Long-term financial sustainability for Loomio

This continues to be a very rich and multifaceted discussion. A big thanks to everyone who has participated! Here’s a high-level summary so far (but this isn’t the end! please keep sharing your thoughts).

• We asked the community for input about scalable, sustainable financial models aligned with our values and mission

• We had a temperature check proposal where the vast majority of people affirmed the basic idea of some people paying to use the software - with some concerns raised about how that might be implemented in practice

• We reiterated some basic facts about how Loomio is set up, to consider in the context of business models (with the software under AGPL3 and the company incorporated as a worker-owned cooperative social enterprise with a constitution that puts the social mission first).

• Great questions were asked, great ideas were shared, and we had a wide-ranging discussion about not just Loomio’s situation, but the larger questions around funding large-scale mission-driven projects and open-source tools.

• We shared details about our current financial situation and why we need to bring in resources

• We explained the business model experiment we’re currently testing (asking people to self-select as commercial users, putting them on a free trial, and reaching out to learn from them), and showed the screens new users see.

Some highlights from the discussion

Ideas for revenue streams

• “Pay as you can” where people can pay zero, or what they are able to.

• Consulting and training around collaboration and engagement. We already do this work and enjoy a bit of income from it, but it’s not scalable in the same way a SaaS business model is, because it relies on people’s time directly.

• Online facilitation services, and a network of facilitators that can help groups on Loomio to be effective. This is a potentially scalable idea, and we’re excited about it, too. But it takes quite a long time to build something like that up, and it still only scales to people’s time. We’re taking first steps to develop training materials now.

• Straight up asking for donations. People in the community say they are willing to give. But overall, even the most successful donation campaigns only have moderate conversion rates and only turn into significant funds at very large scale. Running a campaign takes significant resources in itself. And we need to be wary of donor fatigue.

• There are some innovative funding models out there we should look at, like Gittip, Gartipay, Patreon, Flattr, crowdfunding for specific costs (like features or servers), etc.

• Relatively traditional SaaS model, freemium/premium. Need to find a way to make these successful models work that’s aligned with our values. There are some services - like custom domain names - that businesses care about a lot but that don’t affect others that much. However, we never want to deny core functionality to people just because they can’t pay. Ideas like “you have to pay to make your Loomio private” aren’t a good fit for us because we support, for example, activists in politically volatile situations who need private spaces to deliberate.

• We should consider and learn from the business models of other free software projects, such as paid turnkey solutions for private servers, or help setting up your instance. Examples: Discourse, Github Enterprise, Wordpress.

• Another alternative funding stream could be the Loomio API, with a decision-making engine supporting different UIs, embedding Loomio in other platforms, etc.

• Philanthropic funding is a natural fit for our social mission vision, and we have already gratefully received grants and are on track to potentially get a large amount of grant funding down the line. Long term, Loomio needs a business model, even if we’re also supported philanthropically. So it’s part of our plan, but can’t be the whole answer.

Things to consider in implementing a business model for Loomio

• Sharing stories and case studies might inspire people to pay even even they don’t strictly have to, to support others who can’t. The idea that you could “sponsor” groups doing great work through Loomio has appeal.

• There are ways other than money to support the project, such as raising awareness to potential new users and growing the community. We could ask people to contribute in a range of ways, money being just one.

• Transparency around Loomio’s finances is an important factor in people feeling good about supporting the project with money.

• Many users here are very positive about their groups paying to use Loomio, since they get a lot of value from it. Some are able to right now, some aren’t, but many want to.

• The main people who many expect to pay are those who use Loomio in a commercial context, but many community groups, NGOs, government, and other groups might be able to pay, too. And some people using Loomio in companies won’t be able to pay. It’s not black and white.

• Users really want clarity about “how much does it cost” and it’s important that we do good messaging about whatever revenue model we try out.

• We have to be careful what we incentivise and what we tax with the revenue model. If we make things we actually want to see more of less appealing by charging for them - like people inviting more users into their groups to collaborate - it could be counter productive. Many software companies focus on getting lots of users before nailing down the revenue stream for a reason.

• A model that helps users who pay feel more like members than customers seems like a natural fit for a community-driven project like Loomio run by a worker co-op. Something inspired by a consumer co-op maybe. Involving users in decision-making about Loomio is an important value for us already (and we don’t want to limit that to paying users).

• Maybe everyone should get messaging that sets an expectation that they will pay, but if they really can’t, they can opt for free access.

• Making access and payment easy (recurring payments, robust user support, great user experience) is key in people feeling good about paying money.

• It’s super important we constantly check back in with values and mission alignment - a really successful business financially that fails to achieve Loomio’s social mission and stick to its values is not a success in the sense we care about.

• Utimately, successful businesses thrive based on the value they provide to customers, not based on their internal needs. Loomio wants to not only scale up itself, but hopefully generate surplus that can go toward supporting other aligned projects too.

• People see the essential tension between needing revenue and wanting as many people as possible to use Loomio. A model where a small number of people pay more and feel good about it, so many more people can pay nothing, might be good. But we need to make sure we don’t then skew our focus toward only the needs of that small number of users who are paying.

Wider issues affecting this discussion

• Finding “patient” scaling capital that’s values-aligned is a very common problem for a lot of social enterprises and cooperatives. Out there in the world, mission-driven financing is still under-developed. This is a problem we all should think about if we want more mission-driven ventures to succeed in our society.

• We recognise some serious issues with mainstream venture capital funding. This also touches on really big issues with the capitalist system, centralised currency, and other deep problems in society (mostly out of scope for this particular discussion).

• There’s discourse going on online about a fundamental shift of users understanding that if they don’t pay for the product, they are the product (such as on advertising-based social networks that sell user data). But no one really has the answers about that yet.

• There is a big and diverse community of people out there working on various ideas in the space, including Snowdrift.coop, fair.coop, P2P Foundation and Commons Based Reciprocity Licenses, the Open Value Network, and many others.

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Original Post

As we get closer to completing the massive six-month working bee that the generous support of the crowdfunding campaign enabled (on track for the end of November!), we’re thinking a lot about the long-term sustainability of the Loomio project.

We’re a social enterprise, meaning we place our social mission first: making it easy for anyone, anywhere to participate in decisions that affect them. Our software is open source, and helping all kinds of groups collaborate - not just those with money - has always been our vision. At the same time, we think we can best achieve that social mission if we have the resources to scale, and to keep improving Loomio.

We’re figuring out how to make Loomio financially self-sufficient, without resorting to pushing ads on people, selling user data, or other unfortunate business models that so many online tools use. Up to now, we’ve gotten money via donations, loans, and the team doing some consulting around collaboration/engagement - but these are not sustainable and scalable solutions. We’re committed to keeping Loomio free for noncommercial use for all the community groups, social movements, and other people using it to do great things in the world.

Right now we’re writing lots of grant applications and talking to social impact foundations who support tech-for-good projects like ours, so we can find some bridging funds to keep going while we figure out the business model. The funding landscape for social enterprise isn’t as developed as capital for nonprofits or for-profit companies, but we’re committed to pioneering in this space because we think that should change.

We’re finding out more about the many companies, government departments, and other formal organisations using Loomio in their work. Over the next couple of weeks we’re going to try out some ways of making it easy for “commercial” groups like these to pay a modest per-user subscription for using Loomio. We don’t want this to come as a shock, so we’re hosting this conversation with the community now.

If you’re part of a group that is using Loomio and would like to pay for it, we’d love to hear from you. Also, if you have any questions or suggestions about our revenue model, this is the place to share. Transparency and community input is incredibly important to us, and we deeply believe that the answers to complex questions like this are best discovered by listening to all the voices.

Here are some questions for you:

• How do you think Loomio should go about charging some users to use the software so others can use it for free?
• How can we communicate this commercial/non-commercial differentiation so that users can self-select effectively, and both types feel welcome and appreciated?
• Do you have any brilliant ideas about revenue models for Loomio? How would you go about making the project financially sustainable in a way that’s consistent with our values?