Software Libre and Entrepreneurship

1. Software Libre and Entrepreneurship By Jon “maddog” Hall Linux International and Project Caua February 8, 2013

2. Warning! No magic here! To make money with Free Software you must first be a good business person!

3. Software Livre! Free as in freedom, not free as in beer. Free to read the source code Free to make changes to the source code Free to redistribute those changes Free to use the software for any purpose You can not limit another's freedoms No one has ever said you should not make money writing software.

4. It Is A Business Like Any Other Know your market Know your value added Who are, or will be, your competitors? A real business plan Marketing plan Market to the Chief Executive Officer Market to the Chief Information Officer Financial plan Cash flow analysis Exit strategy

5. Why Do People Write Free Software? They need it for their own work “They scratch their own itch” Other people may help them make it better Other people may pay them for their software They like writing software They have a business model based on service, not products

6. Why Do People Pay People To Write Free Software? They want the software written in a shorter period of time Paying someone allows them to work full time instead of only part time Kernel developers, as an example There is no reason not to share the results of the software being written They want a feature that is unlikely to be written by someone else They can leverage off other free software that has already been written

7. In The Beginning Hardware expensive, computers few Software hand-tailored, from beginning Not “computer science....computer black magic” “Punched cards and FORTRAN all you need” 1980s – Hardware was becoming less expensive Software was manufactured Today hardware is incredibly cheap Software should be tailored again

8. The Economics of Mass Production Meets 70-90% needs of 70-80% of market .70 x .70 = .49, less than half! Create commodity products What is a commodity? Corn? Cups Cars? Are business situations a commodity?

9. Software Companies Love Proprietary Software High Profits, low investment Few jobs, non-local Production software is like printing money Who calls the treasury for assistance? Who calls a farmer? It is in “their” best interest.

10. Total Cost of Ownership (TCO) vs Value Don't be fooled!

11. Most People Do Not Want Products Cars and Food People want service Making software do what people want

12. Service Highly trained and skilled service Like a brain surgeon Like a lawyer Not just packaged product installers

13. 80% of All Software Written... ...is NOT prepackaged, production software Systems Admin software Embedded Systems Software Manufacturing Software Other Why not hire an Open Source developer? Why not make your solution “Open Source”?

14. Jobs Programmer Systems Analyst Systems Administrator Product Manager Technical Marketing Manager Teaching Commercial Public Consultant Integrator

15. Rio de Janeiro:Lowering the Barriers Company investigating pharmaceuticals Proprietary software “Breathtakingly” expensive Only in English Open Source PostgreSQL database OpenGIS - GNUplot Perl Lowered cost of software for company Allowed company to exist

16. St. Petersburg • Turbine Test Bed • Proprietary Software • Expensive • Inflexible • English

17. Enter Linux • Software uses • MySQL • GNUplot • Tcl/Tk • Python • Less Costly • More Flexible

18. Sao Paulo Subway SystemRedirecting Money Saved Dirty subways, no money for subway cleaners Used Open Office instead of Microsoft Office Hired subway cleaners Number of subway riders went up

19. Caixa Econômica Federal Ran lottery system with proprietary software R$1 million/month maintenance Ten months to develop new lottery game Hired three FOSS programmers Three weeks to develop new lottery game Three programmers did NOT make R$1 million/month

20. Value-Added Reseller(VAR) Buys components from “Original Equipment Manufacturer (OEM)” Buys software from System OEMs or Independent Software Vendors (ISVs) Creates Solution for customers May not be targeted to one particular customer or may start with one customer Easier to do locally Easier to do with Free Software

21. Real-life Business Models Closed Source To Open Source Nashua ProjectDotNet Free software, or software that is free? Systems administrators trumpet

22. What NOT to do Think of great new product that a few people will want Borrow a lot of money Hire a lot of engineers Give away your software Expect people to pay you for it

23. Supercomputers:Image Rendering How many human actors appeared in Shrek? How many languages were represented in Big Buck Bunny?

24. Image Rendering How many human actors appeared in Shrek? Answer 0 How many languages were represented in Big Buck Bunny? Answer 0

25. Blender Software that started proprietary... Designed by users Bought by users Continued by users Now a non-profit Creates movies Trains people in how to use Blender

26. Publicly Funded Software University Research and Projects Funded by taxes Real life usage of student's work Military software (non-secret) Philanthropic organizations Government projects Local, State and Federal Education, taxes

27. Government Software Must be “long lasting” Should: Encourage “local” jobs Reduce Balance of Payments problems Reduce cost of license administration

28. Educators Software livre! Teaches students twice Once how to use software Once how software works Real software used by real companies and people Also can teach collaboration

29. Universities vs Self-training Universities teach and certify Teach you what is needed Teach you how to investigate and think Broad background of knowledge Certify with tests and certificate Self-training Certification Linux Professional Institute (www.lpi.org) Other certification programs

30. Summary Study both technology and business Learn from free software projects Determine business area you wish to go Product (hardware and/or software) Service Combined Write business plan and execute against that plan

31. And Now An “Advertisement”

32. Project Cauã: Goals Create 3-4 million new high-tech jobs inside Latin America and around the world Employ “unemployable” Reduce amount of electrical usage Create more environmentally sound computing Provide “gratis” wireless Internet over urban areas Create low-cost supercomputer grid All without government funding

33. Project Cauã: How? Thin clients (<10 watts) replace desktop computers Hardwired via ETHERNET to server system Wireless mesh node Server systems hold data, do heavy processing Everything virtualized and encrypted Systems Administrators/Entrepreneurs own systems As business owners, sell services Bank loans to buy hardware Provide support to end users Sales agents Support for services

34. Project Cauã: Provide Services For “Mom&Pop” Create local “ISP”s buy Internet bandwidth in bulk distribute to local thin client customers Perform services of backups disk storage management security services training/education Create specialized applications for business

35. Project Cauã: Provide Services For “Mom&Pop” Create local “ISP”s buy Internet bandwidth in bulk distribute to local thin client customers Perform services of backups disk storage management security services training/education Create specialized applications for business

36. Our Progress V1.0 – too complex, too expensive to start V0.5 – Multi-media center – too high an entry V0.1 – Right price point, expandable

37. Time Frame Three month pilot – March-May Fifty “Entrepreneurs” Selling/installing 4-5 systems a week Analyze results Three month pilot – July – September 1000 Entrepreneurs Same goal of sales, but also upgrades Analyze results

38. Questions? www.projectcaua.com