Subject: Re: Open Source Developer Exchange
From: Tom Lord <lord@emf.net>
Date: Fri, 28 Feb 2003 19:48:12 -0800 (PST)



      I'm interested in starting a compay similar to what Cosource
      used to be [....] an exchange where buyers can
      sponsor development of features for open source projects. 

      So, why did these companies fail?

In my opinion: lack of focus, and consequent lack of optimization.
They sell too low-level, too general a product, thus they miss
focusing on what's being demanded, and they fail to achieve economies
of scale.   How large, exactly, is their value-add over a google
search for developers-for-hire?

Biggish profitable companies (well, RHAT anyway) sell both roughly
(updates) and specifically (custom development) the same thing but
with the differences that:

	1) In the common case (updates), customers don't have the
           hassle of trying to identify exactly what features they
           want to buy or what they cost.  Instead, RHAT is busy
           studying and optimizing for their collective needs, and
           boiling it all down to (quite inexpensive) fixed-price
           subscriptions that probabilistically do the job.

	2) In the uncommon case (custom development), it's just an
           add-on that makes the common case more valuable.   RHAT 
           _could_ sell custom development at cost and it would still
           make sense -- because it makes their subscription products
           more valuable.

	3) In the common case, by selling the probabilistic
           development of desirable features "redundantly" to 
           multiple subscribers, RHAT implements an economy of scale
           that is very valuable to their customers.

Smallish profitable companies (sole proprietors and the like) in the
same market (features for money) have similar advantages:  focus on
the needs of specific customers they tend to know, individually;
economies of scale when they manage to get a set of customers with
overlapping needs.

In short, a feature exchange is like an inconvenient and unrealistic
wholesale option in a retail market.  People would have to think too
hard in order to use such a service.  It schematically describes the
economics, but other vendors are doing a better job of nailing the
details of actual demand by specializing.

Additionally, for programmers, it's a really perilously uncertain 
kind of model to commit to.   So while, if most programmers were 
working by that model, then sure, that's how things would work --
between here and there you'd have to aquire a critical mass of
programmers and its just not all that attractive an option for them.

-t