About Revenue Share
OSE is a nonprofit 501(c)3 organization that relies on programmatic revenue for funding. As the core of our funding policy, we promote programmatic revenue from education programs, machine sales, or other builds. All is classified as related business income, which is part of the immersion training that OSE provides. The decision to rely on programmatic funding is deliberate - so that we do not rely on external funding such as foundations - which can appear (and disappear) rather unexpectedly - leaving little room for long term planning. OSE wants to put itself in a financially autonomous position, for reasons of continuity. As such, it operates more like a business - via its earned, program revenue. We are not opposed to foundation funding - that is just not where we put in most of our energy. Instead, we spend our time on developing products - so that we create a viable funding model that would allow many organizations such as ourselves to bootstrap fund their operations - as well as allow individuals anywhere to gain financial independence for their life's pursuits.
We have achieved certain innovation on bootsrap funding. Early on (2007), we started crowdfunding and our True Fans program - 6 years before Patreon was founded. We ran kickstarter campaigns, posted funding baskets for individual projects, and eventually reached the world stage with the TED Talk. Within 3 years, we received about $1M in foundation funding, and things were great until that money went as fast as it came. This is what reinforced our notion of programmatic revenue being a stable way to fund projects - as no foundation will fund the revolution. They can help - but not to get OSE to the next trillion dollar economy with thousands of OSE campuses around the world. Our ambitions for regenerative solutions at scale are high - and a scalable enterprise model needs to be innovated to match that need.
To date - we have reversed the funding model in production, by innovating on the Extreme Manufacturing model. In this model, the customer pays for an immersion learning experience - and there is also the possibility of a product sale - such as our Compressed Earth Block Press, a Power Cube, Tractor, 3D printer, or even a house. In our model - we don't only produce an immersion education experience - we produce a real product as we have developed ways that make this possible even with unskilled participants. We have lowered the barriers to entry to the point that even inexperienced participants can contribute to an education/production experience that yields a real, marketable product. Thus, we have developed a dual revenue model based on education and production in one. Furthermore - we invite the customer to the actual build. This allows the customer to understand the machine to the point that they could even rebuild or fix the artifact - if they want to do it themselves. We produce transparent designs that are easy to fix and maintain for a lifetime.
As we teach people how to build machines or other products, the possibility of a resulting produce sale emerges. Historically, some participants have asked about profit sharing - which turns out to be a misconception that arises as people are not familiar with OSE's operations and funding. A savvy entrepreneur understands that a sustainable business must bring in more money than it spends. However - this point is very confusing to those unfamiliar with business - and it's even not clear to established entepreneurs. For example, as of this writing, this point is not clear even to a company like Uber, which as of today (May 2021) has yet to bring in more money than it spends. This page aims to clarify the issue of OSE's nonprofit operation, and the related concept of 'profit sharing'. We are making this clear here because we had significant conflict on the issue before - where we had to go so far as hiring a professional mediator to mitigate conflict that arose from volunteers who were demanding a share of nonexistent profits from one of OSE's builds. The resolution occured as we explained to the volunteers that there was no profit in the deal - a very basic concept once one accounts for true costs - though one which can be confusing even to seasoned entrepreneurs.
The first thing to point out is that an enterprise has operating costs. Whenever OSE makes a product sale - it operates like a business that sells products, not a non-profit that gets donor funding. With the business nature of any deal - there are operating costs, risks, years of product development behind the product, marketing costs, operating costs, staff, facility operations, and more. Whenever we produce something within an immersion workshop or education experience, there are significant costs involved. First, to develop and deliver an Extreme Manufacturing requires a lot of effort and cost - it is a highly organized effort that doesn't just appear out of nowhere. When OSE brings in revenue as such, there is no profit to speak of. All revenue covers costs, and if costs are covered, it goes to improving our programs. While it may seem that we brought in easy money - the truth is that a lot of cost and effort went into a public, Extreme Manufacturing event.
Let's give a specific example. The current cost projection for the 7 month period from June 1 to December 22, 2021 - surrounding the Summer of Extreme Design-Build 2021 and the related OSE Apprenticeship program - is around $550k - and is also our most ambitious and expensive program to date. Typically, we have operated on an average of a $100k/year shoestring budget over the last decade, 80% of which went to infrastructure and materials. To date, most staff time is still as volunteers.
The 2021 budget is 90% materials and infrastructure construction costs. The budget includes materials for dozens of machines that participants will build, facility improvements such as a new workshop to provide space for the larger program that we will have this year, additional housing for participants on site, a site manager, and other operating costs. To reduce costs, we will be using our own machines - such as tractors, 3D printers, and sawmill- in construction - as well as our own materias such as CEB Block from our brick press. The cost figure for 2021 is an extremely lean value- as we use extremely efficient build techniques and our own machines. It's important that we continue lowering costs, to reduce barriers to entry - such that regenerative solutions at scale become a reality in terms of a livelihood option that anyone can take on.
Summer X program and tuition fees must cover these costs. OSE is further taking on additional risks by taking our a loan to cover preparation costs. The above illustrates some of the costs, prior development effort, risks, and opportunities involved. Getting back to profit share - let's address this question clearly for participants so that this is not an issue to some who may perceive that 'their labor is being used so someone else can make money.' That is so far from the truth. Our first goal is to cover costs - so we remain a sustainable business - and second - we put all excess into improving our programs and growth, so that anyone can benefit from the open knowhow that we create. We are creating significant value: whether it is the design of the Seed Eco-Home that anyone can build at a fraction of the cost of any alternative to address housing - or our lifetime design Lifetrac that can be used for construction or agriculture to lower barriers to entry - our CEB Press - or our 3D printers - all published openly - each worth billions of dollars of potential market share. We know that we are creating signficant value - and we discovered that our workshops and programs are a great way to fund continuing development. And no, participants in our workshops, immersive builds, in the OSE Mentorship, or in the OSE Apprenticeship do not get a revenue share for reasons that by now should be clear.
There is also another reason - fairness - even if there were profit to share. If OSE (with past contributors) spent years developing products, took on current financial risks to deliver the product, provided the organizational experience to execute, created the infrastructure to make a things happen, marketed and publicized the build - continue to innovate as most of our work is fresh and recently developed. OSE effectively took on all the liability and risk involved. Any product build really does stand on the shoulders of giants. Thus, how does a newcomer - who is benefitting from years of prior development and everything that was built up to enable the build to happen - have any claim on a revenue share? Yes, they may have done the build - but they did not 'make' the build happen. This is a sticky point - because many newcomers think that they did all the work - whereas in reality - all the vast majority work was done before to enable their part in the build. So to reiterate for clarity: there is no profit to share, and there is no justification for sharing profit based on merit.
So is OSE a bunch of stingy bastards - not hiring or paying? Far from it. We are open to working with or hiring graduates from our programs- with the OSE Apprenticeship designed specifically for that purpose. This is where specific work contracts and agreements can take place - as we are enabling others to collaborate on open product development, and to replicate our operations - once they get the critical skills to do it. Not to do it any way - but our way - which means truly collaboratively, in a way that allows for Economic Time Binding. We are enabling others to take years of our work, and create enterprise - collaboratively - upon it. Contractual agreements are spelled out black and white, and these come after people finish our programs and get various certifications. But people are not paid during the programs, unless specific agreements are made in writing to the contrary. The relationship of a participant to OSE is that of a student - not worker. Even OSE staff are students - as they have a stake in starting enterprises afer their training. We are really innovating on a potentially transformative collaborative development model - one which has no precedent to date - and one which can cause confusion as to how it works.
What about the Seed Eco-Home, which we envision as a solid revenue model for growth? Our goal is building one in 1000 hours and charging $50k for that build to a client (on top of materials) as our flagship product. Smaller microhomes can be built for as little as about $15-25k in materials - though we intend to make this even lower as we produce our own materials. We may achieve an even faster build as we optimize the design and build process further - indeed we will definitely reduce build time - until full automation. For OSE sustainability, the basic ratio of pay to operations must be about 50/50 - 50% goes to staff and workers who do the build, and 50% goes to OSE for operations to deliver such builds. This is just an industry standard for what a company needs to make - and how much it can pay its workers - if it is to stay afloat and grow. We are reifying all these numbers as we develop the revenue model of the Seed Eco-Home so everyone can gain access to the highest quality build at the lowest possible cost.
We hope this clarifies the logic of OSE revenue share, leaving both sides ecstatic to create open source, regenerative solutions at scale - by lowering the barriers for everyone.