OPENtrepreneurship - a business model

Forum 2005-2010 (read only) General Bar Sport
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Heres an idea I have been kicking around which I call OPENtreneurship. Its the marriage of "open source" and "entrepreneurship" into a business model and a licence based along the lines of Creative Commons but aimed at making Open Source Hardware more mainstream and even bringing crowdsourcing and corporates together for mutual benefit.

I am busy drafting the concept and will possibly put a website up explaining it.

The reason I posted here is because this idea is based upon Creative Commons and Arduino but allows more freedom in franchising the product or idea.

This is based on my experiences from starting a kit business and seeing some pitfalls especially if you haven't got any capital at all to get started. This is a good way to leverage the marketing power of the crowd, and possibly get the attention of corporates.

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Before I start explaining the concept let me first give an outline of the traditional scenario:

We have two people Jack and Daniel.

Daniel develops a really handy gadget like the Arduino with lots of potential for hobbyists and even in education. He posts the design and info on the internet and even comes up with his own brandname. He also puts up kits for sale on an e-shop. He retains all the copyright and will allow other to make their own versions from scratch which he will most likely not allow them to sell under the same product.

Jack wants to sell these items because he has access to a lot of interested people.

Thats the tradional scenario.

OPENtreneurship means that Daniel not only allows people to reproduce and resell his gadget under the same brand name but he actually encourages them to do so.

Copyright still remains with Daniel but many people are able to start building and selling the product in doing so making the brand more wide spread. Daniel being the originator of the gadget has paid all the setup up costs for PCB fabrication etc so he can supply all the hardware and resources to the others who are selling the product.

So Jack comes along and he doesn't know much about electronics but he can solder a bit. Jack is actually a science teacher at a school. So Daniel supplies him with all the PCB's components etc on demand and Jack then assembles and resells the hardware leveraging the market that he has access to, namely school learners.

If Jack knew how to develop something himself he could merely have take Daniels IP and reproduced it himself. Even then Jack would end up paying for setup costs etc etc and buying small quantities of components are more expensive than buying in bulk.

Instead of all the hassle Jack can just get all the components etc from Daniel and since Daniel has established a "hardware bank" Jack will still pay less for the components than if he bought small quantities himself from his local suppliers.

Daniel makes money, and so does Jack who leverages off Daniels expertise.

Now maybe one of the kids in the class comes up with an enhancement, Daniel still retains copyright to the core gadget but the kid can apply OPENtreneurship and make use of Daniels, hardware bank to save costs as well.

So its sort of like a franchise but not quite.

Daniel can still sell his product to resellers but by using people as well, but by encouraging franchises he can offload a lot of the hassles to partners.

I am posting this here to get some ideas and feedback. In particular criticism is wanted. Maybe its a stupid idea maybe its a good idea.

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Effect of Jack Daniels? :wink: Its wednesday bro.. long way to the weekend... ;D

Thats how its working here i suppose... only that daniels provides jack with a fully assembled PCB ready to sell... but i like the name... OP-ENtrepreneurship

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Haha I didn't even realise Jack and Daniel =Jackdaniels ;D ;D Lol maybe they could sponsor something like this since its very possible this idea was thought up while sipping some of their product :wink:
Its similar to the way Arduino works but shifts the whole business more on the franchisee.

Im just thinking that with this Daniel basically provides the resources to Jack who must do most of the assembly etc etc and gives him greater room for profit, while Daniel doesn't have to stress over building stuff and can just provide lots and lots of stuff to others who will build the brand.

Daniel can make money by selling lots of components and PCB's with a lower markup and of course Daniel gets the cred if the gadget gets really popular. That way Daniel can also benefit by charging consulting fees and possibly even getting decent employment. Of course Daniel can still sell ready built kits on his own as well and make the same profit that the franchisee makes in parallel.

The reason I do this is because sometimes the Daniels don't have the networks or the time and resources to both produce and market their product, this way they can leverage the marketing power of others and it appealing to others to come and become franchises because there is better profit potential than just buying and adding a smaller markup.

Tie this together with hardware banking where the originator sets up a hardware bank and you could easily have a good way for Open Source Hardware to become a good business and a way for innovation to be crowdsourced.

This kind of model could work well developing countries for example, where sometimes people don't have the resources on their own to get their ideas to market.

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What protects the developer against competition by bigger entities with more knowledge on the selling process and more marketing power?

Udo

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What protects the developer against competition by bigger entities with more knowledge on the selling process and more marketing power?

I think in the future bigger business entities will get replaced by individuals with a passion in the concerned area.... but then as of today your question is valid...

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Good question. This is the same concern that applies to all open source hardware products. My reasoning on this on this "OPENtrepreneur" concept focusses on that. The whole idea of franchising out to others who can market and get your gadget out there in a bigger way than you can is to help build your brand. Thereby also leveraging the crowd for marketing and building the brand. So the more people who go and take your product to market the better it is for you. If you can't beat people capitalising on your idea embrace their efforts instead:

OPENtreneurship means that Daniel not only allows people to reproduce and resell his gadget under the same brand name but he actually encourages them to do so.

Copyright still remains with Daniel but many people are able to start building and selling the product in doing so making the brand more wide spread. Daniel being the originator of the gadget has paid all the setup up costs for PCB fabrication etc so he can supply all the hardware and resources to the others who are selling the product.

The more the merrier. Because you are supplying the parts to your franchisees you also have some control of the quality of parts.

Part of the idea for some kind of ethics to be involved so that if a big corporate wants to take over the idea you can easily sell it over to them, or if they want to keep it open source it would be in their interest to hire you to consult etc etc.

I think in the future we will still have big corporations but possibly less of them we will also have a stronger market of individuals and smaller entities also playing in the same field. Instead of working against each other individuals and corporations will need to try to learn to work together, companies are already realizing this hence the growing interest in crowdsourcing.

I am trying to propose something that could facilitate crowdsourcing in open source hardware

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I think this is exactly how I'd like to go with my project.

I'm defining a network that should make it easy to hook up any processor type and access other nodes with just a few lines of code. This is going to be open source and so far I'm running with the CC-BY-SA model.

I have a draft licensing statement here (like the project it's still a work in progress.)

www.bus-net.net/busnet/licensing/index.php

My thoughts are that

  • Although I'm not adverse to having money thrown at me I no longer have the drive to be rich and would rather have the idea "out there" and being used.
  • I am happy to stock and sell PCBs, programmed chips etc but don't have the time, space, or inclination to stuff, solder and debug boards.
  • I could possibly be talked into selling kits, but that gets into inventory issues so maybe not.
  • Any product is subject to being ripped off by big business and there's nothing practical you can do about it. So why not make it open and hopefully make a few bob by consulting and/or selling parts as mentioned.

If an idea is any good and takes off then there is a real chance that a company will use it to make megabucks, that's a risk you take but remember that there is a LONG way between having a "thing" that works and a marketable "product", not to mention the effort involved in marketing, manufacture, inventory etc so such a company would deserve to make money and as you said, the designer will get the cred and may sell more kits/PCBs/whatever because of the idea's raised profile.

I met someone once who had a great idea but no resources to develop it, he had an offer from Ford for x% royalties but refused because he wanted 100%.
I pointed out that x% of $$$ is better than what he had now, ie 100% of nothing.

Anyway that's enough rant for the moment. I'm interested in this if you take it any further.

Rob

PS. I can't believe you didn't make the Jack Daniels connection :slight_smile:

PPS. I love the name, has a good combination of doing things for the community but still making a few bucks for yourself, something we are all entitled to do. It needs a good logo thought and that may be difficult with such a long word.

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Hey Gray,

Superb!!! I like your Wothahellizat. Wish i lived on it :wink:

Good luck with living on the road.

Cheers,
Pracas

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@pracas
I guess you can see then why I don't want to get involved with manufacturing or holding inventory. Been there done that, even got the T-shirt but I prefer the free-and-easy life these days :slight_smile:

Rob