Subject: Re: "Reasonable Profits"
From: Bob Weiner <weiner@altrasoft.com>
Date: 01 Sep 1998 22:42:49 -0700

>>>>> "JG" == John Gilmore <gnu@toad.com> writes:

   JG> The FSB list appears to have grown beyond its original membership, to
   JG> people who are more interested in tearing down free software
   JG> businesses than in building them.  Perhaps these people are infected
   JG> with the self-destructive virus many progressives carry, that in
   JG> creating great amounts of value in the world, one must somehow
   JG> "exploit" somebody, somewhere.

Funny, I was just about to write in about how refreshing it was to hear
from Frank Hecker and David Henkel-Wallace, people with solid experience
on the business-side of interacting with larger corporations and helping
to produce value equations that can generate sustainable, high-growth
businesses.  I think they and others among us are genuinely interested in
whether someone can produce a scalable, replicable FSB model.

I have heard no discussion of exploitation or of any bias against FSBs,
unless non-linear growth in some way bespeaks of anti-FSB views, which
I seriously doubt.

Let's not drive away people with serious business interest, experience and
expertise just because they speak of concerns with particular ideas.  There
is already way too much random thought on this list looking for bases in
reality that can back it up, rather than thoughtfully experienced and
researched philosophies and business models.  If people are interested, I can
post my notes from a talk by Darlene Mann, a VC, on what actually constitutes
a business model.  I think that may open some eyes to the complexities of
building sustainable businesses.

I can tell you from our own two years of experience at Altrasoft in selling
some GPLed tools to major organizations, that there is a distinct and
reasoned bias against purchasing anything that can otherwise be obtained
without a purchase.  The $1000-and-up purchasing processes in many major
corporations is purposefully designed to be difficult to navigate and
successfully complete in order to help hold costs down (when you have 10,000+
employees all trying to meet their own specific work needs, it is easy for
spending to spiral out of control).  This means that most bright people will
avoid it wherever they responsibly can.  Thus, if they can get nearly the
equivalent value from a quick and simple net download, there is near zero
incentive for them to promote a purchase from a vendor.  Service is useful to
corporations but in our case, selling into the technologist marketplace,
interest is largely driven by the technology itself and if they can obtain
that without a purchase, there is seldom enough of a perceived benefit to go
through the purchasing cycle to get the service.  We have even had clients
say that they wanted to pay only for the new features of the product that
were not available on the net.  These are some of the issues that any FSB
serving similar markets will face, all on top of the hundreds of other
risk-factors that any growth-oriented business faces.  (Consumer markets are
largely different because the user, buyer and decision-maker are often one
and the same and there are no formal purchasing policies.)

As a businessperson, your job is to help face issues like these and resolve
them in ways that benefit your firm, your investors and your clients.  As an
FS businessperson, you start out with more risk factors (though the risk
involved in spending marketing and distribution dollars might be reduced by
leveraging the net).  The opportunities are still there, you just have to
be prepared for long battles and clients whose value systems, even if
pro-free software, may not support allocating funds towards your FSB.

Cheers,

Bob