My views on software, programming, Linux, the Internet, government, taxation, working, and life.

Monday, March 20, 2006

Free Software Startups for Old-Timers

Are you an old timer like me who's quickly approaching 40, still moonlighting, writing code, and wanting to get rich quick? If you're doing it with the LAMP or LAPP platform on Linux (Linux, Apache, PHP, and MySQL or PostgreSQL), you're probably being encouraged to release the software in typical FLOSS (Free Linux Open Source Software) style by giving away the compiled software and the source for free, then turning around and charging for tech support and T shirts. My feeling is that the original FLOSS model is designed for young college grads, divorcees, or people who either have plenty of time on their hands or very little debts or family life. Many of us old timers don't have the time initially to handle tech support emails or calls while we juggle our family life, pay our big debts, and work our day jobs to pay those debts. But it need not be. Even us old-timers can participate in a slightly different model of FLOSS and eventually (I hope) move from dull day job to the job you really love. You do not have to be pinned down by concepts from the likes of FLOSS gurus like Richard Stallman or Eric Raymond.

In FLOSSFOT (Floss for Old Timers), wealth is built in phases. In the first phase, we can take our time writing the first release of the software in order to make it good, then turn around and offer two different versions:


(a) The commercial version, which includes far more branding, a web or graphical based installer, a web or graphical based admin or preferences tool, excellent documentation for end users to use it, installers to install it, and developers to extend it. It also includes 48 hour email tech support for up to 5 incidents, with additional email tech support packs being possible to be purchased later.

(b) The free version, however, is more limited. Instead of the latest major release, it's one major release behind. Note, after the first release of the product, releases should happen often -- not like the long delay between releases of MS software. However, it does have all critical updates and security fixes applied in minor release updates. To find the link, one first has to see a big Donate button, and the donate feature is integrated into the home or login page of the app and in the README. Instead of an admin tool, you have a readme and you must get a DBA to update the database. Instead of an easy, intuitive installer, you get a readme on how to do it yourself. Instead of excellent docs, you provide a minimalist readme. And to make it a little tougher, you change the page names slightly so that the commercial docs do not apply to the free version.

There should be some more catches to the free version. You need to make it slightly enticing. It should be fairly easy to install by simply copying the folder to a certain directory and then adding some entries into a database for users, groups, customers, etc.

And all tech support to help get the free version installed should be in the form of pre-sales context with 48 hour turnaround and a rather large FAQ that you build based on common customer queries.

In this phase, you should save all money and never spend it unless absolutely necessary.


Now that this system is in place, you're going to need to work on bug fixes and marketing. You need to consider OEM partnership deals, government contracts, a small advertising budget, and self promotion at small conferences and trade shows when affordable. Perhaps even speaking on Linux LUG radio or some other means is necessary. Do anything you can to increase profit potential and hobbyist interest. Meanwhile, listen to your hobbyists who take the free version and take their advice and code for consideration. While doing this, save as much money as possible, using only just a sliver for advertising, hosting, etc.

Perhaps in this phase, you may get an offer for investment capital. RESIST! You're not big enough and dedicated enough in the business to manage this. You still have a day job to maintain, doing something else.


You have four major goals in this phase:
* Rewrite the internals in a major release so that developers find it easier to customize.
* Increase your advertising budget.
* Continue seeking partnership deals.
* Maintain the course of the business.

Again, avoid investment capital at this stage.


Hopefully by this stage, you have achieved launch status where you can leave the mothership of your day job and spend fulltime on the business. But should you do that? No, I don't recommend it. Instead, consider a part-time retail job so that you have some other kind of income, just in case.

At this point, however, you might be able to afford to hire a separate company on 1099 Misc to do L1 tech support and/or pay for a call answering service that acts as a front for your business while you're gone. Do not consider W2 employees yet.

I would recommend using a freelance specialist (on 1099 Misc) just to help you get listed on GSA schedule.

You should be partially living off the income from this business.


At this stage, you can now leave the part-time job and work full-time in the business. Should you consider W2 employees yet, however? No. If anything, it should all be 1099 Misc.

Your main focus in the business at this point is to keep those eyeballs turned to your product and to increase profits. Come out with more exciting releases. Listen to your customers more and implement their suggestions where reasonable or when you see "low hanging fruit".

You should be living completely off the income from this business.


At this point, you have a critical test. You need to change the course of this business so that you almost give the software away with all features intact. Instead, customers pay for the nice media + printed docs + a tech support 5 pack. You need to change the dynamics of how you operate, or the marketing and deals you have with OEM partners, such that you can survive very well in this model without having to go back to your day job.


At this stage, you now have enough cash on hand to hire 1 employee. He or she should be, as the Yahoo eCommerce guru, Paul Graham says, an "animal". I would suggest one person to manage sales and marketing with you. You need to make enough money to pay a low but decent salary for this person, and a minimal salary for you to pay your own bills.

At this stage, you'll want to get more serious about the business plan.


Everything before this stage was what I consider "micro-startup". Now we're talking "startup" phase in the real sense of the word. You should be gangbusters by this stage, ready to take on a small business loan and start growing your business with a serious business plan.

Your choice to use venture capital after this point is your own. Personally, I would prefer to avoid it because it gets in the way, bosses you around too much, and increases costs while at the same time it is trying to pay your existing bills.

You might luck out and get an offer for a buyout, but again, I would recommend you avoid that for at least another two more years.


You really need to hedge your bets with another software business idea. Perhaps it's a product line in the existing software company, or perhaps it's another software company entirely. But you have a lot riding on you and you need to focus on investing in what you know. To invest in some kind of other investment is just a risk. At least you know this industry somewhat.

Do not forget that you're so skilled now that other startups and individuals will pay you for what you know, such as hearing you speak or if you write a book or eBook, or if you record a speech or set of tapes.


At this point, you're in small business mode and you can either choose to remain on and grow the business, sell it, or bring in other partners and take a long sabbatical working on your next big project.


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