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How to make $100k in Open Source by working hard

mikeperham.com

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Re: How to make $100k in Open Source by working hard

#41

Post by jes »

justin_vanw wrote: post #36

The title of this article is the opposite of what the article says. He made almost no money with open source. He made tons of money by withholding features from the open source library and instead only offering them under a commercial license as an add-on. Since this is itself a violation of the LGPL, anyone using the Pro version isn't even using open source at all, as both the original and Pro enhancements are at th…

If a lot of people were able to build products based on his open source library, it seems wrong to claim that anything he held back was truly essential.

Re: How to make $100k in Open Source by working hard

#42

Post by shutupalready »

If your story is true, then stop talking about it already!

First,

Since you're in the U.S.A., you'll be getting into the 40-50% marginal tax bracket with federal, state, and Self-Employment Taxes. If you incorporated in an off-shore jurisdiction, you'll keep all your money. In your situation, it's completely invisible to your corporate customers where you are located. If they're willing to pay random guy in Portland, Oregon, they'll pay random company in Singapore (for example). You could even disclose the existence of the foreign company to the tax authorities. In that case, don't draw a salary or a dividend from the foreign company, and you'll still pay no U.S. tax. Let the company pay for your "business travel", "business expenses", etc. And otherwise just let the cash pile up in the foreign account.

Second,

I highly doubt you'll gain additional customers through your blog. It sounds like you get customers because they are already using the open source component, and discover they could benefit from the paid component. Your article about the $100k gets you hacker cred, but also draws competition. Blog about the open source component, and keep mum about the dough.

Good luck.

Re: How to make $100k in Open Source by working hard

#43

Post by [deleted] »

mmahemoff wrote: post #26

Charging a flat rate ($500) per company is leaving a lot of cash on the table. Have you considered a tiered model based on number of servers in use? As well as increasing fees from Megacorps, the flipside is you could also offer discounts to non-profits, early startups, and so on, and in exchange for links on their homepage.

[deleted]

Re: How to make $100k in Open Source by working hard

#44

Post by rustybones »

Can someone help me understand whether he's the only one allowed to build a paid service over the open source code, or could anyone technically take away all his open source code and build the same service he provides in the pro. Because if he doesn't have that control, then this is really not making money with open source but rather relying on existing open source to make money

Re: How to make $100k in Open Source by working hard

#45

Post by mariusz79 »

Confusion wrote: post #35
mariusz79 wrote: post #32

First, the title is simply wrong. The OP did not make 100k with Open Source, he made 100k selling something that's an addon to his LGPL based offering. Another part of the package is a commercial license bundled with his software. Of course there is nothing wrong with that, but saying that he made money in os is just plain wrong, IMVHO. >>In nine months of selling commercial licenses, I sold 33 for $1,650. If you fig…

Why do you object to calling this 'making money with Open Source'? I agree that "making money by developing and selling closed source extensions to open source products" is 'making money with Open Source'. Especially considering he also developed and maintains the OS product.

Most of the money made was made with the Pro version of the software. Correct me if I'm wrong, but that version has a commercial license, not an open source one. He's making money with a commercial addon.

Re: How to make $100k in Open Source by working hard

#46

Post by 3pt14159 »

justin_vanw wrote: post #36

The title of this article is the opposite of what the article says. He made almost no money with open source. He made tons of money by withholding features from the open source library and instead only offering them under a commercial license as an add-on. Since this is itself a violation of the LGPL, anyone using the Pro version isn't even using open source at all, as both the original and Pro enhancements are at th…

Something can be pay for use and open source. What he did here was totally fine. Sidkiq is amazing, and what it replaces is kludgy. If Sidkiq or Riak want to make a version that is specially geared for people that need software to scale then everybody wins.

The people at scale win because they buy the software for peanuts and they were able to do so only after hitting product-market fit. The people starting startups win, since they get well designed software from someone that has self-interest to keep it going.

I see no problem with this whatsoever. It isn't like the at-scale version of Sidekiq would ever have been built if it hadn't been for the cash. The only thing I would add would be that maybe he puts a sunset clause in there that auto-frees the source in a year or two. That way people won't waste time rebuilding the at-scale components.

Re: How to make $100k in Open Source by working hard

#47

Post by VLM »

mmahemoff wrote: post #26

Charging a flat rate ($500) per company is leaving a lot of cash on the table. Have you considered a tiered model based on number of servers in use? As well as increasing fees from Megacorps, the flipside is you could also offer discounts to non-profits, early startups, and so on, and in exchange for links on their homepage.

The authors article is good although it misses a tiny little detail when calculating hourly costs. Its not just his $100K/700 hours = pretty good, its also his customers thinking, hmm, it took a specialist 700 hours, so it going to take our busy guys 1000 hours part time, and our guys are already busy, and he's only asking $500, thats a bargain at 50 cents per hour to replicate...

Now if you start demanding $5/hr from each customer then the outsources in India are going to start eating into your sales when they take the work inside or just figure out a work around that doesn't take 1000 or 700 hours.

Another interesting issue is signing budgets. I have no use for this particular example but my boss can sign off on $500 at pretty much any mega corp I've worked at, but if you demand annual auto-renewal ongoing charges or get into the mid 4 figures suddenly you have to convince a heck of a lot more people than me and my boss. If you're charging more than a conference or a training class, or you're demanding annual payment, its going to be a harder sell for megacorps. Sure the code monkey and his boss might love it, but now you need to convince additional bean counters who think ruby is a precious stone and its all downhill from there. You could try to corporate speak market it to get past the bean counters with lots of babble about proactively leveraging the synergy of the enterprise cloud platform but that risks repelling the code monkey and his boss, a fine line to walk.

Re: How to make $100k in Open Source by working hard

#48

Post by GFischer »

shutupalready wrote: post #42

If your story is true, then stop talking about it already! First, Since you're in the U.S.A., you'll be getting into the 40-50% marginal tax bracket with federal, state, and Self-Employment Taxes. If you incorporated in an off-shore jurisdiction, you'll keep all your money. In your situation, it's completely invisible to your corporate customers where you are located. If they're willing to pay random guy in Portland,…

I upvoted you because it's an interesting dissenting opinion, and I've always wondered about whether the upside of being open beats the downside of additional competition.

We also don't know whether he paid taxes on the income (I also guess not), and, most importantly, whether his blog post will bring him additional revenue.

Do you have many examples where blogging about success brought about competition? Are there big barriers of entry to building what he built? It looks like you'd need at least 700 of developer hours, I wouldn't do it lightly.

OTOH if I had found an easy way to beat the lottery I wouldn't blog about it :P

Re: How to make $100k in Open Source by working hard

#49

Post by tedunangst »

justin_vanw wrote: post #36

The title of this article is the opposite of what the article says. He made almost no money with open source. He made tons of money by withholding features from the open source library and instead only offering them under a commercial license as an add-on. Since this is itself a violation of the LGPL, anyone using the Pro version isn't even using open source at all, as both the original and Pro enhancements are at th…

Violation of the LGPL? By the author?

Re: How to make $100k in Open Source by working hard

#50

Post by 6cxs2hd6 »

Confusion wrote: post #35
mariusz79 wrote: post #32

First, the title is simply wrong. The OP did not make 100k with Open Source, he made 100k selling something that's an addon to his LGPL based offering. Another part of the package is a commercial license bundled with his software. Of course there is nothing wrong with that, but saying that he made money in os is just plain wrong, IMVHO. >>In nine months of selling commercial licenses, I sold 33 for $1,650. If you fig…

Why do you object to calling this 'making money with Open Source'? I agree that "making money by developing and selling closed source extensions to open source products" is 'making money with Open Source'. Especially considering he also developed and maintains the OS product.

Because it seems similar to claiming prostitutes make money by greeting people and chatting. Although they do greet and chat for free, what they actually do for money is different.

Note: I believe prostitution is a morally acceptable profession for consenting adults. Therefore I'm not choosing that analogy to be pejorative to the OP; I'm choosing it to be blunt. IMHO the OP is doing nothing wrong, and more power to him. I just agree with GP that the characterization of it as making money "from" open source is confusing.

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