Open Collective and funding open source

Welcome back everyone, this is The Changelog and I am your host, Adam Stacoviak. This is episode #234, and Jerod and I talked to Pia Mancini, one of the co-founders of Open Collective. We talked about her background and where she came from, her passion around upgrading democracy, what Open Collective is, how it works, how you can support your favorite open source communities, but more importantly how you can take part and start your own collective.

We have three sponsors today - GoCD from our friends at ThoughtWorks, Toptal and also Rollbar.

We are back. It is the first show of the year, Jerod. Man, 2017 - right here.

2017…

Can you believe it?

I can believe it. I’m excited!

Nice break for the holidays, but back fresh, talking to Pia Mancini from Open Collective. We’re huge fans of the work they’re doing there, the great budget they’ve helped create for open source, a lot of crowdfunding happening from communities and that transparency back… Pia, welcome to the show and thank you for coming on!

Hey, thank you for having me!

Open Collective is not your first thing, it’s not where you began, and we one of the things we like to do is figure out where you came from. How did you get involved with Open Collective? What’s the backstory to you?

It’s pretty long, guys… I come from politics, which is probably not what you expected. I’m actually a political scientist by training. I worked in politics most of my life; I co-founded a political party in Argentina, ran for elections myself, I did civic technology for quite some time and developed a platform that is being used by congresses around the world and other political parties, called Democracy OS. Its second version is now Democracy Earth.

So that’s where I come from, from the political world, and all of my work has been trying to find ways of - this is gonna sound a bit outrageous, maybe it is, but rendering governments and the nation states a bit obsolete in front of the internet, so thinking of the internet as a jurisdiction, if you want, a political jurisdiction. We are organized very territorially still, all our political institutions are territorially-based; we are represented by the people that run in the place where we happen to be living in, or that we happen to be born at.

[03:59] So most of my work was finding ways to circumvent that and think of the internet as a new political space. Open Collective actually comes also in that line. Governments are legacy institutions; they force us to fit into these boxes, the legal entities. In order for a group of people with a shared mission to receive this funding, you need to become what the government understands is a proper political entity, whether that’s an LLC, a 50(c)(3) foundation - it depends on the country, it doesn’t matter, but it’s territorially-based.

The internet in general, and open source projects, especially - they are run by people who might never meet, and they’re transnational. The fact that they organize themselves in that world, basically online, means that they can’t receive money, because either they’re not willing or they’re not able to become these legal entities that governments require to receive funding. For us, for the founders of Open Collective, that’s irrational.

I think that online communities can thrive and need funding to do so. They need funding to do what they love, to do what their mission is, to accomplish what they set out to do, and so Open Collective was a way of creating what in my mind is like a browser on top of governments for all of these online communities to be able to receive funding without having to create a legal entity and have a conversation about who’s the owner of something. It’s like asking who’s the president of the internet… It’s insane.

So that’s sort of the path towards what I’m doing now. Was that too long?

No, that wasn’t too long. You opened up so many cans of worms there, I’m just not sure which one to bite into first…

Yeah, sorry about that.

I was thinking back to a note we have about a Ted talk you gave in 2014, which was quite well received, to the tune of a million plus views: How To Upgrade Democracy For The Internet Era. So what you just said there to us - is that kind of the nut of what this talk was about, and kind of your mission to recreate or replace governance for the internet?

More than ‘replace’ I would say ‘redesign’. The way I see it is that politics is trying to solve today’s problems with yesterday’s tools, which is not a phrase of mine, it’s Marshall McLuhan’s… So that’s pretty much what we are trying to do - we are trying to navigate a world with a very, very dated map. My proposal was how we can use technology to upgrade our political institutions, to redesign our political institutions in a way that is more in sync with how we’re organized today as a society.

What we do now is we essentially outsource our thinking, our decision-making, our citizenship on a group of professional citizens for four years or six years… You know, really long periods of time, for every topic, for everything, and based on where you are living. I think that that sort of political representation needs to be redesigned, and what we propose with Democracy OS and now with Democracy Earth is a horizontal representation where you get to assign your trust on different people for different topics, for different periods of time.

[08:13] Technology allows us to have a much more sophisticated, dynamic, fluid representation that emerges social leadership, that, again, is not territorial. It really blows my mind that I’m only represented by Argentina in the world, just because I was born there. Maybe I’d rather have you, Adam, represent me on certain issues; why can’t you do it? Just because we weren’t born in the same territory? That really blows my mind. I think that that needs to be redesigned urgently, and that was what the talk was about.

It’s interesting, because you’re coming at this as a politician, or at least as a…

Political scientist.

Political scientist, and one who’s run for political office, so I would consider you a politician in that sense. It seems like to upgrade the system you have to engage the system… I don’t know, it seems like such a huge war to fight…

Oh, that’s what you said earlier, ambitious…

You said ‘circumvent’ and then you said ‘upgrade’ - I’m just trying to understand…

No, thank you for that. That’s exactly what happened; that was exactly the path. In 2014 the talk was about upgrading the political party, the running for elections, and all of that. It was about engaging with the system and kind of hacking it, kind of rewiring [unintelligible 00:09:45.10] And that was Democracy OS, that was the first version of the platform, and that was everything I’d done until probably 2015.

In the second phase that we started with Democracy Earth, we decided it was just too hard. It was almost impossible. We were trying to get a system that is entrenched, that is closed, and we were trying to get power to devolve power. So the next stages, or what we are thinking now is how we can create an alternative system that renders the existing one obsolete. Democracy Earth (the second version) and Open Collective are trying to say, “You know what, guys? We’re not gonna fight against government or nations states”, we’re just gonna build on another level of the stack, a level on top.

Democracy Earth is a decision-making platform that runs on blockchain, so uses Satoshis for voting and Liquid Democracy protocols. What Open Collective does is essentially we are creating a platform on top of which people around the world with a shared mission can do what they want and get funding to do it. Then there’s a platform underneath that allows them to do that, and the platform connects with the governments.

We do the book-keeping, we do the taxes… We are compliant, but we, the platform, not everyone else. So it’s like abstracting all of that friction for everyone else. That’s our way of circumventing, if you want.

Rewiring, I like that. Rewiring is a good concept because a lot of times you wanna get in there and tinker, and in many cases – in your Ted talk you talked about how you had to work so hard to get to a certain level in politics; to be a politician you had to work so hard to get to the seat at the table, basically, to influence decisions, and I can see where Open Collective rewires things to give the power back to the people, to unite and organize, while the platform itself engages as needed and is compliant with the necessary local governments.

[12:10] Exactly. It just definitely makes sense that if you have an open source project, you need to do all of that yourself. We need to be able to abstract all of that friction for communities around the world. And it’s not only open source. Think about unions, for example. This is one of the things that I’m most passionate about and one of the reasons why Open Collective is so important to me. Now we have algorithmic companies like Uber, for example. They are at this transnational level, they have the same interface for everyone around the world, but then their contractors, their drivers are still siloed in the nation states, they’re siloed in the governments. There’s no reason why we can’t have a union of drivers from Mexico, United States and Canada, for example.

The power of these networks would be far larger than what it is now that they are sort of encapsulated in each kind of different governments or states or territorial legislation. So Open Collective actually aims to do that. Another example is when I co-founded the Net Party in Argentina in 2013, we couldn’t raise funds for our campaign until our government approved our legal entity, our political party. And of course, the government wasn’t very keen on approving a political party that was aiming at forcing this conversation between citizens, opening up congress etc. We had to jump through some serious hoops to make it happen, and we got our party approved something like two or three weeks before election. That’s when we could start receiving money. That’s unfair. It is very unfair, because you depend on the same authority that you are trying to transform to receive money.

Yeah, you have to ask permission from the status quo if you can replace the status quo.

Exactly. It doesn’t make sense, right? And it’s impossible.

Now, for example, we have a political party on Open Collective and it’s a political party that was modeled after the Net Party in Uruguay, and they started raising funds on Open Collective. They’re not waiting for the status quo, the establishment to say “Okay, we are blessing you with your legal entity status and you can now collect money.”

Right.

It’s a while to have done that like that.

Let’s lay out Open Collective a little bit and put it on the table, talk about what it is and how it’s designed, and then we’ll dig into the details… Specifically how those details affect the greater open source community, as that’s the one that us and our audience are most concerned about. Obviously, there’s a lot of different ways you can use Open Collective, like you just said, the political party. I know there’s collectives for meetups, there’s collectives fo open source, there’s probably collectives for all sorts of initiatives and things that you wanna gather together around… But Open Collective as a thing calls itself “a new form of association, transparent by design” and it says “a group of people with a shared mission that operates in full transparency.” Can you take those two statements and kind of launch off and tell us more?

[15:42] Essentially, Open Collective is a way to enable these new associations to become a collective that has funding and members and operates in full transparency. To bring it into the open source community, if you have an open source project for which you’d like to receive funding for, and you have maintainers from all around the world that might or might not have met, they can now become a collective, become an entity without needing any sort of government permission, and start raising funds on this platform. It’s transparent by design because the only way for collectives in general to receive funding or get money out of the system is by doing it on the platform, and everything gets recorded. So it’s transparent by design; we think that the conversation about money, especially in volunteer communities or open source communities - it’s a very tricky issue, it’s a hairy issue, and our proposal is that the way of making that easier is by being transparent about it, by showing what it takes to create an amazing open source project, laying out what your expenses are and laying out what you expect to get out of it and allowing for others to cover those expenses.

Starting a conversation about money is where the ‘transparent by design’ element for us is core to what we do.

So transparency in terms of the purpose of the collective, as well as the financial needs of the collective and all the way to the use of those - the expenses paid, or the labor… However you’re gonna end up using the money is all publicly available information.

Yes, exactly. Because we generally believe that a big part of why it’s so hard to talk about money in this kind of communities is because it’s always a big hush-hush. We’re always a bit guilty of asking for money, or ashamed to do it. It’s done sometimes behind closed doors… Bringing all of that into the open - we think it’s a way of having a healthier conversation about money and funding in open source.

Yeah. It also removes and reasonable doubt or skepticism around organizations who are willing to do that. I’ve always been very skeptical of most charities, almost all of them. I’m de facto cynical on charities, because I don’t know where that money’s going, I’m not sure what happens, and you see all this – especially, for some reason, when it’s trying to get me to send money somewhere in Africa, I’m thinking “It’s never gonna get to where it needs to go.” And because there’s no transparency, I can continue to remain as skeptical and cynical as I want, because they’re not proving otherwise.

One charity that I embrace and really appreciate is Charity Water, and one of the reasons why I think Charity Water is so cool is because they show exactly where the money goes and they keep you in the loop and they show you, “Here’s how much money is going a hundred percent to this particular well in this particular region.” It’s geo-positioned so you can see where it is in the world, and they’ll send you pictures throughout the process. This level of transparency removes all of the skepticism and doubt because you know exactly what’s happening. I think building that in by design enables a lot more people and groups to follow that example, and I think that’s a really cool thing.

Exactly, and Open Collective is an association, it’s a group of people with a shared mission that operate transparently by design; there’s no other way. It’s not like GitHub, that you can have closed or open collectives. An open collective is this - it’s showing who’s giving you money, where the money is going, submitting expenses, uploading…

[20:10] There are collectives that even if they don’t have any donations yet, they are already submitting expenses, because they want to show what goes into building a community, building a project, building a meetup. Many of these things are taken for granted, as well.

Part of the problem before Open Collective appeared was that before, the only way of managing money was either using someone’s personal bank account, which is highly problematic, or a shoe box, or using cash. There was so much friction going into funding a project like this. Our mission is to remove all of that friction and hopefully enable a lot more collaboration, because all of this is happening in the open.

Well, I think that sets the stage pretty well… We have a bunch of questions about Open Collective, how it works, the repercussions and what do all the different details mean for us and for the open source community and anybody who’s either engaging it as a collective or trying to join one. So let’s take up our first break and we will talk about those things right after this.

Alright, we are back with Pia Mancini, talking about Open Collective. Before the break you laid out Open Collective - what it is, its mission and its design, to a certain degree. We’d like to understand how it works on a practical sense for a hypothetical project and a new Open Collective being founded. Let’s just say Adam and I have an open source project and it’s getting popular… Project X - it’s got a great name, because it’s Project X, and we’ve been putting time and effort into it and we’re starting to think “If we’re gonna keep this going, we might need a thousand bucks a month, or some sort of income coming in. Let’s start an Open Collective.” How would the process work and what does Open Collective provide for our group in Project X?

[23:52] Alright, so essentially if Project X is an open source project, you would apply to create a collective. The link is like opencollective/open source/apply, and the reason why I’m mentioning that is because that connects to GitHub. So you would pick your repository and your core contributors, and then we would create the Open Collective. What that means has two different elements to it.

The first one is you will have your own public page on Open Collective. It’s gonna be opencollective.com/projectX, and there you will be able to state your mission, show your expenses and your donations and show who your core contributors are, and there’s two buttons to receive donations.

Now, the second aspect of it is where the money goes. Once you guys have this set up and someone wants to come along and says, “Oh, I love Project X. I wanna give then a hundred dollars per month”, they hit on your public page “Give them a hundred dollars per month” button, and then what happens? So a stripe model popped up the user credit card, and that money goes to your host organization. In this case, the host organization for open source projects at the moment is Open Collective. But it can be another organization that acts as the host. For example, the Ruby projects on Open Collective are not hosted by Open collective, they are hosted by Ruby Together. All the Docker meetups are hosted on Docker themselves.

What does the host do?

Exactly - the host’s role is to receive those funds, those supports earmarked for you (in your name), and hold that money for you. Then, when you submit an expense – for example, you have your hosting costs, you submit that expense on your Open Collective page and the host organization reimburses you, pays that expense for you. That’s the role of the host - receiving funds for you and then paying for your expenses.

What the host organization does as well - and this is the part that we were talking about, of how we’re removing friction - for Project X, in this case, is they keep the books on that money, they are compliant with regulations on that money and they pay taxes if need be on those funds. That’s why they charge a fee for hosting you.

So these are the two parts of Open Collective - the public page, where you can receive the funds, and then the host organization that is a legal entity that receives the funds in your name and manages it.

So how can you trust the host?

Well, Open Collective is the host for all open source projects. Because this is all public information and it’s transparent, everyone knows that Open Collective has x amount of money that belongs to Project X, and when you submit an expense, we reimburse/pay that expense from your pool of money. Because everything happens on the Open Collective platform, it’s very clear how much money each collective has, how much money there is left, and if you can, for example, pay or not for a certain expense. The system, for example, won’t let you submit an expense without an invoice. It won’t let you pay for an expense if there are not sufficient funds in that collective. That’s how the system works.

[28:04] That’s the setup that allows you to receive funding and use that money without needing to create a legal entity.

Right. It’s very much a “bring your own host” situation. If I have a relationship with a nonprofit or some sort of legal entity, I could have them host, if I wanted to… In the case of the Ruby meetups or Ruby projects, they’re using Ruby Together because they’re a legal entity; I’m not sure if they’re 501(c)(3) or not, but for whatever reason they could adopt them as their host or use a default of Open Collective and that’s the default host, so to speak. So you can use the default, or you can bring your own.

That’s correct. For example, Women Who Code is a 501(c)(3), it’s a very large organization and they have local chapters, local Women Who Code around the world, and all of those local networks are on Open Collective and the money is hosted by Women Who Code 501(c)(3). It’s not hosted by us, by Open Collective.

Docker did the same with their meetups. There are many meetups of Docker around the world, and the money goes to Docker. They are in charge of paying those expenses.

We have collectives that actually self-hosted, as well. They’re using Open Collective as a transparent crowdfunded platform. They have their own legal entity, they have their own bank account, but they want to provide that extra level of transparency, they want to use Open Collective as a way to receive money from backers and sponsors without worrying about setting this up.

Democracy Earth is an example. They are a foundation, a 501(c)(3), but they use Open Collective to receive funding as well. So it’s “bring your own host” or find a host that you trust, that you have worked with, or use Open Collective as a host.

Are the donations to those who use Open Collective as the host nonprofit donations, or are they tax-deductible donations?

Not at this stage. We’re still in the process of getting IRS approval for that. But we are filing for a 501(c)(3) as well. The idea is that the Open Collective foundation is gonna be the host organization for all open source projects and other kind of meetups and other kind of collectives that are nonprofit or have charitable purposes or social impact. That’s gonna be completely removed from Open Collective the company that’s managing the platform.

Can we also break down the contributors portion of this, too? So once we’re past that stage, we’ve got our collective page, we’ve informed our small, budding community, Jerod and I are working really hard on Project X and we’re telling people about it; they’re going to opencollective.com/projectx and there’s two options there you’ve mentioned: contributors, which is either a backer (a person) or a sponsor, which typically might be an organization or a company out there in the community who cares about what we’re doing and they wanna help us get there. Can you break down how that works?

Yeah. The way we set it up – and again, a collective can decide to do this differently; backers start at two dollars per month, and typically they are individuals that are supporting any collective. Sponsors can be individuals or companies, but start at a hundred dollars per month support, and they have different avatars. Both of them show up as backers and sponsors on the GitHub readme of the collectives.

[32:16] Then, each collective can decide to have other (we call them) tiers. Node.js for example starts for their sponsors at five hundred dollars per month, and you can decide for example… React Boilerplate have this set up where they have a gold sponsor or a silver sponsor, and they have different tiers and they give them different online real estate on their website or their readme, depending on the support that they receive.

Webpack, what they did is they gave sponsors gold points for their decision-making tool, the app they use for features; we’re also working on offering office hours for sponsors above a certain threshold. If you support a project with above whatever number, like a thousand dollars per month - and this is just a makeup number - you get one hour of a call per month with a core contributor or every other man on the core team, or things like that that encourage support, and also we move past the good will.

Right, the charity model.

Yes, exactly.

We’ve talked about that recently, Jerod, on the ending show for the first season of Request for Commits, where Mikeal said that companies need to reassess their relationship with open source and their idea that supporting it is charity.

Yeah, totally. Part of the reason why we’re doing a 501(c)(3) as well is because we want to experiment with building some sort of membership organization. We created this open source collective; it’s essentially – we call it a Super Collective, but it’s like a bundle of every open source project on our platform, and we have sponsors at the open source collective level. We are working very hard to strike a couple of deals with some companies to give a larger donation to the open source collective, and then we either distribute that to the projects that they’re most interested in or we give the members of the open source collective certain perks and things like that.

What we’d like to do is to create a whole community around this idea that open source is not just giving money, it’s about being part and a member of this group, of this community, and bringing the companies on board as members of the collectives. For us it’s breaking that barrier that is “Oh, we have two thousand dollars spare budget for this year; we’ll just [unintelligible 00:35:21.10] open source”, you know what I mean? We wanna break that, and what we’re experimenting with is creating a community where everyone is a member and you have certain perks for belonging, essentially, whether that’s access to the maintainers, or access to office hours, or a better say on features… It really is up to the collectives to decide. We are not forcing anything, we don’t have an agenda in terms of what they can do, but it’s about how we can work together in creating an environment where it’s not the company just giving money when they’re lucky, or sending them pizza for a meetup, you know? Which is great, but you can’t live on pizza. [laughter]

[36:11] Or you can, it’s just not extremely healthy.

Yeah, exactly.

For a little while, you can live. I like the idea of the Super Collective, or your open source, which is a collective of collectives. I can see that being, as you branch out into other budding initiatives, you could have these groups where maybe it’s “The Internet Freedom Collective” and you have an EFF Collective, and this collective… You have these other people that are doing different things, supporting internet freedom or whatever the bigger mission happens to be, and you could just… Adam, maybe he loves the EFF, so he’s gonna contribute directly to them, but I just love internet freedom in general, so I’m just gonna contribute at a higher level and let the money go where it needs to go.

That’s uncanny, because we are actually building an internet freedom Super Collective with…

Whaaat?!

Yeah, with the Open Technology Fund (OTF). Absolutely.

Wow, I did not know that.

Yeah, I thought you had seen it.

No, I just was thinking that would be a good use case, so I guess I drilled it.

Yeah, that’s exactly it. So building these Super Collectives, and the internet freedom is a great example, so all the projects that OTF funded or they can’t fund for a certain reason, but they would love to fund… Bundling all together means that they can give the collectives a workshop on how to apply to grants, for example, or a crypto teaching of some sort, and other perks that make sense at that level. It’s about mutualizing resources for certain groups, and that’s super interesting.

I’m not sure if we’ve put it out there yet, but I know in the break we did ask you how long Open Collective has been in place and you said - this is 2017 now, so in 2016 you founded it in February… Is that right? Or was it 2015?

No, 2016.

Okay, so we’re not even a year into this thing, fairly.

Yeah, we started actually working - and I know because my baby was two months old - on the 11th of January. That’s when we started working, and then we went live pretty much early February. Amongst our first collectives were [unintelligible 00:38:55.21] for example and Rails Girls Atlanta [unintelligible 00:39:00.03] So yeah, we are super proud of them. And then, of course, Women Who Code came on board really early on, and it was a great learning curve with them.

I think over the next little bit I’d like to break down not only how much money you’ve enabled to be raised, but also how and what you’ve done to get it right, because this isn’t the first time something like this has come about. You’ve got other platforms out there that kind of have not exactly the same mission, but the nuts and bolts and the way things work are very similar. So maybe we can start out since last February, but we effort has done, so I’ll put it in your hands to explain the details of it. basically, we’re looking at roughly 141-ish thousand dollars towards open source has been raised… Or what you call annual budget, basically, for that, across a hundred collectives, and more than 8,300 contributors.

Let’s break down what the effort has collected so far, the impact so far, and then what you’ve been doing right to get there.

[40:09] We didn’t start with open source as our focus at the beginning. We experimented with many different collectives, but very soon we realized that the open source community had a massive pain point there, because meetups, whether you live it or not, they were already dealing with money somehow. Some way or another, they were managing to get some of their expenses. Yes, it’s painful, and they had to match an expense with a donor - someone paid for the place, someone paid for the pizza… But open source had absolutely nothing, and it really was a big pull for us. Instead of us pushing Open Collective, we started receiving a lot of inbound requests to create collectives.

It’s been a very long learning curve. It took us quite a while to realize that part of the problem was the open source collectives not knowing how to spend the money, wanting support but not being sure how to go about asking for money. Talking through these issues with our community, with the open source collectives has been very helpful, and the latest result of that was that we did a big redesign of the collectives’ page, where now the expenses and the donations are at the very top, above the fold, and that was us saying, “We need to talk about money in these kinds of communities”, instead of talking about what we do and what’s great about the projects and the people, and then at the very last the issue that no one really wants to talk about, that is money.

Bringing that at the front of the design, what we are trying to achieve is to say is – a good way of collaborating is showing your expenses and then asking for people to cover those expenses without being ashamed of that, and then talking about how it’s best to spend that money, whether it’s paying for features or whether it’s giving contributors x portion of those funds as rewards for the work, or paying infrastructure that everyone shared, like [unintelligible 00:43:08.11] or flying people to meetups or conferences, or paying for someone to go speak about your project at a certain conference, or things like that.

I think that what we really learned, our biggest learning curve was not the fact that it was difficult to raise money, which it is, but what was more complicated was how to spend that money, and how to have a conversation about how to spend that money. That’s super interesting.

Something else that we learned as well was, at the very beginning we thought that companies would jump at the opportunity to give to open source - that is not the case. [laughter]

I loved the dramatic pause…

[43:59] [laughs] We have some amazing sponsors that have been sponsors of the platform from the very first day, and we’ll love them [unintelligible 00:44:09.05], but there are very few. The rest, we really need to work to get them on board. Also, part of our challenge and part of our role as Open Collective and, in a way [unintelligible 00:44:23.14] is “How do we help the communities deal with the fact that maybe they’re gonna have an Open Collective, but it’s not like they’re gonna receive thousands of dollars from day one?” and what are the best strategies to find those funders or those donors, how to reach out to sponsors and companies… We did that a lot ourselves at the very beginning, really trying to understand what the value proposition is for sponsors.

I think that a part of why we struggled so much at the beginning was because we were seeing it through the lens of charity. You need to give to open source, because… “You are Netflix, how are you not gonna give to [unintelligible 00:45:08.22]? It’s such a big part of your…” And that’s not the right focus, that’s not the best approach, and we learned that the hard way.

We learned that from really not being able to find sponsors or to help collectives get sponsors. Now our focus has much more to do, as I was saying before, with everyone being part of a certain community and getting something in exchange for their support; really getting what they need - it might be support, it might be access to information, it might be just the ability to reach out every now and then to the Sean Larkins of the world and them replying to an email, or things like that.

I think that there’s a lot of companies out there that use these projects, that are not the Netflix and Googles and Yahoos, but they’re the a thousand and one pharmacies, and they are willing to support the technology that they use, the open source software that they use. But they also need something in return, they also want to be in the know, they also wanna be part of this community. That’s the framework that’s been guiding our actions.

One aspect of that - we just may be getting too far into the weeds, but I’ll give it a shot anyways - is you said that one of the major changes that helped was to put money first, whether it’s in your design or in the conversations you have, and even in your focus… One thing that you all do on a website is you reference everything in terms of annual budget. That takes me aback every time I see it, because I always think it’s gonna be monthly budget, because maybe that’s just how my brain works, and then I realize it’s annual, so I get very excited and then I get a little bit depressed.

I’m with you on that, yeah.

Because I look at Cycle.js, I’m like “Wow, six grand a month”, and then I see that’s in fact annual, and then I have like a sad emoji face. I’m curious why you focus on annual budget and what the implications of that have been.

That’s a very fair point. Because most of the donations are recurring, we project those donations to a year. I think that organizations need that sort of previsibility of where we’re gonna be a couple of months down the track, what do we have to work with during a whole year, and I think that’s very healthy, to start thinking about these groups as organizations, as collectives that have a proper…

Roadmap.

[48:04] Exactly, they know what they’re gonna have in four months down the track, so what features can they get now etc. So that was the goal of having the annual budget. When we redesigned the page, we put the monthly available budget there as well, for that number be sort of readily available. This way they can see how much they have to spend for the year, but they also see how much they have right now. What we are trying to do is to incentivize more backers and sponsors for these collectives.

Behavioral-wise it’s a tough call. On the one hand, you want to show that a collective is successful, because that brings more donations. At the same time, you don’t want to show you have too much money, because then they’re like “Oh, I’m not gonna give to these guys. They already have all of this money.”

We should probably do more testing on how the potential backers or sponsors feel when they see one number or the other one. If you see that a collective has $400, you might not be very inclined to support because you think that whatever you have to give might not really make a difference, or they’re not gonna be sustainable anyway. We’re also trying to avoid that.

The bigger number is always more exciting, as Jerod has clearly stated that he gets really excited with the bigger number, and with the smaller number he gets the emoji sad face. Maybe I missed it, but what is the annual budget number consist of? Is it the expected donations? Or is it actually something where the team behind Project X, or Webpack or whatever has gone and said, “Okay, we have these expenses, now let’s raise towards those expenses.”

No, it’s projected donations.

Okay. And then you also show funds available, which means that they’re projecting - I’m just using Webpack as an example - $34,000/year annual budget, and right now they’ve got just a little under $14,000 of funds available.

Correct, so that’s what they have to spend right now.

Right, okay.

Yeah, so they can submit expense – I mean, they can submit any expense that they want. We actually encourage them to submit all their expenses, regardless of whether they have the funds to cover them or not. We are soon gonna do this feature where I can say, “I’m paying out of my own pocket for Project X, $100/month for whatever service. Please help us cover it”, so someone can choose to either make a donation to the larger pot, or can decide “Okay, I’m gonna just cover your hosting costs” or “I’m gonna cover your rental of the mic for your podcast”, or whatever it is.

That’s why I was thinking, is the budget based on – like Jerod said, it’s kind of weird why you use an annual budget, and then also call it a ‘budget’ versus ‘donations’ or some other term for it, where I can go and list out, “Well, we have hosting, we have meetups once a month, so there’s a certain number that takes to create that meetup; we’ve got a [unintelligible 00:51:37.00] we’ve got this person going here to spread the news and evangelize, we’ve got this person going there to give a talk at their local meetup, there’s expenses associated there… Then kind of add all those up and make a budget, but it seems it’s the opposite, which is…

[51:54] It’s like a double entry - sometimes you know that you have a grant, for example, so you decide how you better allocate those resources. If you have more money than you thought or if you have less money than you thought, you might allocate your resources differently. What we want to give the collectives is an idea of how much money they’re gonna have for the year, so they can plan better and create a better roadmap. But they can also list all their expenses and encourage people to cover each of those expenses in particular.

If you only take the “These are my expenses” approach, then I think that you’ll tend to be… You know, there’s things that you might not include because you never think you’ll get the money to do.

Right. It doesn’t allow you to dream bigger, either. I wasn’t advocating one way or another, I was just trying to figure out how it broke down. On one side of my brain I’m thinking, “Okay, it’d be nice to actually set a budget, because it’s true, it’s what I or the organization needs to do what we’re trying to do”, and on the other side it’s like, “Well, if we dream a little bit bigger, maybe we can do a bit more and fly somebody somewhere, versus do a teleconference”, for example. It gives them a bit more legs there.

And what I think is beautiful about this conversation is that now open source projects can do that. That’s where I feel this warm, fuzzy feeling of “We’re doing a great thing for this community”, because you can now plan like that, you can have your budget, you can dream bigger, you can stop worrying about other things. We’re definitely not at a point where maintainers can get fully paid for their open source work - I would absolutely love to take Open Collective there, and that’s what I work for, but at least we are now having a conversation about “Alright, we have this money. How can better use it? What are our costs?” That keeps open source more sustainable for the future, because this conversation is how you build stable, long-lasting organizations.

Yeah. Well, it goes back to what Jerod said earlier, how he is just naturally cynical towards a situation like this, where if you open the transparency up like that you remove the assumptions. And like you said, this is something that the open source community hadn’t really had at their fingertips, to have a decentralized way of basically collecting money and not having Jerod or me be the caretaker of that money. It’s removed from us, so there’s a lack - or a potential; hopefully a lack - of foul play, I guess. Or what do you call that?

Friction?

I was thinking more like…

Corruption?

Corruption, that’s the word I was thinking of, and I lost it. So the lack of corruption on how the money – because that’s the biggest problem: you come in with this lack of trust. The other side of that is that open source hasn’t had this. You haven’t been able to collectively organize a group without having a political or legal entity, as Pia mentioned earlier; now you have a way where you can, and you can be transparent about it, so there’s trust. That’s like a new foundation to build upon, that hasn’t been there before.

The overarching point we’re trying to all get here I think was figuring out what you had done well, versus other platforms. I think that’s clearly a good example of getting to a realization of how important transparency is.

Especially in a world where you might not ever meet the person you’re working with, right? We have collectives that they’ve never seen each other, so getting to trust each other, as you say, is very difficult. And being transparent about it is as important towards the backers and the sponsors as it is towards your own community and the members, you fellow core contributors.

[56:06] That’s a good spot to take our next break. This is our final break for this show, but when we come back we’re gonna dive deep into what the future might hold for Open Collective and those trusting this awesome platform to empower them, to unite and form international communities that are not bound by their birthplace or origin; you’re breaking down barriers. Let’s take this break and when we come back we’ll dive a bit into where the future’s going. We’ll be right back.

Alright, we’re in our last segment with Pia Mancini, talking in general about funding open source through Open Collective… A lot of different ways to decentralize how you give to an organization that doesn’t need a political backing or a legal entity.

Pia, we talked about a lot of fun stuff in this conversation, but to wrap it up let’s talk about portions of this blog post you wrote recently on Medium. It’s titled, “2016 on Open Collective and What’s in the Works for 2017.” I’m more interested in the 2017 part, because we’ve kind of covered 2016 so far in this conversation. What’s coming up that people may not be aware of?

We’re gonna be experimenting with a couple of things that are all going towards our goals of enabling communities to be financially sustainable. The first feature that’s gonna be live super soon *coughs twice*, (to put some pressure there) [laughter] is gonna be being able to sell tickets for events or for any sort of conference that you’re doing. In that blog post that you mentioned there’s a link to the feature where we’re having that discussion.

We have a lot of meetups on Open Collective, so we’re trying to help them use Open Collective not only to receive donations, but also to sell tickets or Swag or things like that for specific events.

The other things that we’re gonna be exploring is with our common friend Justin Dorfman, from Sticker Mule. If we can allow for people to buy stickers from open source projects, and then that money going to their Open Collective - that sort of marketplace. The same with Teespring - projects can have a campaign where they have T-shirt with the project’s logo, then someone can go purchase that on Teespring, and that money, above the cost, goes to their Open Collective.

[01:00:20.25] So finding these ways of integrating with other services that will help them be more sustainable. Also, part of this effort is something that we touched upon before, this idea of office hours. If you have sponsors that you’re offering them five hours per month with a quoting to go through their hangs and issues they’re having using your software, then managing all of that can be very stressful, obviously, for the maintainers, and it shouldn’t be their job. So how do we make that very easy for them? A ticket can be a slot for an office hours as well, an hour of a call.

Everything that goes towards helping them manage the way they are sustainable and they way they receive more funding, that’s gonna be our focus for 2017… Which brings me to the second issue there in the blog post, that is the $ustain unconf that we were just talking about. So what we’d like to do - and this is together with other organizations: Sticker Mule, GitHub, Gratipay - is on Changelog, how can we…

Yaaay!

[laughs] So having like a day-long meetup of maintainers and sponsors, a mix of people talking about open source for the future, how we can make this last in the future. The idea of the $ustain unconf is gonna be quite flexible, but what we know we don’t want is having speakers or having keynotes… We wanna talk about it face-to-face, in real life, about what are we doing, where we want to go, how can we help the open source community reach the places they want to reach, and make this amazing software last and be well-maintained and keep growing. So it’s gonna be like a large conversation about that, and that’s coming up in May 2017.

So very soon…

Yeah, very soon… Soon. Don’t say that! [laughs]

If someone’s listening, where would they go to find out more? How can they submit their name to an email list, or just kind of be informed? What’s the best way to keep up on that?

Okay, thank you for that. So in our Open Collective Slack, slack.opencollective.com, there is a channel [unintelligible 01:03:01.13] Everyone’s talking there. That’s the place that we gather. So just join slack.opencollective.com and in there the [unintelligible 01:03:11.00] channel.

It’s a very unconference, moving very quickly, coming soon… I know Justin Dorfman from Sticker Mule was working on the website, so there’ll be more information coming out soon… That should be a lot of fun and a lot of good conversations will be had around sustaining open source there.

You mentioned Gratipay as another group that’s involved in that. One thing we haven’t done - and Gratipay is probably the other platform that I think about when it comes to this kind of funding for projects… Just briefly, could you give us a quick compare & contrast, what are the things where Gratipay and Open Collective are the same, and then how are they different? Just for a reference.

[01:03:57.23] Sure. Our aim - if you want, our goal in life is the same, we want to make open source sustainable for the future. The main difference is that we don’t require a bank account or a legal entity to receive the funding, and we have an element of transparency about who’s funding the project and where that money is going. I think that’s the biggest difference.

Very cool. One thing that I’ve been thinking this whole conversation and haven’t quite asked yet, so I’m gonna just lay it out there now, is you mentioned that it’s in the works and perhaps in the near future you’re separating Open Collective the host - the open source host, which is the legal entity that is becoming a nonprofit - from Open Collective the company that runs the platform. First of all, did I understand that correctly? Secondly, if I did, how does Open Collective the company make money, and what’s its plan for sustainability?

Yeah, you got that exactly right. So the company had some investors early on; they are listed in opencollective.com/faq, or in the About. All our investors are there; most of them are friends, co-founders, entrepreneurs and from other companies that are just supporting this. We decided a couple of months ago not to raise a traditional seed round, if you wish. We are trying to bootstrap as much as we can. It’s a big challenge, it’s hard, but the goal is to try and keep this project as lean as possible, until we can live out of the fees we charge. At the moment, Open Collective keeps 5% of the donations that are coming through the platform. The host organization - that until now is still Open Collective, but is gonna be separated very soon - keeps another 5%. A host can choose to have a different percentage, but the platform is gonna survive/sustain itself with 5% of the donations that are going through the platform.

So 5% goes to the company, and then another percentage… 5% if you’re on the Open Collective collectives. But if you’re on a different host, like Docker, they could take 3%, or 5%… It’s up to them.

Exactly.

So collectives that are joining, they know upfront that “Hey, between 5 and 10% of our donations are gonna go to the platform/host.”

Yes, absolutely.

Gotcha, cool.

There’s a lot of work involved. When we don’t do the administrative tasks of reviewing the expenses and making sure that the invoices are correct and reimbursing everyone every Friday, and dealing with the bookkeeping and taxes and all of that, then the platform fees are 5%. When we do all of that, which means when we are host, then the whole fee is 10%.

Maybe we could also mention too the extra effort you put in to actually helping collectives succeed. I know when we talked to Sean, Jerod - I don’t know if we got too deep into it, but I think maybe in some of the breaks or post-conversations after the actual show we talked a bit about their involvement with Open Collective and their success there… Which I don’t think we covered too deeply on the show, just enough maybe, towards the end. But he was very thankful for the loads of help that he had gotten from you all. I’m not sure what that meant or what the details were, but maybe that’s something you could touch on, too - not just the bookkeeping side and the platform side, but the actual human element that you bring to say “How can we help collectives be successful?”

[01:08:10.05] Yeah. I think that part of the moderate initial success that we’ve had is that our interests are very much aligned. The better the open source community does, the better Open Collective does. Then we have more spare money to build in features that are gonna help the open source community have more funding and better funding and better access.

It’s this sort of virtuous cycle, if you want. My time - at least I believe so - is very well spent when I help our projects connect with their sponsors, or help them through how they’re gonna spend their money, help them sort through some of the conflicts that might bring suddenly having funding, or helping them with ideas, like writing blog posts with them, reviewing their blog posts… Anything that we can do to help them have more sponsors and have a healthy relationship with their funding and get the word out there. For us it’s a win/win situation, so we do help them a lot.

Initially, what I was doing was just reaching out to sponsors myself, saying “This is an amazing open source project you guys should give money to” or “I know that Netflix uses these” or “I know that Yahoo! uses these” or “Spotify uses this. You should support them.” I think that it was a really good effort, but it felt a bit less legit because I’m not part of that community or that project in particular.

So now what we’re doing is they write an initial blog post launching their Open Collective, and then we share it among the companies that we know and our contacts among the sponsors, that kind of thing. I chase them a lot. [laughs] Poor Sean, I ping him every now and then about a blog post that I really want him to do. Or the Preact team, I would love them to do their blog post to launch their Open Collective. But it’s doing great, and I want them to harness this momentum and really get more funding, so I’ve been pestering [unintelligible 01:10:42.26]

But I think that that’s part of our role. Open Collective is really helping the collectives that are on our platform be the best that they can, and have the best possible funding and best relationship with their sponsors, and in general have a healthy ecosystem for supporting open source long-term.

A healthy ecosystem for supporting open source long-term. That sounds like a pretty good thing to me. What do you think, Adam?

That’s the best direct – whether it’s a tagline or not I don’t know, but it’s the easiest concise way to say it. I love it.

Me too. Maybe that’s on your tagline. [laughs]

There you go. At least for the open source section.

Exactly.

Well, you mentioned the 5% and the 10%, and despite how much success you’ve had in the first year, which is admirable and it’s been a lot… I mean, annual budget across the whole system I think you said was around 393,000. If we just do a little bit of math on that, 10% would be 39,000, so you’re making, as a team, the platform/Open Collective host has made less than 40,000 - of course, you have some money, right now you’re trying to stay bootstrapped, but where do you have to get in terms of like…? Do you guys have a goal for “Here’s our sustainability point for Open Collective the team. We need to get to a million dollars per year, so that we can get 8% of that.” What’s your goals in terms of…?

[01:12:23.19] We don’t. I mean, we know obviously our burn rate and how much runway we have left. Our burn rate currently would be around 30k a month, a bit under that, maybe. So we know we need to hit that mark before our current funding runs out, or we need to bring more investors on board.

Open Collective being an Open Collective, which it is, but to its full extent, so having members, and saying “What these guys are doing is really important for online communities across the board, so yes, I’m gonna give to Webpack, but I’m also gonna give to Open Collective.” So we are running a very lean operation at the moment, where there’s three of us and a designer that’s a contractor. We are trying to really be very careful with how we spend, but we are also trying to be very bold in how we experiment with funding. That’s something that we struggle a lot with; we do not wanna go through the traditional path, so whether we end up being ourselves an organization that you could give $10/month to, because you believe in Open Collective as a platform… That might be very durable for us. We’d really prefer that model, but if we can live on that, that’s definitely what we would try to do.

Experimenting is fun. We are trying to really think outside the box in terms of new organizational structures for Open Collective. It’s fun, it’s a lot of fun. It’s scary… But a lot of fun. [laughter]

So just some quick math here based on Jerod’s estimate of just under 40,000, your burn rate roughly being 30k/month… You pretty much need to, at current burn rate, 10x annual budgets to get close to meeting your burn rate.

Yeah, to break even. Yes, absolutely.

So like four million-ish would get you at breakeven.

Something that I didn’t mention that I think is interesting as well is the three of us took a ten-year vesting on Open Collective. So we are a traditional C corp, but instead of having a four-year vesting, that is the average time in which your equity [unintelligible 01:15:17.23], so we took a ten-year one, because we think that this is long-term.

Wow.

So if we have to find creative ways of supporting Open Collective throughout the first couple of years until we are at that point, I think we would experiment with that. We are really here for the long-haul. That’s also a signal that we wanted to give to everyone in the community. We’re not building a company that you would flip and sell in four years. This is really – for us, it’s like ten years of our life that we decided that we wanna do this at least.

[01:16:02.14] Because this will take time, and we are more than okay with that. So if we don’t meet that next year, it’s gonna be the next one, and we’ll find ways of crossing the dessert.

Wow, that’s pretty cool.

Yeah, definitely… I think the next thing I’ll say is ‘thank you’ for stepping out like that. Not many people are doing that, and it takes a lot of courage and commitment, given that you have a family, you have people you love, you have things you can do… But to commit yourself like that to such a great cause is awesome. And to do it well, I mean… Year one - this is year one. Not even year one, it’s still under year one, and even during that year, you - to your own words - weren’t getting it right, so to speak. You learned the lesson of transparency first and making the communication between funding and the community and that kind of thing be a bit more transparent and be a bit more clear. So this is what you did year one; I can’t wait to talk to you next year and be like, “Bam! This is what happened!”

I know! How exciting, right?! [laughter]

Well, Pia, anything else you wanna cover? I know Jerod and I had a lot of questions here and we’re getting ready to wrap up, so I wanna give you a chance to cover anything that we may have not talked about that you wanted to cover. Any closing thoughts, any welcoming invitation to the community Open Collective? Whatever you wanna share is really what this is about, so anything else you wanna share before we wrap up?

No, you guys have been super thorough, thank you very much for having me. To your audience in general, I’d really love you to go to opencollective.com/open source/apply and join this community. I think that, as I said, the more amazing projects we have, the better we are gonna get at having better sponsors, more backers… We’d love to have everyone on board, as long as not like Webpack, that you are breaking Open Collective… [laughs]

Right, pretty much. That’s a success story there.

Pretty much, yeah. No, we love Webpack, they’ve been amazing, and it’s such a great example of how this can work when everyone’s interest is aligned, and we are talking about the topics that we need to talk and dealing with the issues that we need to deal with. It’s such a great project… We love them.

I also wanna direct people for you, since Open Collective is open source, go to github.com/opencollective. You’ll see various projects there; I believe your website is just /opencollective, and there’s a bunch of issues there. To the community out there listening, if you wanna step in and help triage issues, documentation, things like that, that’s probably a great place to get started, to reach out to the team behind Open Collective.

[01:19:11.15] Yeah, absolutely. We welcome every PR and support and issues and feedback. We really thrive on feedback, so yeah - just jump in there!

And even the issue you’d mentioned earlier, issue 177, was Support For Paid Events… A lot of communication going on there from the team; everything from the details in the API to some of the design pieces there. We’ll link that up in the show notes, listeners, so just go to the show notes to check out the notes and links there, we’ll link out to that.

I think this is really interesting, how you’re sharing all this there and inviting people to come in and participate. Jerod, we’re not even doing this level of sharing of design and issues… We need to do this more, man.

We do have a Slack and we’re opening that up, that’s something happening soon, but this is definitely leading in a good way. I like that.

Well, Pia, thank you so much for joining us, and to the listeners out there, thank you for tuning in. I’m sure if you’re listening to this, you love open source as much as we do. We’ve wrapped a great, big, green heart around open source and the communities around it. Thank you for listening to this show, and if you don’t subscribe to our weekly email - Jerod, is it a good email or is it a bad email? What kind of email is it?

What is wrong with you, if you don’t subscribe to this email? Like, come on…

Right. Changelog.com/weekly.

You’ve listened this far into this episode and you’re not subscribed at Changelog Weekly? What is wrong? What’s wrong here, Adam?

Fix the problem. Go to Changelog.com/weekly, put your email in… No spam, the best email ever, overarching all of open source, all of the community. It’s language-agnostic… We share a lot of great stuff in there - our favorites, everything from best projects to videos we find on YouTube and elsewhere, to some of the best articles out there covering what’s happening in open source today.

That’s it for this show, so let’s say goodbye.

Goodbye! Thanks again, Pia!

Bye guys, thank you!