Ideal/Model FOSS Service Companies

Running Gna! Business development
#1

These companies are of interest because they have the following characteristics, similar to what Hostea members are trying to accomplish:

  • Have ten full time employees or less
  • Publish a software stack that is self-hostable and Free Software
  • Provide an online hosting service (recurring)
  • Provide services to their customers (work hours)
  • Are profitable

In the following the information that is not publicly available on the web site of the company is the outcome of speculations on my part. It is not based on inside knowledge of any kind.

IndieHosters

  • Employees: about ten full time
  • Product: K8S infrastructure as code for a variety of services
  • Hosting: Dedicated GitLab instances among other services, some Gitea instances
  • Service: Priced per person with a semi-standard but flexible package per organization
  • Income: R&D tax return, Service, Hosting

Webarchitects

  • Employees: about two full time
  • Product: Co-op Cloud infrastructure as code
  • Hosting: Dedicated GitLab instances
  • Service: No standard pricing, each customer has a custom package
  • Income: R&D tax return, Service, Hosting

Autonomic

  • Employees: about five full time
  • Product: Virtual machines as a service
  • Hosting: Dedicated GitLab instances
  • Service: No standard pricing, each customer has a custom package
  • Income: Service, Hosting

Easter-Eggs

  • Employees: about twenty full time
  • Product: ForgeFriends Gitea based reverse proxy
  • Hosting: Dedicated GitLab instances, some Gitea instances
  • Service: No standard pricing, each customer has a custom package
  • Income: R&D tax return, Service, Hosting

Heptapod

  • Employees: about three full time
  • Product: GitLab long standing fork
  • Hosting: Shared GitLab instance
  • Service: (maybe)
  • Income: R&D tax return, EU funding, Service
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Trade organization business plan
Bootstraping a company providing Gitea services
#2

Oh great, that looks like an excellent start!! There are more companies providing similar services than I realized, which is good.

But yes, this is exactly the type of research we need – and we’ll all review them as a team.

For this list specifically, I’d try to dig in a bit more on the business itself. What is their model? It’s relatively easy to make a nice looking webpage with a product offering, but we want to try to gather bits about business operations. Good clues for this are founder bios, employee experience, job postings, etc.

That will give us confidence that we can build a similar business model. For example, if you investigate Autonomic a bit more, I see a few “red flags” right away in this blog post:

  • We are currently paid £16 per hour for all work.
  • Everyone in the co-op will always be paid the same rate, which we decide on collectively and adjust according to how well we’re doing.
  • If we want to take you on, we’ll then have a vote amongst our members and you can start working for us right away as a “potential member”. After 100 hours of work you can be invited to join the co-op as a full member.

I say “red flags”, because this model is very misaligned to the model we’re talking about building. It’s a good anti-model, and shows us what not to try to emulate :wink:

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Bootstraping a company providing Gitea services
#3

In what respect is it misaligned?

I can imagine the company paying everyone the same rate and adjusting to how well it is doing, We’ve discussed that in the past with @realaravinth, IIRC.

I can appreciate that you have a different opinion and I’m not opposed to the company paying different rates to different employees. I think it is a minor concern.

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#4

With Autonomic, this is one of those cases where just a single point invalidates the whole model:

We are currently paid £16 per hour for all work.

No other points or aspects really matter after that – and in fact, any model similarities (from product pricing to hiring practices) should be taken with a grain of salt. It’d be like trying to model gasoline engines with electricity :slight_smile:

Otherwise, compensation is a complicated topic, and the best way I can put it is this. Quirky compensation schemes are a huge negative for nearly everyone on the job market, and hardly anyone sees them as a plus. Nonstandard policies rarely last past the initial employees, and they will create a lot of dissatisfaction and stress along the way. This is not a good area to differentiate or innovate.

#5

I agree innovating on compensation would not be a good idea. What Autonomic is doing by setting the same hourly rate for everyone is not innovative though, it’s fairly common in cooperatives. Their hourly rate is unusually low and, if I was to buy services from Autonomic, I would set my expectations accordingly.

Since the market for online service is global you pretty much always pay the same thing regardless of the hourly fee. When I want a task Y done with a clear definition of done, I will almost always pay X. If a service provider charges N/h it will take them X/N hours to complete the job. If they charge M/h it will take them X/M hours to complete the job. That’s a bit of a simplification but I’m sure you’ve experienced that more often than not.

#6

Working on Free Software is different from working in a traditional job. Developers in the FOSS scene have multiple projects, so they try to split their time among their projects. The original Hostea financial model accounts for this uniqueness by using a meritocratic system. A static pay and a constant return of investment, in my opinion, will either increase bloat or discourage external participation.

And there are also issues with the unequal pay system that you propose: in a loosely bound organisation that resells third-party software, some of which are maintained by @dachary and I, how will you determine who gets paid more? It’s not like there is a hierarchy where there are senior developers(or any role, really) who direct the work of other devs. These are independent projects with independent people working on them providing roughly the same amount of value to Hostea.

This is not a good area to differentiate or innovate.

I strongly feel that this is an area that requires innovation. The fact that there aren’t very many financial avenues for Free Software itself implies that there aren’t off-the-shelf solutions that will fit its needs.

For this reason, Hostea is also an experiment in Free Software sustainability. As @dachary already mentioned, we have had extensive discussions on this topic and have settled on a model that we feel the best about. The system itself is open for debate and has mechanisms for amendment, but I would like to stick to the general sentiment of the model.

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#7

In general, this is true for commoditized labor like office cleaning, landscaping, etc. That work is very well defined, and it’s very easy to specify tasks with precision. But software/technology is a creative industry, and creative workers that are skilled in delivering “what the client needs” versus “what the customer asks for” are in very high demand.

It’s nearly impossible to commoditize software development labor. It was “the big idea” back in the early 2000’s with outsourcing to India (“we just write highly detailed specs, and they just deliver the code that meets those specs”), but that failed spectacularly :smiley:

#8

I too have a lot of strong feelings about things that I don’t like, but a first commercial venture is not a great place change those things. It’s makes the odds of success go from difficult to basically impossible.

As an analogy, I suppose we can all agree that English is a pretty silly language? I’ve heard that Esperanto is all kinds of better, and maybe some people have really strong feelings about that. But you’re going to have a reaaaaaaly hard time building a business in Esperanto.

Idea execution is difficult. If you want to be successful, you really ought to pick a model that works: business, charity, hobby, etc. Then, simply fit your idea around that model and execute.

This model is very confusing and overly complicated. It’s almost as if it was developed by a couple of really smart software engineers or something :stuck_out_tongue_winking_eye:

If you want to create a successful business, then you really ought to make it as easy as possible for reliable, skilled people to work for you. This means picking from a known compensation model that works: fulltime employee, freelance hourly, fixed-bid work, commissioned, etc.

If you ultimately decide to pursue Hostea as a hobby, maybe it’s fine? Personally, I don’t expect to get paid for my hobby projects… but sometimes my hobby ventures do make money, and when that happens, I just reimburse expenses, and then divide the rest into “fun money”.

#9

@apxltd I think I better understand what you’re after, thanks for articulating it.

Since the FOSS part of Hostea is not something you think will appeal to potential customers, let’s forget about it for now and focus on businesses that are willing to pay for an online software development environment, i.e. a forge. Which Hostea is.

Businesses who are customers of GitLab or GitHub pay a recurring subscription and service fees for custom installation, training etc. so that their engineers can work on an online forge. Heptapod is the closest and resembles very much what Hostea could be. I don’t know of any other company doing the same but there may be a few.

All other (InideHosteers, Webarchitects, etc.) are generalized service provider who provide forge instances among other services and are not an ideal model for Hostea so let’s forget about them.

#10

@dachary ah, I see - so in this case, let’s try to look for small businesses that are built around different categories of FOSS tools, and not necessarily related to hosted forges. Ideally they’d be software engineering tools.

Maybe there’s like plug-in vendors to Eclipse, or Apache … things :sweat_smile: I don’t know even what to look for. Wordpress or Drupal companies are not good examples, because those aren’t really a software engineering tools.

But the whole point here is to get insight into how niche players are making money using FOSS, and what their structure, differentiation, etc. is. My theory is that it’s related to services, training, and integrations surrounding the FOSS tool (likely multiple), but that’s just a wild guess.

When it comes time to creating a product offering that looks like an online forge, that’ll be a separate type of market research. We already know GitLab, GitHub, but there’s other major players as well like Jetbrains, Atlassian, Assembla, Azure DevOps, etc. Then there’s a whole bunch of niche players.

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#11

Your theory matches reality: the vast majority of small businesses / niche services provider with FOSS expertise make money exactly as you describe. There are thousands of them around the globe and their business model is widely known to be sustainable. It is so common that I don’t see how market research would help … but it’s probably because I’ve never read a market research report in my entire life :sweat_smile:

#12

I can’t think of a single one :smiley:

But even for you, a report/list like this is a good thing - if you can find a bunch of companies that “do what we do but with XYZ instead of Gitea” then the research gives a few things:

  • if everyone is doing something that we’re not doing (or isn’t doing something that we want to), then that’s a red flag
  • helps outsiders (contractors, etc.) you’ll meet in the future understand what model companies are
  • provides potential points of contact for advice/help
#13

Just in France there are a few hundreds. A large number are member of the April non profit funded over twenty years ago (see Adhérents personnes morales | April).

The one I know best are:

and have been around for more than a decade.

Ok, that narrows it down to something that seems doable and I understand the logic, thanks for explaining. I found https://meet.coop where videoconferencing based on BigBlueButton is the equivalent of forges based on Gitea. But it is not a good example because they are not profitable.

#14

@apxltd I think only you can do this market research and come up with a list of companies that are worth looking into. If I was to do it, I would spend a considerable amount of time blindly analyzing hundred of companies and you would then quickly discard 99% of them because:

#15

@dachary you’ve got this :slight_smile:

You’re already on the right track, and it’s going to be an iterative process. Think of this list almost asking a young man in his teens/twenties, “who do you want to be like when you grow up” as a means to help them with career planning. You could immediately spot relevant red flags like, “that person has billionaire parents” or “that person is 2 meters tall” - but those wouldn’t be so obvious to someone without decades of life/career experience.

Obviously there are better career planning tools, but this is a critical tool for business planning.

You’ll start to notice trends yourself, and in each iteration, I’ll help you spot new a “red flags” as well. For example, in this next iteration, if you find a company with a labor force based in in Kerbleckistan, you’ll know that’s not a great model for a first-world based company.

Just remember what the stated goal is: “create a small business surrounding Gitea that can sustain a small number of fulltime employees, with a minimal revenue of $20k - $25k/mo”

I suspect there are few companies that primarily provided a hosted version of an open source tool, but I could be wrong. I think the value-adds will be support, integrations, etc.

If you can’t find any companies that are similar to the company you want to build, then that’s a really good sign there’s no market and thus the chance of success is effectively zero. We don’t have a few hundred million dollars to can create a market :wink:

My role is to point out that, “no, these companies are not similar because…” or “this company is a good model because…”

#16

I have given quite a bit of thinking on this subject. I encourage all of you to ponder the concepts of Social Coding and the Free Software Development Lifecycle. A “forge” is a rather arbitrary, though related, collection of tools… that help overcome some of the challenges of software development. All these tools are merely supportive to help apply domain expertise appropriately and automate manual chores.

At highest level Hostea offers a set of services and tools that help ease (free) software development.

But in what Hostea offers it helps not to think in terms of the particular tools and their feature sets, but considering the particular (domain-specific) processes and how they are improved by what Hostea provides.

I agree. On the Fediverse I see a lot of activity around creating cooperatives of all shapes and sizes. Particularly interesting may be the Multi-Stakeholder Cooperative which recognizes different roles and forms of participation:

The page above has a great reference guide: Solidarity as a Business Model (PDF)

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