Once More unto the Breach

Conversion Rates (Again), Open Source Business Execution, and JBoss

Readers know I disagree with the facile answer that businesses that use open source software need to "convert" their user community into customers. I've laid out my concerns in two blog posts over the past couple of years (here and here). Today, reading Matt Aslett's (always useful) 451 CAOS Links I came across this gem from David Skok on developing the JBoss business pipeline.

If I had to summarize my overarching concern with conversion discussions (and wearing my customer hat), it's that sales and marketing types confuse conversion with selection. They're trying to jump start leads by applying historical pre-web lead qualification thinking in a world where the web allows potential customers to self-educate and then self-select. The process and thinking that goes into this JBoss case study isn't simply good for open source related business strategy. (I really wish we'd had this level of process and the tools to support it 15 years ago when we started Softway Systems.) Quotes that stood out for me:

The first question we looked at was: Did they know the names of the people that had downloaded their software 5 million times? The sad answer was no. Not only did SourceForge not allow them to collect names, but even if they did allow it, there was clear evidence that developers would simply not go through with the download if they were asked to provide their name.

Following one of the key principles of this methodology, we immediately realized that they needed to find a motivation to get the customers to provide the company with their contact information. The best motivation appeared to be the documentation, that they were currently selling. There was one big problem: selling the documentation was resulting in $27,000 per month in revenue, which was paying the rent and several peoples’ salaries. To me it was obvious that this was a small price to pay to get the names, but to the JBoss team, who had battled their way to get every dollar of revenue, that was less obvious. We debated this issue over the next three months, but finally they gave in and switched on the offer. It turned out to be a huge success: over 10,000 leads started pouring in every month. Over time this grew to 16,000 leads per month.

And ...

Later on the process, JBoss was able to look back at the customers who had actually bought the product and close the loop, by testing whether they had predicted the right events as qualification events. They did a lot of analysis to refine the events based on this information. Several of the original assumptions, based on common sense, turned out not to be true. For example, the amount of time that a lead spent on the website had little impact on their likelihood of becoming an opportunity or a closed deal. The same was true for time spent using the Wiki or the Forums.

Here was a process used specifically to "weed out" (qualify) customers from the noise of lead potentials in user and developer communities using the web site. The entire article is worth reading and careful consideration within your business. This is how JBoss "went on to reach an annualized bookings run rate of about $65 million a year within two and a half years after starting the process." Execution requires the right team, but it also requires the right process.

Making Money from Open Source and the Business Model Debate

Matt Aslett makes great observations about open source business models in a recent blog follow-up discussion:

I am very glad that they took that decision, because in hindsight the statement “there is no open source business model” would have been inaccurate in the context of our report. We identified that there are multiple models used to build a business around open source: theoretically hundreds.

The 451 Group did a lot of research as they developed their model of discussion, and their definitions around development model, license choice, and revenue trigger are great. But it still feels like they start falling victim to the shades of grey slicing problem.

I'm still more of a fan of the tool analogy. As a company, you have a certain budget to spend developing the product, it's marketing, sales and distribution. Imagine a proper old hardware shop where you have a certain budget and need to figure out how you're going to spend to buy what tools from which aisles (development, marketing, sales, legal) to launch and build (and maintain) your product. "Open source licensing" is a set of new tools in the legal aisle and "collaborative community development" is a new aisle. It's not that there are hundreds of business models, but rather one can combine the tools in hundreds of ways. (Some ways are more proved than others depending upon the business.)

Indeed, "dual licensing" doesn't even belong in the open source licensing tools. It's an attribute of copyright law. I can license my intellectual asset to as many people as I want in as many ways as I choose. The Microsoft EULA attached to software at the local office supply store is different to the Enterprise Agreement signed when a corporation purchases based on a bundle of units and services is different again from a volume license to a smaller organization. No one accuses Microsoft of "dual" or "multi-licensing" their software. The fact that MySQL began closed licensing royalties as well as selling service agreements subscriptions (i.e. product) of their GPL distributed software does not mean that they invented "dual licensing".

The fundamental question around which this all revolves is the confusion embodied when one asks, "How can you make money when you give the software away for free?" Large "software" companies (Microsoft, SAP, Oracle, Adobe, etc.) have spent a lot of time questioning the scale of "the business model(s)" rather than looking at the opportunities the tools provide. In the end, they need to understand that it's not the "software" that a customer is buying but the solution and the support and maintenance and certified tested warranted removal of risk embodied in their product packaging and testing capabilities. (This is a core competency Microsoft has over most "software" companies when you consider the size of the test matrix defined by OEMs, ISVs, and device manufacturers that needs to be exercised between code complete and release-to-manufacturing.) Whether you call it a "license" fee and then charge 20% of the license fee per year for maintenance, or distribute the "license" fee into the maintenance "subscription" over time isn't a discussion about open source. It's just business.

Open Source Software and Product Management Tools

Matt Asay has a great blog post today on what Alfresco has learned with regards to their use of open source and product management, from both the perspective of their own product development feedback, as well as the strength of reuse by their customer base.

For years, our marketing has targeted buyers in these markets, pitching a low-cost, high-value alternative to proprietary ECM/WCM/RM.

Our customers didn't get the memo. While we were talking about ECM, many of the roughly 30,000 people downloading the product every month were using it as a foundation upon which to build their own applications, most of which would never be classified as ECM. They were creating their own category of infrastructure/middleware, using our technology.

The content application server was born, and we almost missed it, despite the fact that it was happening with our code. We were so busy marketing our vision that we almost missed listening to our users' vision(s). This new vision on an old way of using our product will significantly impact everything we do for years to come.

This is the sort of strategic edge I meant yesterday when discussing the extra tools a product manager has when open source software is added to the mix. Matt also points off to Vinnie Mirchandani's posted observations on how mainstream IT is rediscovering custom-built applications again. (Indeed it was exactly this sort of rationale coupled with open source software that was the impetus for the creation of Optaros in 2004 and why I went to work there.)

It really is about the engineering economic imperative of collaborative community development coupled with free and open source software licensing and enabled by the web and its ability to remove friction from the process. Developing good software is hard work, and we have shared software literally since we've been writing it. Brian Behlendorf gave a great talk around the time I began this blog where he made a number of key observations about open source repositories based on his experience. Open source projects don't "end" the way traditional development of IT applications end (sliding into withering maintenance) or vendor-led software products (being replaced by forced upgrades). Well run open source projects are much more organic. The software evolves and adapts. The building blocks are continually improving and very complex and powerful platforms can be constructed.

Carlo Daffura responded to yesterday's post with pointers to two posts supporting the idea of the economic value of open source software in product development. This certainly bears out our experience from 1995-1999 developing Interix (now Services for UNIX at Microsoft). Following one of Carlo's examples, Ari Jaaksi's paper is a fantastic overview of Nokia's experience launching the N770 and the cost savings to be had.

I essentially said yesterday that it's all just software business, that there is no "open source business model". Please don't misunderstand me. Open source licensed repositories and collaborative community development on the web substantially add to the tool set of product management on both the marketing and engineering sides of the house.

Open Source Business Models Redux

I debated again yesterday with a colleague on open source business models. I don't believe there is such a thing. Several well documented models have been articulated and debated (see Matt Aslett, Roberto Galoppini, Carlo Dafarra for excellent cogent examples) but when you get into the discussion it immediately degenerates when you try to assign certain companies to certain models. It degenerates further when you try to invert the discussion to argue that these stylized business models share attributes or can be applied together when discussing example companies. To me it's a useless rat-hole of a discussion.

It confuses audiences into thinking "open source" (or "free software") is different in a business context. Such confusion:

• Slows adoption by customers.
• Causes investors to hesitate.
• Can lead inexperienced start-up executive teams to chase ghosts instead of focusing on the business at hand.

Here's how I tried to articulate the counter-debate yesterday:

1. Customers buy solutions. In the immortal words of Theodore Levitt (Harvard Business School), “People don't want to buy a quarter-inch drill. They want a quarter-inch hole!”
2. Geoffrey Moore wrote "Crossing the Chasm" in 1991. As well as clearly articulating the Technology Adoption Life-Cycle (that he has evolved over the ensuing ~20 years), it helps people understand that developing a "whole product" offering (the core product and its complements) provides a better solution to customer needs and companies in a market that provide the best whole solution succeed better than their competitors and peers.
3. For technology solutions companies, there are a well understood collection of tools that product development management uses to deliver solutions.
• Buy or build complements and include them in the base product.
• Publish interfaces to encourage complement value add in an ecosystem of partners.
• Provide tools and frameworks to ensure partners can easily build complementary products in the ecosystem, providing an even bigger "whole solution" or enabling it to be re-positioned into new markets (i.e. onto new problems).
• Publish tutorials, how-tos, books, etc. to ensure people understand the product solution and can provide complement value add in the ecosystem. And publish here is a very loose word. Consider magazines and conferences and user groups here as well, and how the web helps or supplants each. The web removed enormous friction from this collection of related tools.
• Develop training programs to ensure people understand the product solution.
• Develop certification programs to ensure a good supply of knowledgeable people on the solution.
• Provide consulting services to ensure an immediate supply of knowledgeable people on the solution. Really though it could be other services as well (maintenance, repair, operational, etc.)
4. Companies can choose to sell (or license) the complement or give it away. In each case there's an opportunity for direct or indirect revenue. As long as the sum of the revenues is greater than the sum of costs of providing the whole solution (and operational margins are within tolerances specific to the "tool" or tactic or mix in the portfolio) the company is profitable and thrives. [Indeed, over time as value moves around the solution network — and it's a network not a stack — companies have a better chance of survival if they control more of the higher margin pieces of the network that is their whole solution or ecosystem. Think IBM with the breadth of whole solution they can deliver posting better than expected results September 2008 as the rest of the economy tanked.]
5. The larger the company, the more tools it likely uses in providing a whole solution. Maybe this is the corollary to the above statement. It certainly explains why we all rat-hole when trying to fit large complex companies into the stylized business models.
6. Adding open source licensed software repositories on the web and collaborative community development into the mix adds new tools, and evolves old tools:
• To "buy" vs "build" for complement value add, you can add "borrow" (IBM Websphere and Apache, and Red Hat and RHAS) and "share" (IBM and the original Eclipse project, and Intel and moblin).
• New companies (Red Hat) with lower margin business models (compared to the incumbent) can use F/OSS components to rapidly develop products that either serve new markets or serve the bottom end of an over-served market and then evolve over to or up into an incumbent’s market space. [Classic Christensen economics here.]
• It broadens the base of "users" which opens future customer opportunities and locks out competitors. (JBoss and MySQL used this tool.)
• Companies that participate in communities:
• Can rapidly develop complements to core offerings in their solution network (without necessarily building complete products), e.g. SAP and MaxDB and MySQL
• Can amortize dev/support/maint costs of software components across customers/partners/competitors (e.g. the vendors in the Linux Foundation today are no different than the vendors in the OSF 20 years ago sharing the development costs of OSF/Motif and OSF/1 as royalty free base technology).
• Get to interact directly with like-minded customer prospects in community, influencing customer/partner developers.
• Build brand awareness and trust through transparency of actions.
• Companies that participate deeply in communities better influence those communities (e.g. participate, hire, or acquire).
• Companies developing their own communities increase the opportunity for partners to provide complement value add as well as encourages engagement and commitment through participation and contribution.
• Companies can use F/OSS projects to reduce the cost of sales by allowing users to try and pre-qualify themselves as customers.
• F/OSS projects are an interesting publication strategy against competitors from an IP strategy perspective.

What all of this means is that the ideas need to be turned around. Technology businesses and technology adoption is well understood. We know how to measure successful companies and compare them. We understand the tools those businesses use to engage customers and solve problems. Open source software is a key economic driver from an engineering efficiency and software reuse perspective, but it also opens new opportunities and additional tools for product management to engage better with customers and improve both the top line and the bottom line.

But there is no open source business model.

The Community Leadership Summit and the Art of Community

Good community leadership is desperately needed. Too often companies mistakenly think of it as some small adjunct to marketing, an extra channel over which to broadcast messages and through which to generate leads. Likewise product engineering can equally confuse community purpose and disrespect its impact, relegating it as "beta tester" or ignoring its contributions with Not-Invented-Here blinders. We've understood community since before we climbed down from the trees, and we've understood the social dynamics: despite our best intents every village has its idiot and every playground has its bully. But when community in its truest collective sense meets business, we seem to forget all our lessons and expect something to manage with the efficiency and efficacy of a time-motion study in an automobile factory.

This weekend, 18-19 July 2009, marks the first Community Leadership Summit in San Jose, California, at the San Jose Convention Centre (McEnery Conf Centre). Jono Bacon, community leader for Ubuntu at Canonical, Ltd. has done amazing work organizing the event and it promises to be a great opportunity to share experiences and learn from one another. It is a free event in front of O'Reilly's Open Source Conference, supported by a small savvy set of vendor sponsors, but the event is about community development experience and not any one vendor's take on it. While free, one should go to the registration page to register.

Jono has also been busy this past year writing "The Art of Community". He developed it over time in conjunction with the Art of Community blog. I was a reviewer, and I think it's an excellent book covering the breadth of the subject. It will be available in August, and you can pre-order it here.

I was hoping to participate in this year's inaugural summit, but unfortunately I'll not be attending it (or OSCON) for several personal reasons. I will certainly miss friends and colleagues, but trust next week will be as brilliant as always!

SourceForge Acquires Ohloh!

First, congratulations to Scott Collison (Ohloh CEO) and the Ohloh team. [Caveat lector: I've been an advisor to them for some time.] It's a great exit for a great little company. As with all the companies I advise, there needs to be something unique going on. Ohloh has always been unique. As I described in January:

When a potential open source user wanted to find out "what open source software is available" to solve a problem, they were invariably left hunting across Google, SourceForge, and sites like java-source.net and FreshMeat. There was no consistency. The depth of information was sketchy. Some of it was bleeding edge software, some tied to the site. There was no sense of "what's good" unless you were already involved in a particular community, and even then community bias could get in the way. This gave way to a collection of directory solutions and companies that tried to bridge this gap.

Ohloh has always had the most useful and interesting directory for me. First, they have no direct sales model tied to the directory, so my trust in the depth and breadth of the information is high. Second, the beauty of the analysis is that the core data is metrics based on what programmers do, not what they say. I can see how big or small a community is, how long it's been around, how active it is, and this provides hard data when one then looks at the qualitative commentary. Third, it's always been comprehensive across the open source world and getting better all the time.

...

Over their several year history, they have continued to expand and add features to their core statistical analysis. They've built the community and expanded the number of repositories they support. Once one finds a project, one can see other projects immediately that are related through the tagging and stacking other Ohloh users share. The site is a proper social network for open source developers. It's been used to get a project manager's view of an open source project by the project's own leadership. As a resource for job hunters and recruiters it's invaluable to be able to see the visual resume of a developer. They've evolved their offerings to act as download host, and provide job and support services classifieds.

In one commentary, Jon Sobel (SourceForge group president of media) made reference to "Another advantage for SourceForge ... is that Ohloh's data will help the company deliver advertising that is more targeted and effective." This is the real key to the acquisition. A primary revenue driver for SourceForge is advertising across the forges and online media properties. Ohloh has been successfully developing a data service that would wildly improve the ability to target technology advertising and provide data rich feedback for high-tech marketing campaigns. [Frankly, Google should have acquired Ohloh.] They have a number of large corporate customers. So through this acquisition:

• Ohloh can improve SourceForge's advertising revenues.
• The Ohloh data service itself provides an excellent additional revenue stream in the high-tech corporate marketing world.
• The Ohloh community site is complementary to SourceForge's forges, providing open source communities better tools for understanding their projects.

This is a great acquisition for SourceForge. Hopefully along the way, the original and unique aspects of the directory that make it so valuable to open source users (as opposed to open source developers) are not destroyed or lost, and that SourceForge continues to recognize the difference between the core data competency Ohloh represents, the core value proposition to SourceForge's customers, and its complementary uses as a separate directory at strengthening the SourceForge brand in non-revenue producing ways.

Other commentary:

• The official press release
• Matt Asay's interview with Jon Sobel, SourceForge group president of media
• Ars Technica Article

Partner Programs and Open Source Software Businesses

I was discussing partner programs with colleagues the other day. Partner programs tend to need careful thought — much more than many young companies realize. The simplest summary I can offer is that partner programs aren't about marketing — they're about sales, which means they're about compensation plans and metrics aligned with those plans.

Four years ago when Optaros announced what it was doing (consulting services based on open source building blocks) many companies approached us to "be partners". This meant everything from at its most innocent "let's share leads and swap logos" all the way to "Optaros would be a great sales channel for our product." All this requires (a.) a lot of time, and (b.) needs to be tracked against revenue. As a channel, it needs management just like a company's sales team does, so you can figure out who is really performing and so as to get rid of the non-performers. We did sign several light weight partnerships (i.e. logo swap and a joint press release) in the first year because it gave us a press release with a high profile (i.e. newsworthy) partner. We expected nothing else from the partnership — no leads, no co-marketing, no co-sales. Some partners never called with leads despite promises and follow-up from us. They did, however, call to give us a hard time if they heard us using a competitor's project/product to solve a problem for our customers. Obviously our customers were more important to us and our revenue than the partners lack of leads/revenue. [To be clear, Optaros has strong partner management in place and developed a number of excellent partners over time with strong complementing business relationships.]

Aside from the day-to-day management, you also need to ensure there's no channel conflict. You will encounter problems with partners where their business development people may love you, but their sales force may never think of you because:

• You're not helping them meet their quota
• Worse, your product/service competes with the higher margin items they sell to make their quota
• They'll take a lead from you, but have no need to return the favour on their way to closing their quota. (Contrary to popular belief, they will not call you because they like you — they are sales people and there needs to be some bottom line benefit to calling you because otherwise you're taking away valuable time from them making their quota and "salesperson of the month/quarter/year" and the perks attendant on that title. These are highly competitive revenue-focused individuals. Good sales people in a channel conflict won't call because it wastes their time.)

Business development managers that don't sell for a living don't necessarily understand the channel conflict problem. They also might be compensated on something like "partner satisfaction" or "# partners signed", etc., rather than on revenue numbers. Not only that, if the partnership is one sided (they get sales, you don't) they still may not care. Partner programs aren't worth anything if the channel and compensation programs aren't well-aligned to mutual benefit.

Gaining visibility through partners is an interesting idea and a Big Name Partnership MAY help as a marquee sort of "partner" regardless of sales, but THEN you need to ensure you have a solid business development person on their side that will speak GLOWINGLY on your behalf to potential investors or act as a direct customer reference to close a deal. That's when they count. Otherwise, you're lost in a sea of all their partners. [Softway was a Microsoft partner back through the late 1990s before the acquisition. It was a fascinating relationship when it came to getting them to admit that they wanted to see UNIX/Linux applications running natively on Windows NT.]

I'm not saying don't set up a partner program — I'm saying set one up with your eyes wide open and with a realistic eye on the revenue that could otherwise be gained by (for example) hiring another sales person rather than a partner manager. Once you understand exactly how you want to make revenue directly for yourself, you can better determine how to organize a partner program (by region, by vertical, by function) such that your needs and your partners's needs and compensation are properly aligned and your partners trust you to not conflict.

Photo by Robert Scales

OSBC Keynote Competition between Sun, Microsoft, and IBM — IBM Won

I continue to stand in awe of IBM's ability to market. Here's how the line-up of executive keynotes went down this morning at OSBC.

First up was Jonathon Schwarz, Sun CEO. Jonathon always gives good presentations, although he seemed a little brittle this morning. His messages this morning:

• It's all about the cloud.
• We are it.
• It's still about business.
• [Please] buy our hardware.

Microsoft stepped in with Robert Youngjohns, President of Microsoft North America. An excellent soft speaker that quickly established his historical geek credentials and breadth of technology interests beyond Microsoft tech. He apparently even worked at both Sun and IBM. His messages this morning:

• It's all about interoperability.
• We get it [finally].
• It's still about business.
• [Please] buy our software.

Robert Sutor, IBM VP of Open Source and Linux, then finished with a virtuoso performance. It was about collective action. His messages this morning:

• It's all about open source and open standards.
• Linux is an amazing mature flexible solution for the world's information processing problems. "It's not a hammer, but a collection of fine tools." Our involvement in the Linux community is ten years old.
• It's NOT about business. It's about solving hard problems. [A nice paraphrase of Drucker's the purpose of a company is not to make money.]
• We [collectively] have the tools to solve these problems. We [IBM] can help you.

I think the only time he actually mentioned IBM was when he said in passing that they had broken the petaflop barrier last year. It was masterful. It was designed to remind you that IBM has depth of technology experience, and the tools (people, hardware, software, knowledge) to help you with your information management problems. It was a conversation starter between the company and customers. It wasn't about selling technology but rather tailoring solutions — just tell us what you need.

It doesn't matter what you think about each company. Good executive keynotes are performance art delivering a marketing message. (Bad executive keynotes are product announcements to audiences that paid good money to learn something other than the latest thing they're going to be forced to buy.) While all three presenters today are consummate performers, one message was about solving problems, the other two about selling stuff.

Long after Sun's been cut up for parts the way DEC was, and long after Msft stops trading, IBM will still be humming along as a technology solutions company with a mixed-margin portfolio offering, terrifying as that might seem for some. Well done, Bob.

Does Your Community Manager Report to Engineering or Marketing?

I asked a question during Matt Aslett's excellent presentation on Monday at the Microsft/SD Forum OSBC Zero Day event: Does your community manager report to engineering or marketing? Matt gently stepped out of the way, but there is exactly one right answer: Engineering.

Here's why:

Community is concerned with the software project and it's complementary assets. Customers care about buying product solutions to their problems.

Engineering cares about software development. Marketing cares about product lead generation and qualification.

Engineers manage software. Marketing manages messages and expectations.

This doesn't mean that the community isn't an enormous source of word-of-mouth evangelism for the company, the project brand, and self-qualified leads over time. But the community doesn't want messages and they don't want to be qualified or converted. The community is already setting their own expectations around the project instead of buying the product. Neither does this mean that marketing is out of the loop at developing inbound requirements from customers for the engineering team as they develop the software that feeds into the product.

While marketing traditionally managed the "developer network" in closed source companies, that's because the software wasn't a community engagement mechanism for users that weren't customers. Growing the developer community around your platform was a marketing function based on the business strategy of growing market share and providing complement value with lots of "knowledgeable developers" for customers. The software part of the solution wasn't a source of customer contribution, innovation, and testing resource. Your community equated to your customers.

There are companies that historically have strong product management departments that are often staffed by engineers that have crossed the floor to marketing. There's still a problem here with the community manager reporting to marketing, because the marketing department is traditionally measured on marketing functions. They will behave against how they're measured.

So community development and management is an engineering function.

More on Open Source Conversion Rate Myths

A year ago I posted on open source business practices and conversion rate myths. A colleague asked yesterday whether we shouldn't still use it as a measure until a better one is found, since it's the best we have.

The problem isn't that it's a poor measure, but I believe it's a wrong and misleading measure. It is NOT similar to lines-of-code in software engineering (a poor measure). Variation in LoC is still within a few percentage points when you resolve for the project differences. Conversion rate is orders of magnitude different between companies. Business measures are typically within percentage points. Think of ratios like gross margin. They vary between types of businesses by as much as 30% but within an industry they're pretty steady and act as a benchmark.

Using a wrong or misleading measure will put you in jeopardy if you're the marketing or community manager. (You're being judged against the metric.) If you distribute for "free" as open source software, you capture your user base depending upon how good you are at getting the word passed onward. If you're good, you build community around your software. Remember software only forms part of the value network that is your solution — and customers buy solutions to problems. Mårten Mickos well observed that your early community is willing to trade time to save money and your later community is willing to trade money to save time — and the later community contains his customers. The observation implies a timeline for community growth depending upon the software project. Companies starting a business around a new project need to be sensitive to this. Customers (people that are going to buy something) will use free access to test that your software might solve their problem before they pay for your solution.

Many users in community do not have money to spend today. They can't be converted. As a "lead" they will never become a "qualified" lead, and getting in their way trying to sell to them will only be a source of frustration for everyone involved. BUT while in a normal proprietary software company this means you've disqualified someone that isn't a customer in the pipeline, in the open source corporate world, I believe they sit in a different process. Instead of a manufacturing metaphor (pipelines) we need a more organic social metaphor to track success and growth of the community. Lead generation is a measure of community engagement. You want to grow your community. Customers will self-qualify.

This WILL be reflected in a number of downloads, but this is correlative not causal, and it's an ambiguous metric. It's very software function dependent. If a user downloads one copy and installs it on a hundred machines, your knowledge is already off by two orders of magnitude — counting downloads is useless.

The greater user community still needs care and feeding because they contribute code, bugs, time to answer one another's questions, beta bodies, and interesting applications of your software you may not have thought about or had time to develop yet. They are a source of innovation, not simply within the software (small contributions) but at the solution level. They will tell your BUSINESS new places to go to capture money in the network around your software. These are very valuable people. Growing your community is important for this reason. Don't simply measure downloads and compare to a number of customers. Measure everything you can think of about your community:

• Unique members on the forums.
• Time to answer a question (internally versus community). [And don't reward your employees for answering quickly or your community will never get a chance to answer.]
• Number of code contributions.
• Number of bug reports.
• Number of documentation contributions (howto, tutorials, etc.)
• Feature requests.
• etc.

For numbers that tie back to specific releases of software, use them to tune your engineering process, i.e. involve your users in your engineering process. Consider letting USERS vote on importance of bugs so they feel a part of the process. (Don't draw the line between customers and users. It will be tempting, but customers probably buy something else from you in their solution. Disenfranchising users is disenfranchising the larger community of interest and probably a false feature.) Engage their time (appropriately) and you will win community mind share. Mind share is everything for profitability. It's the stickiness. It will create customer advocates.

There will come a time when the users move to other organizations bringing their knowledge with them and the new organization will self-qualify to become a customer. Or the user's own company grows to a point that they become customers. But they don't "convert" in the traditional sense. The lead did not become a qualified lead and you don't need to "sell" to them to convince them to buy your solution. They have internal needs that makes buying your solution more important than using your software. I'm betting those internal needs are very function-centric (e.g. one company will buy JBoss support while using RHAS for free). Determining those functional decisions in relation to your solutions will give you better insight into how to grow your customer base, i.e. revenues, without sacrificing your community in "conversion" games.

This comic is licensed under a Creative Commons Attribution-NonCommercial 2.5 License from xkcd.org.