[IAEP] Sugar Labs or Sugar Daddy

[David Farning]

One of the challenges that businesses face is keeping their expenses
below their revenues.  Your grandpa would have said, "Don't spend more
than you make."

In many respects an open source project is a business.  Formally,
Sugar Labs is a Not For Profit organized under the umbrella of the
Software Freedom Conservancy.  As such, we are legally able to do most
things that other business can do.  We can charge for our product,
charge for service contracts to support deployments, and hire
employees.

The primary differences between Not For Profits and For Profit
business is that  we must have a clearly stated mission to help
humanity and we can not distribute excess profits to shareholders.  In
short, Sugar Labs must have a clearly defined mission to help
humanity, Sugar Labs must follow that mission, and Sugar Labs must use
any money we have towards that mission.  (Note, this is not the full
legal definition.  But it is close enough for a general conversation.)

In exchange for agreeing to follow those rules(and filing a bunch of
paper work) we become a tax exempt organization.

At the risk of sounding coarse, Sugar Labs primary goal in any
decision is remaining in business.  It does not matter how grand our
mission, how inspirational our vision, how worthy or goals, or how big
our hearts.  If we go defunct, we can't accomplish anything.

'Don't spend more then you make.'  Remember that from the first
paragraph.  It does not day don't spend money, nor does it say don't
make money.

I am convinced that the correct business model for Sugar Labs, will be
a combination of licensing the Sugar and Sugar Labs brands to partners
and donations.

What, this means is that our revenues are pretty low right now.  Our
brand is currently not strong enough to generate revenue from partners
or donors.  This is not necessary a bad thing.  It just means that we
will need to build our brand.

Since we have no revenue, we must keep our expenses at zero too:(

So, how do we survive until we earn enough revenues to cover expenses.
 Raising money for specif things and looking for in-kind donations.
While raising money for specif things does not scale well, it does
allow us to raise money for individual needs.  The transaction cost of
setting up the capital campaign ensures that we have explored other
options first.

The other option is in-kind donations.  At this point in our life
cycle we should avoid transactions and strive for relationships.  In a
transaction there is an implied exchange of goods of services for the
donation.   Since our product is so young, these exchanges tend to be
in the form of promises of future goods or services.  Too many
promises and we spend all of our time working on fulfilling promises
rather than our mission.

Let's go get those in-kind donations.

david