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Business Mentorship

Open Source Business Model Canvas​

Given that we know what benefits open source brings and what challenges you may face, let’s talk about how to develop and execute an Open Source Business Model. Many of the steps are the same for all businesses and are not unique to open source businesses. For example, we have adapted some of the content on The Lean Startup Model, a methodology for developing products based on validated learning, which calls for soliciting customer feedback quickly and often, and creating further iterations of the product based on that feedback.

The 5 basic steps to developing and executing your business model based on this approach are: Research, Plan, Fund, Build, Assess, and Iterate.

Step 1: Research​

The startup already has a business model canvas, and it's a great starting point. For open source businesses, it's good to deeply understand the problem and the space from an open source lens. The startup can answer the following questions:

  1. What is the ecosystem in this space like?
  2. Why does this solution need to be open source? To encourage more people to use this type of service? To build a community? Other reasons?
  3. Are there already open source communities in this area or in relevant areas?
  4. Are there already open source solutions that I can draw on to address this problem?
  5. Are there proprietary solutions that exist to solve this problem?
  6. What are the strengths and weaknesses of the existing solutions?
  7. How will we measure the success of our project? Size of community? Number of contributors? Number of commits? Usage? Conversion rate (if business model includes an upgrade to an enterprise version)?

Step 2: Plan using an Open Source Business Canvas​

Now you can plan out your answers directly onto this open source business canvas Resource: Open Source Business Canvas

Step 3: Fund​

There are many other funding sources that can help jump-start open source businesses. A number of these prioritize open source and open data, though not all fund exclusively open source businesses.

There are a number of marketplaces for finding external funding and investment sources. Some examples to begin your search are:

  • The Crunchbase
  • The Global Innovation Exchange
  • The Capital Finder
  • UNICEF’s Supply Division’s Manufacturer Financing Database
  • Crowdfunding platforms, such as Kickstarter
  • Accelerator and incubator programs

Step 4: Build​

The next step is to build! This can be the most exciting phase in the execution process and, for an open source project, it never really ends. This is one phase where being an open source business can be really useful, because depending on how much interest there is in the project, you can get others in your open source community to help in this process.

Given that this phase can be so variable depending on the company you are building, we have come up with some general guides that will give you some ideas as to how to approach this phase. Github has a great resource on how to launch and grow your open source project that you can view here. This includes Starting an Open Source Project, Finding Users for your Project, Building Welcoming Communities, Best Practices for Maintainers, Leadership and Governance.

Step 5: Assess & Iterate​

Your open source community, especially the Super Users, will be a particularly important partner in this process because they can not only help identify bugs or features that would be useful to them, but also help create the fixes in your product.

You can apply this principle to test every element of your business model, from seeing which pitches are most effective on which customer segments, to landing on the perfect price point for your feature or service.