The Extropia.com Approach

"By releasing Open Source Software, you contribute to the overall health of the programming community...[however] You benefit from the entire ecosystem, not just from the input of the community into your own specific project." - Tim O'Reilly (www.oreilly.com/ask_tim November 21)

After doing our research, we started discussing our ideas with a select group of clients who we thought would give us useful input about how they, as clients, would like to see our business evolve.

We were initially very concerned that people would feel betrayed that we were moving from the not-for-profit sector into the corporate world. However, that is not at all what happened.

Every one of the interviewees expressed that they were thrilled about the evolution of our site and code to a more professional form and were happy that it would mean more regular and powerful upgrades to the applications.

The key of course, was how to develop a sustainable business model. How could we make enough money to afford to devote all our time to the project?

Leveraging the Product Halo and Gaining Market Share

Well, we developed several plans, most similar to Red Hat's "product halo."

We are selling two license agreements that provide customers with CD-ROM distributions, printed documentation and support. We also sell a larger support package that lasts longer than the license agreements.

Yet clients need not purchase the licenses at all. Our applications are still free for anyone to download and install. This is important because of our desire to remain true to the idea that everyone on the net, regardless of income should have equal access to the basic technologies of websites. Providing software at no price also helped us continue to maintain and expand our market share.

Because our applications are open source, clients are welcome to download applications for free and follow the installation documentation in order to get them working. However, the fact that the software could be obtained at no cost, did not mean that we did not "sell" products.

Although we are proud of the user-friendliness of our documentation, clients often find that installation and customization might take some time, especially if they have limited programming experience. The fact of the matter is that Web Applications are not exactly the easiest things to implement. In the end, clients must ask themselves, "Do I want to spend my extra time learning to program or selling my products?" The answer is often that they do not want to learn programming. And that answer means a sale for us.

The Care and Feeding of Networks

"In the past two decades, largely because of the ease, speed and low cost with which information technology allows people to keep track of who's doing what, coordination has become faster, cheaper and easier. Economic logic favors outsourcing....Virtual enterprises can spring up overnight as networks of free agents come together for a single project. Costs and risks are distributed over an entire network....Nothing could be more flexible - ready to turn on a dime, to grab any new opportunity." - Robert Reich in Fast Company November 1998.

We have also created a Developers Network to organize the developers already involved in the project who would be happy to take on projects, but whom we cannot afford to hire because we want to keep fixed-costs down.

Essentially, developers who join the network get a host of services that we provide, such as training, free software and support, and easy access to us.

They also get regular project referrals, since we get too many every day to handle ourselves.

But more broadly, developers in the network benefit in many other ways as well. For example, developers can count on a steady stream of projects.

They also gain the opportunity to work with "the best" web developers on the web. The Developer Network has a reputation. "If you want your job done right, done quickly, and done securely," clients like Franks Supply Co. say, "talk to the Extropia Developer Network gang! They are worth every penny"

This reputation benefits everyone involved. As in real estate, if you get all the big names to setup shop on a strip of land, the value of everybody's investment goes up quickly.

Another reason to get the best programmers around is that all the developers can work together so that anyone can ask for technology help for free from the network and get quick, reliable advice.

Members can rely on the core capabilities of others. Why should one learn MSQL for example, when we have someone with that skill already in the group. Each member becomes a programmer with the skill set of the entire Network at their disposal.

And clients know that. Clients know that they are hiring more than a single developer but an entire network.

The network also allows us to organize "commando programming" teams for "LARGE" corporate web site work that none of us could get or manage individually, but which pay a much greater amount of money.

Finally members represent our first line of beta testers add add-on developers.

Traditional Services

Like GNU, we also have developed a host of support services such as training, tech support, turnkey installations and custom app development.

The following list summarizes our offerings.

• CD-ROM convenience distribution
• Printed Documentation
• Installation Support
• Customization Support
• Turnkey Installations
• Custom-Design Web Applications
• Training
• Developers Network Memberships

We realize that this model will evolve over time, but for the time being, we are seeing enough work that we will be self-sufficient with consistent growth.

Redesigning the Code for the New Model

Finally, settling on the Open Source Model, had several major ramifications on the design of our applications.

To conclude this Case Study, next issue, we will discuss the technological ramifications of the open source model!

The Open Source Business Model!
Extropia.com: A Case Study in Open Source Software