it for a fee, rent the use of your software as a App Service
Provider and never distribute a line of code, or do like Microsoft wants
to do and distribute the software, then expect the users to pay a rental
fee for it's continued use.  well.  you can try to do that... :-)

we need businesses to try all of these things and more, to succeed
sometimes and to fail sometimes, before the world can settle down, and
assimilate the concept and the flow of free software with which it is
even now faced, and accommodate the changes that must inevitably take
place in the current old outdated information/knowledge commodity
markets, the software publishing, book publishing, music publishing and
movie distribution industries.  each has to embrace the new freedoms of
information that every human will soon have at their fingertips to
duplicate and disseminate these forms of information.  the Free
Software concept is one helluva bold attempt by programmers to accept
this future, especially as the developers, the artisans and the authors
of the Presumably Valuable Information.

the very question of *if*, much less how, any so-called business might
succeed in even the widest arena involving free software is a dubious
and open-ended one, indeed.  it's a simply stated question with no
simple answer.  let's be strict in what we define as Free software, but
very open-minded in terms of what organizations we allow to be
considered Free Software Businesses.  In fact, let's let everyone, even
ISS and the Apache Foundation participate by broadening the term even
more to "Free Software Organizations" so that profit is NOT the only
measure of success, but mere activity and interest counts too.  The
Apache Foundation is successful when it merely funds it's own
development.  Is it not a successful open source organization because it
only funds itself, and doesn't make millions of dollars?  As independent
contractors, many of us measure our success not so much by the amount of
money we acquire, but by whether we meet other goals, like making enough
money to meet our personal and family's needs, without spending so much
time as to not be able to watch our kids grow up.  Success by meeting a
combination of modest monetary and other more altruistic goals is
success, too.

-dave