The Year of Crowdfunded Open Source Small Businesses

The ways that crowdfunding is affecting open source business isn't making as many headlines as it should.
Posted December 21, 2015
By

Bruce Byfield


2015 was crowded with events for Linux and open source. It was a year in which the runaway success of OpenStack continued, fuelling -- among other things, rumors of a Canonical Software public offering. It was also the year of unsuccessful ventures into smartphones by Mozilla, Sailfish, and Ubuntu, and the first appearance of a Steam Machine for gamers.

Yet while such big plays grabbed most of the headlines, the most significant trend went almost unnoticed: the emergence of hundreds of products and small businesses made possible by a combination of crowdfunding and open source. With very little publicity, this trend is step by step making both free hardware and the Internet of Things a reality, as well as renewing open source's original values.

The result is more excitement than I have seen in open source for years. To browse the crowdfunding sites is like visiting a Lee Valley Tools store for techies. Smart shoes, smart wallets, smart light bulbs, smart power outlets -- increasingly, smart everything -- keyboards for every taste, computers and cases of all shapes and sizes, free-licensed laptops -- if someone can imagine a product, someone is trying to market it. And, thanks to the low entry requirements, now they can.

Browsing Indiegogo and KickStarter, the two main crowdfunding sites, as well as CrowdSupply, an Free Software Foundation-endorsed site that specializes in open hardware, I count approximately 1400 projects. Even if all these products have Indiegogo's record of less than ten percent being successfully funded -- and CrowdSupply's rate is far higher -- that still means about 130 new products, many of them from small businesses and startups.

Each of these products by itself may be too small for tech journalists to notice it. However, in combination, they have the potential to transform how we think of hardware and software alike.

The Rebirth of the Basement Operations Center

For over fifteen years, open source has been an aid to conventional businesses. By accepting the collaborative model of open source, companies can invest less in development, and bring products to market faster than they could on their own. OpenStack, of course, is a prime example of such advantages.

In some cases, open source software may have made products profitable that would otherwise not be worth developing. In the case of companies like Red Hat, open software has helped establish new business models, often with a strong ethical claim.

However, while open source has boosted and even dominated large parts of the tech industry, what it has not done is transform it, as the writers of the Cluetrain Manifesto proclaimed in 1999.

Instead, mainstream tech companies have typically changed the minimum necessary to make full use of open source's advantages. Even those that have proclaimed themselves "open source companies" often have put no more than a gloss of trendiness over traditional corporate practices.

Nothing is wrong with such behavior. However, to this day, it can sit uncomfortably with open source's original vision of idealistic individuals set on changing the world. At best, the corporations and idealistic individuals are allies, with overlapping but by no means identical interests.

Today, the alliance is widely accepted -- and no wonder. The growth of open source, like all success, is difficult to argue against. Moreover, as idealistic young coders have families and start to age, trading some of their independence for a chance to do the work they love often seems a fair exchange.

The appeal of crowdfunded small businesses is that they bypass this alliance. Most programmers cannot fund development of their ideas themselves, and only a handful have the business experience to win investment capital. Nor are most of their ideas likely to be transformable into profitable products for a company oriented towards expansion and growth.

All the same, these ideas have a market, although a small one. Millions of computer users may not want a programmable ergonomic keyboard, but thousands do. Millions of users may not understand free-licensed hardware, but thousands will support or even pay extra to have it.

With the combination of crowdfunding and open source, suddenly the little ideas that companies and investors are rarely interested in become possible. Most of these ideas will never lead to an IPO, but their originators are rarely entrepreneurs, and are unlikely to care. If the companies they are founding never grow beyond a few dozen employees, they will be content so long as they can make a living.

At the very least, the promise is more satisfying than the compromise of working for a traditional business. With a little luck, they might even be able to use crowdfunding to start their businesses, and, after the first manufacturing run, be both profitable and debt-free.

You might call this situation the rise of the open source petite bourgeoisie. Where the industrial revolution replaced cottage industries with mass production, this new trend means the rebirth of cottage industries for the ambitious few.

When I talk to those involved in this trend, what strikes me is how little they talk about finances except as a means to their ends. Instead, what occupies their attention is the chance to realize their ideas -- not just for their products, but for open source in general.

If such statements sound too sweeping, just consider: While traditional tech companies talk about open hardware and the Internet of Things, so far they have done little except talk. Perhaps they are still considering how to make a profit with such things.

Meanwhile, with less financial backing, these open source small businesses are actually producing and selling open hardware. Rather than talking about the Internet of Things, they are not only producing smart hardware, but the means of converting existing hardware. They are starting to show what open hardware and the Internet of Things can do and might actually mean. If they are much smaller than traditional tech businesses, they are also much nimbler, and even quicker to market.

While renewing open source traditions and ideals, this trend is also realizing today what until now has only been vague talk. Is it any wonder, then, that the people involved are so excited about the possibilities?

Reality Check

Like many startups, most of the new businesses riding this trend will probably fail. Scandals involving crowdfunding campaigns that never result in products could also break the web of trust that makes crowdfunding possible. Yet, even with such disasters, the outcome should still be expanded possibilities for end-users, and perhaps a reconsideration of business practices in traditional companies.

Already, the crowdfunding plus open source combination is finding its niche. Businesses like Crowdsupply and Krowdster are already offering advice to the would-be technical petite bourgeoisie. The more astute are also consulting small business advisors, and offering bits of equity in return for expertise from micro-investors.

Exactly what will happen in the next few years is uncertain. All that is certain is that it is happening, and, regardless of the outcome, the trend first became visible in 2015.

Photo courtesy of Shutterstock.




Tags: open source cloud, Open Source Projects


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