Mozilla

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State of Mozilla and 2009 Financial Statements

November 18th, 2010

Mozilla has just filed its audited financial statements for 2009. This is the perfect time to look at the state of the Mozilla mission, our successes, our opportunities and our challenges. This year we’re trying a different format to better reflect the scope of Mozilla and to make better use of video and visual information. We’re hosting this year’s State of Mozilla and Financial Statements at our main website rather than at this blog. Please take a look!

State of Mozilla and 2008 Financial Statements

November 19th, 2009

Today we are posting our audited financial statements and tax form for 2008. We have also posted our FAQ. As in past years, I’ll use this event as an opportunity to review both our financial status and our overall effectiveness in moving the mission forward.

Financial

The financial highlights are:

  1. Mozilla remains strong financially despite the financial crisis of 2008. Our investment portfolio was somewhat reduced, but overall revenues remained steady and more than adequate to meet our needs. We continue to manage our expenses very carefully.
  2. Mozilla remains well positioned, both financially and organizationally, to advance our mission of building openness, interoperability and participation into the Internet.

Our revenue and expenses are consistent with 2007, showing steady growth. Mozilla’s consolidated reported revenues (Mozilla Foundation and all subsidiaries) for 2008 were $78.6 million, up approximately 5% from 2007 reported revenues of $75.1 million. The majority of this revenue is generated from the search functionality in Mozilla Firefox from organizations such as Google, Yahoo, Amazon, eBay, and others.

2008 revenues include a reported loss of $7.8 million in investments in the Foundation’s long-term portfolio (approximately 25%) as a result of economic conditions and investment values at the end of 2008. Excluding investment gains and losses, revenues from operational activity were $86.4 million compared to $73.3 million in 2007, an annual increase of 18%.

Mozilla consolidated expenses for the Mozilla Foundation and all subsidiaries for 2008 were $49.4 million, up approximately 48% from 2007 expenses of $33.3 million. Expenditures remain highly focused in two key areas: people and infrastructure. By the end of 2008, Mozilla was funding approximately 200 people working full or part-time on Mozilla around the world. Expenditures on people accounted for roughly 58% of our total expenses in 2008. The largest concentrations of people funded by Mozilla are in the U.S, Canada, and Europe with smaller groups in China and New Zealand and individuals in many parts of the world.

Total assets as of December 31, 2008 were $116 million, up from $99 million at the end of 2007, an increase of 17% to our asset base. Unrestricted assets at the end of 2008 were $94 million compared with $82 million in 2007, a 15% increase. The restricted assets remain the same as last year: a “tax reserve fund” established in 2005 for a portion of the revenue the Foundation received that year from the search engine providers, primarily Google. As noted last year, the IRS has opened an audit of the Mozilla Foundation. The IRS continues to examine our records for the years 2004-2007. We do not yet have a good feel for how long this will take or the overall scope of what will be involved.

Total grants, donations, and contributions in 2008 were approximately $1 million matching the approximately $1 million of 2007. Mozilla supported projects such Mozdev, Software Freedom Conservancy, and accessibility support for the jQuery library, HTML 5 video, and Firebug.

We believe that Mozilla’s financial setting will continue with relative stability. We continue to use our assets to execute on the mission.

Moving the Mission Forward

2008 was another exciting and robust year for Mozilla. Our scope of activities continued to grow, our community of committed contributors and users expanded, our geographical diversity deepened, and our effect on increasing openness, participation, innovation and individual empowerment in Internet life is significant. Here are some examples.

In February we launched Mozilla Messaging to develop Mozilla Thunderbird as well as new possibilities in the broader messaging arena. 2008 was primarily a start-up year for Mozilla Messaging. In 2009 we’re starting to see the Mozilla Messaging team deliver on the promise. The final version of Thunderbird 3 –- a vastly improved product — is due to be released shortly. In addition the initial developer version of Raindrop — a prototype for a new way of integrating different kinds of messages — has been released.

In 2008 we developed a set of two-year goals (the “2010 goals”), setting out major areas we’d like to see the Mozilla project address in 2009 and 2010. The 2010 goals build upon the Mozilla Manifesto, which articulates the values underlying the Mozilla project and our products. Two of these are familiar — openness in general and continued vitality of Firefox. Two are newer: the mobile web and helping people manage the explosion of data around us. These reflect our desire to see the values of the Mozilla Manifesto infused into these areas of Internet life.

We began an on-going process of strengthening some of the Mozilla project’s basic assets. We began broadening our “module ownership” system beyond code to include governance activities. We began a long-overdue update of the mozilla.org website. In September Mark Surman joined as the new Executive Director of the Mozilla Foundation. These activities continued in 2009, along with new Education and Drumbeat programs.

We expanded the scope of our innovation efforts under the “Mozilla Labs” banner. We launched a range of projects including our first Design Challenge, Test Pilot (user testing program), Ubiquity (natural language interface to browser interaction), and a Developer Tools program. We also expanded existing projects like Weave, Personas and Prism. This focus on innovation continues during 2009.

The activities of Mozilla’s support, localization, campus representative and design communities expanded significantly through 2008 and 2009, reaching more people in more ways.

Mozilla continues to grow ever more global. In June 2008 Firefox 3.0 launched simultaneously in 46 languages. A year later, Firefox 3.5 featured 70 languages. In 2008 Firefox became the majority browser in specific countries. This started with Indonesia, which passed 50% in July 2008, and grew to include Slovenia and Macedonia by the end of 2008. Since then, Slovakia, the Philippines, Poland, Hungary, Latvia, Bosnia Herzegovina, and Ghana have joined this group. Our local communities also work with other Mozilla products and activities such as Thunderbird, Seamonkey and Service Week (in 2009).

We intend to continue to invest significantly in global participation.

Product and Competition

The number of people using Mozilla products increased dramatically throughout 2008 and 2009. This user base makes Mozilla relevant to the Internet industry, helping us move the Internet to a more open and participatory environment. It also helps us build public benefit, civic and social value as components of the Internet’s future.

The number of people using Firefox on a daily basis increased from 28 million in 2006 to 49 million in 2007. In 2008 we moved up to 75 million daily users. As of November 2009 the daily number has grown to 110 million, bringing the total number of users to approximately 330 million people.

Our market share rose to approximately 21.69% in December of 2008. This breaks out into U.S. market share of approximately 20.2%, and more than 32% in Europe. Our statistics for Asia are similar, with our own estimates around 20%. Our South American market share rose to 27% by the end of 2008. These numbers have all continued to rise in 2009 as well. In February, 2008 we crossed the half-billion download mark; in July, 2009 we exceeded 1 billion downloads. As of November, 2009 Firefox’s market share worldwide reached 25%.

In June 2008 we released Firefox 3.0, bringing dramatic improvements to the online browsing experience. These improvements included features to help users quickly navigate to favorite websites, manage their downloads more easily, and keep themselves safe from malware attacks. Firefox 3 was downloaded over 8 million times in the first 24 hours, earning Mozilla a Guinness World Record. In June 2009 we released Firefox 3.5, with additional performance and feature improvements. In November 2009 we celebrated the fifth anniversary of Firefox.

Work on Firefox for mobile devices began in earnest in 2008 with the first development milestones released. We expect to release the first product versions late in 2009. The mobile market has many challenges for us, in particular the fragmentation of the development platform (a plethora of operating systems, handsets and carriers) and a market where touching a consumer directly is more difficult. However, the market is beginning to change and a great, open browser will both help that process and benefit from it. We have much more to do, but have laid a good foundation for long-term contribution to the mobile Web.

SeaMonkey remains a vital project with millions of users. Bugzilla continues as a backbone tool for numerous organizations. A revitalized Thunderbird 3 should ship in 2009.

Looking Forward

The past few years have seen an explosion of innovation and competition in web browsers, demonstrating their critical importance to the Internet experience and marking the success of our mission. In 2008 not only did Microsoft and Apple continue developing their web browsing products, but Google announced and released a web browser of its own. Competition, while uncomfortable, has benefited Mozilla, pushing us to work harder. Mozilla and Firefox continue to prosper, and to reflect our core values. We expect these competitive trends to continue, benefiting the entire Web.

The Internet remains an immense engine of social, civic and economic value. The potential is enormous. There is still an enormous amount to be done to build openness, participation and individual opportunity into the developing structure of the Internet.

Hundreds of millions of people today trust Mozilla to do this. This is an accomplishment many thought was impossible. We should be proud. We should also be energized to do more and to try to new things. It’s a big challenge. It’s important.

We’ve made this opportunity real. Let’s go surprise people once again by showing how much better we can make the Internet experience.

Eyeballs with Wallets

July 21st, 2009

Here’s the business approach of the then-current CEO of a very well-known Internet company. (He’s gone now.)

  • get eyeballs looking at my site
  • find or create content that keeps them at my site as long as possible
  • monetize them as much as possible while they’re there

There are times when each of us will be happy to be a pair of eyeballs with a wallet attached, to be a “monitizable unit.” In our physical lives this is a little like going to the mall. I may “window-shop” and I may enjoy a comfortable environment. But there’s no doubt in anyone’s mind that the point of the mall is to for people to purchase things.

There are times, however, when being a wallet attached to eyeballs is not enough. The possibilities available to us online should be broader, just as they are in the physical world. Sometimes we choose to skip the mall and go to the library, or the town square or the park or the museum or the playground or the school. Sometimes we choose activities that are not about consumption, but are about learning and creation and improving the environment around us.

We have public spaces for these activities in our physical lives. We have public assets, and the idea of building some part of our infrastructure for public benefit as a necessary complement to private economic activity.

Mozilla strives to bring this public aspect, this sense of compete human beings, the goal of enriching the full range of human activities to the Internet. We envision a world where the Internet is built to support these varied aspects of the human experience; a world where robust economic activity lives alongside vibrant social, civic and individual enrichment.

We’re building this world so that we can all live in it.

Sustainability in Uncertain Times

November 19th, 2008

Today we are posting our audited financial statements and tax form for 2007. We have also posted an FAQ. As in past years, I’ll use this event as an opportunity to review both our financial status and our overall effectiveness in moving the mission forward.

Financial

The financial highlights are:

  1. 2007 was another healthy year for Mozilla both financially and organizationally.
  2. Mozilla is well positioned to remain vital and effective during the current difficult economic times.

Our revenue remains strong; our expenses focused. Mozilla’s revenues (including both Mozilla Foundation and Mozilla Corporation) for 2007 were $75 million, up approximately 12% from 2006 revenue of $67 million. As in 2006 the vast majority of this revenue is associated with the search functionality in Mozilla Firefox, and the majority of that is from Google. The Firefox userbase and search revenue have both increased from 2006. Search revenue increased at a lesser rate than Firefox usage growth as the rate of payment declines with volume. Other revenue and support sources were product revenues from online affiliate programs and the Mozilla Store, public support, and interest and other income on our invested assets.

The agreement between Google and the Mozilla Corporation that accounts for the bulk of the revenue has been renewed for an additional three years, and now expires at the end of November of 2011.

Mozilla expenses (including both the Mozilla Foundation and Corporation) for 2007 were $33 million, up approximately 68% from 2006 expenses of $20 million. Expenditures remain highly focused in two key areas: people and infrastructure. By the end of 2007, Mozilla was funding approximately 150 people working full or part-time on Mozilla around the world. Expenditures on people accounted for roughly 80% of our total expenses in 2007. The largest concentrations of people funded by Mozilla are in the U.S, Canada, and Europe with smaller groups in China, Japan, New Zealand, and South America.

Our assets as of December 31, 2007 were $99 million, up from $74 million at the end of 2006, an annual increase of 34% to our asset base. Unrestricted net assets (net of liabilities) at the end of 2007 were $82 million compared with $58 million in 2006, a 42% increase over the prior year. In 2005 the Mozilla Foundation established a “tax reserve fund” for a portion of the revenue the Foundation received that year from Google. We did this in case the IRS (the “Internal Revenue Service,” the US national tax agency) decided to review the tax status of these funds. This turns out to have been beneficial, as the IRS has decided to review this issue and the Mozilla Foundation. We are early in the process and do not yet have a good feel for how long this will take or the overall scope of what will be involved.

In 2007, the Mozilla Foundation expanded its grant giving and funding program, providing approximately $700,000 in funds. Mozilla supported projects such as Mozdev Support, the NVDA open source screen reader for Windows, GNOME, and Mozilla-related educational activities at Seneca College. In addition, the Mozilla Corporation contributed $321,326.40 to various individuals and efforts, which supported the open source projects of individual developers, the Bugzilla community, Creative Commons, Oregon State University, and others. This brings total grants, donations, and contributions to over $1 million (roughly tripling 2006 donations).

We believe that Mozilla’s structure and financial management will allow us to continue with relative stability despite the disturbing economic conditions that developed over the summer and fall of 2008. There are no guarantees of course and Mozilla is not immune. We will certainly feel the effects of the economic situation. However, there are a number of reasons why Mozilla is likely to experience less disruption than other organizations.

  • Our financial objective is sustainability, not financial return on investment, and certainly not the increasing financial return on investment that the markets seek. Success in our fundamental goals is not measured by the stock or investment markets.
  • Our basic structure — public benefit, non-profit organization — means that we do not have a share price or valuation set by the market. So the downturn in the stock market does not affect us directly.
  • Mozilla’s participants do want a return on their investment. That return is our effectiveness in creating a part of the Internet that is open, participatory, innovative and promotes decentralized decision-making. Financial resources are one tool in generating this return. But they are not the only tool. The open source software development model is adept at providing multiple tools to achieve our goals. Financial resources are a catalyst, but neither the goal nor the only tool.
  • We’ve been building in the ability to live with greatly reduced revenue for years. We have a significant amount of retained earnings. We don’t currently anticipate dipping into that fund in the immediate future. We believe our revenues for the near term future will be adequate to fund ongoing work. If the economic setting further worsens, we do have retained earnings to carry us through some difficult times.
  • Our financial management style has always been that each person who is paid to work on Mozilla needs to be a resource for many other people. We haven’t tried to hire everyone we need to fulfill our mission — that’s not possible.

Moving the Mission Forward

1. Scope

In 2007 we launched a number of initiatives focused on strengthening the Mozilla mission. In February we published the first version of the Mozilla Manifesto and began the ongoing public discussion of the most over-arching goals of the Mozilla project: openness, participation, decentralization, innovation. A few months later we turned to describing the open web and promoting an open Internet as the most fundamental “platform” for ongoing development. There is much work to be done here, both in defining what we mean clearly and in working with others who share the goal. This is possible only because of our success to date — we are able to shift the focus from Firefox as an end in itself to Firefox as a step in achieving something much greater.

In May the Mozilla Foundation started an Executive Director search process to add additional capabilities. This task required designing a search process appropriate for an open organization like Mozilla. We figured out how to create a search committee with board members and individual contributors, created that committee, did a lot of public outreach and discussion, and combined this with classic search techniques. We were able to include a live, streamed, public discussion and the chance for hundreds of Mozilla participants to meet our final candidate as part of the process. It would have been ideal if we could have done this more quickly, as it took us until August 2008 to officially hire our new Executive Director. But we found a rare and great fit in Mark Surman, and this occurred only because of the determinedly open nature of the search process.

In June we launched a focused, increased effort in China. This includes a range of outreach and community activities, particularly in universities, plus a focus on making Firefox a better experience for Chinese users. To do this effectively we created a subsidiary of the Mozilla Corporation known as Mozilla Online Ltd.

In July we launched a call to action to revitalize Mozilla efforts in email and Internet communications. That led to vigorous discussions for several months, and the decision to create a new organization with a specific focus on mail and communications. In the fall of 2007 we laid much of the groundwork for the creation of Mozilla Messaging, which launched officially in February 2008.

The idea of openness is taking root across the industry and in other areas of life. More organizations and people are realizing that choosing openness, collaboration and enabling participation is good for people, and good for a set of business opportunities as well. In addition, we are seeing the vast amount of civic and social benefit that can be created through open, collaborative, shared work product.

2. Geographic Reach

2007 was also a year of geographic expansion, reflecting the increasingly global nature of the Mozilla project.

One aspect of our global expansion is in our user base. By the end of 2007, nearly fifty percent of Firefox users chose a language other than English. In a fast forward, the first country in which Firefox usage appears to have crossed the 50% mark is Indonesia, surpassing 50% in July 2008. A set of European countries (Sovenia, Poland, and Finland) see Firefox usage above 40%.

Another aspect of geographic expansion is in the contributor and community base. In 2007 Mozilla contributors from the United States made a series of trips to India, resulting in many contacts and one of our 2008 interns. Mozilla contributors from the United States also made the first trips to Brazil to see our contributors there. This also resulted in ongoing activities in Brazil that are continuing, as well as expanding activities in other South American communities. The number of participants in Eastern Europe is growing dramatically. We started work in China and hired Li Gong to lead this effort. This resulted in the creation of Mozilla Online Ltd. in August. Mozilla has new groups of contributors and employees in Auckland, Beijing, Copenhagen, Vancouver and across Europe.

This global reach is driven by our focus on local contributors, local product and local empowerment. Firefox 2 shipped in thirty-six languages. Firefox 3 shipped in forty-six languages in June 2008 and 4 months later, our Firefox 3.1 beta is now localized in over 50 languages. We continue to invest very heavily in what we call “localization” for short but which in its broadest sense means everything that allows global participation in building and accessing the Internet.

At the end of 2007 our Calendar Project had twenty-six active localizations for Sunbird 0.7 and Lightning 0.7, and Thunderbird 2.0.0.9 offered thirty-six active localizations. SeaMonkey 1.1.7, the last stable release of the year, featured twenty languages. The number of releases is made possible by the enormous dedication of the localization communities, plus a focus on building infrastructure to enable those communities.

These efforts to make the web more accessible did not go unnoticed. In May of 2007 Mozilla was awarded the World Information Society Award by the ITU, the United Nations agency for information and communication technologies. Mozilla was singled out for its “outstanding contribution to the development of world-class Internet technologies and applications.”

3. Community

Our community remains healthy and vibrant. The percentage of code contributed to Firefox by people not employed by Mozilla remained steady at about 40% of the product we ship. This is true despite a significant amount of new employees in 2007. Our geographic expansion is powered by active and committed volunteers, from the localizers to Spread Firefox participants to others who introduce Firefox to new people.

In June of 2007 we launched a new quality assurance effort, building ways for people to get involved without needing to plunge exclusively into our bug-management tool. In October we launched a new support effort, building on the work community members have provided via forums. Today our end user support offering includes an online knowledge base, forums for discussion and troubleshooting, and one-to-one live support. We also made event planning and speaking planning a public activity, and have developed programs to assist more Mozilla contributors to become active public speakers about Mozilla.

4. Product

The number of people using Firefox on a daily basis nearly doubled from 27.9 million in 2006 to 48.9 million in 2007. As of October 2008 that number has grown to 67.7 million. In 2007 and 2008 three titans of the Internet and software industry — Microsoft, Apple and Google — all released competitive Web browsers. Our market share continues to rise, our community continues to grow and Firefox continues to provide leadership in innovation, technology, and user experience. Living among giants is not easy, but the Mozilla community continues to demonstrate that our efforts stand the test of competition and continue to lead the way.

Other Mozilla projects remain vital, with committed contributors and users. Worldwide, SeaMonkey has approximately five million users and Thunderbird has five to ten million users. Bugzilla installations are hard to count since many of them are internal to an organization. But we see Bugzilla installations everywhere, and over sixty thousand copies of Bugzilla were downloaded in 2007, with hundreds of companies identifying themselves as Bugzilla users.

The impact of our userbase allows us to help move the Internet industry to a more open and participatory environment — accessible content, standards-based implementations, and bringing participation and distributed decision-making to new aspects of Internet life.

In 2007 we began a new, focused effort to bring the Firefox experience to mobile devices; early steps included forming a team and identifying mobile platforms as a central part of our work going forward. We’ve begun shipping development milestones and early releases in 2008.

We’ve also started new initiatives to promote innovation across the Mozilla world by providing a home and infrastructure for experimental work via Mozilla Labs. Innovation is a notoriously difficult thing to build into an organization; we’ve adopted a flexible approach that we expect to grow and change over time. The Mozilla community is diverse and creative, our challenge here is to build environments that both encourage individual creativity and that allow us to work at scale.

Mozilla is strong. We’re growing. We’re trying new things. 2007 and 2008 to date have been important, successful years for Mozilla.

I hope Mozilla participants feel proud of what we’ve accomplished and excited about what is still to come. The Internet is still young, and still in its formative stage. Mozilla has, and can continue to empower each one of us to build the Internet into a better place.

  • Revenue and Motives

    March 25th, 2008

    John has a post today about how some people impute revenue motives to everything we do. In his case John made a statement about how one of Apple’s business practices is bad for the overall security and health of the Internet. (In this case the practice is to encourage consumers to download and install new software by identifying it as an “update” to software the person already has on his or her machine.)

    Some of the reactions address the actual issue. But there’s also a set of responses along the lines of: ‘All Lilly really cares about is using Firefox to make money from Google, and all this talk of what’s good for the Internet is just a smokescreen for protecting the revenue stream from Google.’ (This is not an actual quote, it’s my description of a set of responses.) I’m coming to wonder if any statement or action we take that is controversial or based on mission with get this response. I’ve had this experience myself when discussing a number of topics.

    Periodically I’ll be in a discussion about Mozilla’s plans for something and people respond by saying “Oh, that’s because Google cares about [fill in the blank] and your revenue comes from Google.” On several occasions I’ve been utterly dumb-founded and speechless because I have never even thought of Google in relation to the discussion. (I’d give some examples but I am concerned that we’ll end up rehashing old issues. )

    But much of the world is driven by money and all sorts of people say they have different or additional motivations. So suspicion may be warranted. At Mozilla we can only do what John notes — keep pursuing the mission, keep demonstrating by our actions that our mission is the critical piece, and being authentic.

    A separate problem is that a focus on money makes it easy to miss other, important topics. In this case the question is: what happens if consumers stop accepting security upgrades because they don’t trust the other software that comes along with it? That’s a disaster for all of us. That’s the question John is raising and it’s an important question to consider. Those commentators who dismiss this topic because Mozilla competes with commercial offerings and generates revenue miss this point. If the commentators you turn to dismiss everything for this reason, then I’ll hope you’ll add some additional commentators to your resource list.

    The SQLite Consortium

    February 27th, 2008

    Yesterday Robert Accettura made an interesting post about the range of SQlite today titled “The Winner For Most Embedded Is: SQLite.” This reminds me I’ve been wanting to talk about SQLite Consortium for a while. Robert points out thatSQLite is an element of “Adobe Air, Mozilla Prism, Google Gears, Android, iPhone SDK (likely through Core Data API), Ruby On Rails (default DB in 2.0), PHP 5 (bundled but disabled in PHP.ini by default).” I personally would probably say Firefox as well as Prism. In addition, SQLite is an open source (actually, public domain) piece of software. At Mozilla we view SQLite as important both for our product and for advancing transparency, openness, innovation and participation in the Internet.

    Last December Symbian and Mozilla became the charter members of the SQLite Consortium. Last week Adobe announced that it has joined the SQLite Consortium, demonstrating Adobe’s recognition of the importance of Sqlite and its participation in various open source projects. Hopefully other organizations that rely on SQLite will do the same.

    Here’s a bit more on the history.

    A while back Richard Hipp contacted Mozilla to see if we had some time to talk to him about sustainability models. He had a problem we at Mozilla were familiar with — difficulty in getting organizations to fund the development of the core. At Mozilla we have seen this repeatedly — many companies understand why it’s important for them to fund development of the particular aspects of Mozilla that specifically benefit their business. It was much harder to find companies that would fund the core development applicable to all users of Mozilla code.

    Dr. Hipp was facing the same issue with SQLite. Many companies were willing — eager even — to enter into contracts to enhance SQLite to meet their needs. But few were funding the fundamental core of the offering. I was embarrassed to learn that Mozilla itself belonged to this group. We had entered a contract with Dr. Hipp some time before to do some work related to full-text indexing support. I knew about this of course but it never occurred to me to ask if the SQLite developers needed funding to maintain the core capabilities. (I should note that Richard didn’t raise this point with us; I asked directly and thus learned of my failing ). Fortunately the folks at Symbian were more perceptive. They had realized that providing stability and sustainability for long term development of the core of SQLite is important and were talking with Richard about how to do this. As a result Richard contacted Mozilla to see if any of our experiences could help him with his thinking.

    Once I got over my embarrassment I spent some time talking to Richard to understand his goals for SQLite and to see how best Mozilla could support Richard and SQLite. Richard was clear about the main goals: keeping SQLite an independent project, and freely available for anyone to use. On behalf of Mozilla I expressed a strong interest in the current developers (Richard and his colleague Dan Kennedy) retaining technical direction over the SQLite project and in developing a sustainability model that does not diminish the effectiveness of the technical leadership. The Symbian folks agreed completely, and Symbian and Mozilla became charter members of the Consortium, which was launched on December 12, 2007. The Consortium is described in general terms on the SQLite website, and the form of Consortium Agreement is also available online.

    The Consortium Agreement makes it clear that technical direction of SQLite remains solely in the hands of the developers. Consortium members receive access to the developers for support if desired. I noted that Mozilla would join without the support offering solely to provide support to the core developers to do what they think best (and I suspect the other early members might feel the same way). Dr. Hipp felt that it would be easier to attract additional members over time if the support component was retained. I don’t know that Mozilla will make use of this. But I hope that other organizations that use SQLite in their products will find this significant enough to help justify participating in the Consortium.

    Joining the Consortium was an easy decision for Mozilla. We use the technology, it advances the Mozilla mission and — most importantly — the SQLite developers themselves are people who combine a fierce dedication to the openness and technical excellence of their work with discipline and structure. Like many great open source (here, public domain) and free software projects, the key developers have enormous commitment to their work. In my discussions with Richard I’ve come to understand that this commitment is combined with integrity, modesty, and an exceptional consistency of focus and quality.

    It’s great to see the SQLite Consortium come to life. It’s great to see this grow out of Symbian’s very forward-looking thinking in supporting Dr. Hipp so early on; and great to see Adobe’s quick decision to join the Consortium. And I certainly hope that other companies who aren’t already supporting SQLite development will look closely at keeping SQLite independent and vibrant by becoming Consortium members.

    The many aspects of “non-profit”

    November 5th, 2007

    I’m often asked various questions about non-profits. Many people have a general idea of what “non-profit” means but very few have a specific, technical understanding. This makes perfect sense. The technical understanding is a legal and accounting mix, and specific to legal jurisdiction as well.

    Here’s a brief outline of what “non-profit” means — in the technical, legal sense — to the Mozilla Foundation. It’s pretty dense stuff, and I’ll provide only the most basic summary. I think about this a lot but in this post I’ll try to stick to describing the structure.

    I. “Non-profit” status

    The Mozilla Foundation is legally identified as a “non-profit public benefit” organization under California law. Its property is “irrevocably dedicated to charitable purposes.” The Mozilla Foundation is governed by the California Nonprofit Corporation Law, which is somewhat different from California’s General Corporations Code. I’ve found that the distinctions between the general Corporations Law and the Nonprofit Corporation Law include structural elements — members instead of shareholders and so on, and a set of distinctions which I think of as designed to ensure that the organization is pursuing a non-profit goal rather than pursuing private gain.

    II. “Tax-exempt” status

    The Mozilla Foundation is also a tax-exempt organization as determined by the U.S. Internal Revenue Service. To be a tax-exempt organization one should be a non-profit organization (as described above), and the purpose of the organization must fit within additional specifications. Once this status is granted, a tax-exempt organizations is governed by a body of regulations and policies determined by the IRS. These regulations are in addition to any requirements imposed by the Nonprofit Corporation Law. These regulations identify permissible purposes for a tax-exempt organization. They also limit the kinds of activities in which a tax exempt organization can engage, especially for activities that generate revenue or that involve advocating for particular laws. In exchange for tax-exempt status, an organization lives with significantly more restrictions on the way it can operate.

    III. “501(c)(3)” status

    The Internal Revenue Service grants tax-exempt status to several different kinds of organizations. The Section of the Internal Revenue Code that describes the types of exemptions is Section 501. The most important one for our purposes is Section 501(c)(3). This section applies to organizations “organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition . . . or for the prevention of cruelty to children or animals . . .”

    The Mozilla Foundation is a 501(c)(3) tax-exempt organization dedicated to promoting the Internet as a universal, innovative platform accessible to all.

    IV. “Public Charity” status

    There are actually two types of 501(c)(3) organizations. One type receives significant contributions from the public — a “public charity” 501(c)(3). The other type is a “private foundation.” These are generally 501(c)(3) organizations where an individual or family contributes most or all of the money and the charity operates from these funds and the income they generate. Private foundations are required to spend a certain percentage of their funds each year, public charities are not. (There are also two types of private foundations, operating and non-operating.) The IRS reviews 501(c)(3) organizations periodically to see if they are public charities or private foundations. The Mozilla Foundation is currently a public charity 501(c)(3) organization.

    For Further Detail

    Each of these areas can become complex quickly. This is an area where it takes true experts to fully understand. Wikipedia has a nice overview article. The actual documents relating to the Mozilla Foundation can be found at the Mozilla Foundation website.

    After living in this world for the last few years I have many thoughts about where this system works well and where it is unwieldy or even counter-productive. I’ll put those in a separate post before too long.

    Beyond Sustainability

    October 22nd, 2007

    In this post I want to focus on two fundamental aspects of the Mozilla project. First, Mozilla as a giant, wildly vibrant open source project. Second, Mozilla as a force for building an Internet based on openness, choice, participation and public benefit. We’re a force in the lives of individual people and in the Internet industry as a whole. These two aspects of Mozilla are complementary; each strengthens the other. Either one alone would be a great achievement. The two together are a breathtaking accomplishment.

    Today we are posting our audited financial statements and tax form for 2006. The highlight is that Mozilla remains financially healthy: we’re able to hire more people, build more products, help other projects, and bring more possibilities for participation in the Internet to millions of people. The Mozilla project is growing in almost every way — size, scale, types of activities, new communities, and in reach.

    Financial Highlights

    Mozilla’s revenues (including both Mozilla Foundation and Mozilla Corporation) for 2006 were $66,840,850, up approximately 26% from 2005 revenue of $52,906,602. As in 2005 the vast majority of this revenue is associated with the search functionality in Mozilla Firefox, and the majority of that is from Google. The Firefox userbase and search revenue have both increased from 2005. Search revenue increased at a lesser rate than Firefox usage growth as the rate of payment declines with volume. Other revenue sources were the Mozilla Store, public support and interest and other income on our assets.

    Mozilla expenses for 2006 were $19,776,193. Expenditures remain highly focused in two key areas: people and infrastructure. By the end of 2006 Mozilla was funding approximately 90 people working full or part-time on Mozilla around the world. Expenditures on people accounted for roughly 70% of our total expenses in 2006. The largest concentrations of people funded by Mozilla were in California, Tokyo, Toronto, and Paris. The number of funded people and of multi-person locations continues to grow. As of October 2007 we have additional concentrations of people in Beijing and New Zealand, with announced plans to increase the number of people in Europe.

    Mozilla’s revenue in 2006 exceeded our expenses. Our assets at the end of 2006 were $74,148,710, up from $52,396,387 at the end of 2005. In 2007 we expect our expenses to be significantly higher as we have continued to hire and fund more people and develop additional programs.

    Of the people Mozilla funds, the largest single group works on the Mozilla “platform.” This includes all the underlying technology that individuals don’t manipulate directly — networking, layout, understanding content from websites, security, and so on. The work of the platform group supports all Mozilla products and most Mozilla projects. The next largest group is Quality Assurance, which provides formal verification for Firefox and Thunderbird, and informal assistance to other Mozilla projects. Other large groups are the Firefox application group, marketing and outreach, and IT or technical infrastructure. We have small but potent sets of people working on build and release, web tools, our websites (including add-ons), and other functions.

    Mozilla’s technical infrastructure also grew dramatically in 2006. In late 2006 we served close to 600,000 Firefox downloads, over 2.1 terabytes of data and 25 million update requests — per day — making Mozilla one of the top 100 sites on the web. In addition, 2006 saw a vast increase in capacity and infrastructure reliability for all essential Mozilla services including the launch of a European datacenter, cutting server response time by 50% or more for much for Europe.

    The improvements in infrastructure go beyond machines and moving bits. Our infrastructure for providing add-ons is an example. The add-ons site supports not only Firefox and Thunderbird but also the community projects of SeaMonkey and Sunbird. We’ve also spent a great deal of effort to make our sites multi-lingual, rather than simply “localized.” In the past, key sites such as addons.mozilla.org were English sites that could also provide translated content in other languages. Today add-ons has been rewritten to be language-neutral, meaning that the same service level is available to everyone. This was actually a very difficult and painful process. We did it because more and more non-English speakers are accessing the web, and we want to offer them equal ability to participate in the Mozilla world and the Internet in general.

    The infrastructure work is an example of how revenue generated by Firefox is used to provide benefit to the entire Mozilla community. We now have a world-class infrastructure – machines that are tended and optimized constantly, prompt updates with security patches, on call response available when problems occur – which supports a range of Mozilla projects.

    In 2006 we began giving grants and funding programs. One area of focus has been improving accessibility for people with disabilities, including people with low vision, mobility and learning disabilities. This work includes accessibility for Mozilla products and also accessibility in general. For example, funding to date has included better accessibility of AJAX-based dynamic web applications and support for building better open source accessibility infrastructure technologies on Windows and Linux. In addition to the accessibility related programs, Mozilla’s other major areas of expenditure have included support of third-party developers of add-ons, and support of a trial program at Seneca College exploring student participation in Mozilla development at colleges and universities. We have also made a series of grants to individuals making contributions to Mozilla projects. This includes hardware, funding travel to allow face-to-face meetings for our distributed community of participants, providing tools and infrastructure (machines and hosting) for community members. We also provided assistance to Creative Commons.

    In 2006 Mozilla contributed approximately $300,000 to these efforts. This is a small first step as we learn to spend money without causing unintended consequences in our community. We expect the amounts to expand significantly in 2007 and beyond. For example, so far in 2007 we provided a grant to the Open Source Lab at Oregon State University for its ongoing operations in support of open source projects and the Participatory Culture Foundation for improving open source-cross platform video on the Internet through its Miro Player project.

    We’ve started an FAQ and will add to it if new questions come up.

    Our financial status allows us to build on sustainability to do ever more. More as an open source project, and more to move the Internet overall increasingly towards openness and participation.

    Growth as an Open Source Project

    Mozilla is a gigantic open source project and still growing. Tens of thousands of people are involved in the Mozilla project. Over 1,000 people contributed code to Firefox 2. Mozilla employed around 50 of those people. In 2006, approximately 10,000 people downloaded nightly builds every day; this number continues to grow. Sixteen thousand people reported bugs or potential issues in our bug-tracking system; something like a thousand comments a day were added to the issue-tracker. Our new, more precise distributed testing system gained approximately 2000 participants in the first months after its deployment. Tens of thousands of people test our beta and security releases before we offer them to the general public. The Spread Firefox referral program had over 65,000 participants displaying Mozilla or Firefox content (buttons, etc.) on their websites. Uncounted numbers of people participate through promoting Mozilla and helping others learn about Mozilla.

    The geographical distribution of Mozilla contributors and usage has expanded significantly. In November of 2006 we shipped Firefox 2 in 37 languages. That’s unprecedented. Comparable products ship in as few as 1 language, with some tools available for a handful of other languages. Thunderbird 2.0 shipped in 33 languages. We’re adding more languages all the time; Firefox 2 is now available in 44 languages and Thunderbird in 36. The translation and localization work for these languages is overwhelmingly done by volunteers who want to see Firefox and Thunderbird optimized for their culture and then vetted through our Quality Assurance team. This is demanding work, often done on a tight time frame. It reflects much of what makes Mozilla great: people’s willingness, even eagerness, to commit time and energy to create something worthwhile. The results bear out the importance of this work: today about half of Firefox usage is in a language other than English.

    Mozilla is best known for the Firefox web browser, but the Mozilla community creates many other things as well. This includes the Thunderbird mail client, and a set of other significant projects such as Bugzilla, SeaMonkey (cross platform browing and mail integrated product), Camino (Mac-only browser), Sunbird (calendar application), and Lightning (calendar add-on for Thunderbird). Thousands of people create new functionality for Mozilla products through the mechanism known as add-ons. In addition, people and companies are using Mozilla technology to create whole new applications, ranging from video browsing to music to specialized “in-house” applications.

    Impact in the Industry

    The Mozilla mission is not simply to be a successful open source project. It is also to develop an Internet where choice, innovation, participation, individual empowerment and public benefit are integral to the fabric of online life. It’s a big vision, and we’re making progress. Already about 120 million people use Firefox and enjoy a safer, more personal browsing experience. Millions use the Thunderbird email client and enjoy an open email experience.

    This userbase makes Mozilla relevant to the Internet industry. We’ve always had high mindshare but combining mindshare with a significant number of users makes an enormous difference. As a result, good things happen. For example:

    1. Web content is increasingly written to be accessible through Firefox and other standards-focused browsers. This is a fundamental requirement for keeping the Internet a good place. It’s a prerequisite for individuals to have choice and for commercial players to have room to innovate.

    2. We are able to drive innovation into the open, interoperable layer of the Internet rather than see it end up in the closed, controlled communities of commercial platforms. An example of this is video. We are working publicly on a shared specification that allows videos to be manipulated in the browser like other content. We have the technology working already. By “manipulate” I mean much more than watching a video, a la YouTube. I mean being able to combine, rotate, overlap, cut and paste video just as we do text today. You can see the possibilities here. This might seem obvious until one realizes that there are commercial initiatives underway to demonstrate that video should be manipulated not so much through the web, but through closed, proprietary development environments and plug-ins. An environment where a single software vendor controls the formats, and ultimately controls whether people using Firefox or other browsers can see the content that results.

    3. Innovation is flourishing. Thousands of people have created and tested improvements to human interaction with the Internet. Some of these have been significant commercial successes, such as StumbleUpon which started with a Firefox-specific product and later moved to other browsers.

    4. Mozilla’s voice is stronger when fundamental decisions about Internet technology – particularly protocols and standards – are decided. We’re also a force for making these discussions more transparent. For example, the ongoing work on ECMAScript 4 (generally known as “JavaScript 2″) is becoming publicly available for review, comment and participation. A more general example is Mozilla’s involvement with the WHAT Working Group (“WHATWG”), which is pushing development of web standards into open, public forums.

    5. Safety and security of Internet life can be improved. Firefox users have been at risk far, far less frequently than people who use the dominant browser. Mozilla is regularly cited as an example of how to respond when alleged safety issues are uncovered. Our approach to security allows more people to do more to protect themselves and others.

    6. Public benefit, civic and social value become components of the Internet’s future, complementing the creation of private economic value.

    7. Millions of people who would not otherwise know of or care about open source software are exposed to it and experience its power.

    Mozilla is a global community of people working together to build a better Internet. We work to build an Internet that is open, participatory and exciting. We create a portion of the Internet that is a public asset, forever dedicated to public benefit.

    We do this through by building communities of people who believe in this mission and enjoy working together to make this happen. It’s an inspiring task. It’s hard work. It’s rewarding. It’s fun. And it’s growing.

    Mozilla is growing because people choose to join us, because individual human beings make a decision to take action. People participate in a myriad of ways, from building our software to telling others about our goals.

    We can make the impact of the Internet on our lives better — better than it will be if Mozilla doesn’t exist; better than we can imagine.

    If you are already a Mozilla participant, I urge you to take a moment and reflect on the contributions that together we are making to online life. If you’re not yet a participant, now is a great time to join us.

    Thunderbird — Revenue

    July 30th, 2007

    Some people have wondered if revenue is the reason we’re looking at making some changes in our approach to Thunderbird. The answer is no. No, no, no. The reasons for looking at a change are articulated in the last 5 or 6 posts:

    • The impact of browsing and the Web, as delivered through Firefox, dwarfs Thunderbird
    • Thunderbird is a different enough product and audience that the focus on browsing and the web doesn’t automatically bring Thunderbird what it needs
    • Thunderbird — both its strengths and its weaknesses — are overshadowed by the giant footprint of Firefox.

    These issues would concern us whether or not Thunderbird generates revenue. Mozilla is not aimed at maximizing revenue. And Firefox revenue is funding a range of activities beyond Firefox, from infrastructure to Thunderbird employees, to documentation for web services.

    Once we figure out what kind of organization makes sense then we can look at what funds it would need. Then we can figure out what combination of money from Firefox and what from Thunderbird activities would make sense. We don’t plan to leave Thunderbird high and dry without funds.

    I know from previous comments that some people will never believe this. But repeating myself won’t change that, so I’ll stop here.

    The Mozilla Foundation: Achieving Sustainability

    January 2nd, 2007

    Mozilla is a global community dedicated to improving the Internet experience for people everywhere. We do this by building great software — such as the Mozilla Firefox web browser and Mozilla Thunderbird mail client — that helps people interact with the Internet.

    We build great software by building communities. Our software is “open source software.” The source code is available to everyone; as a result people are able to work together and we all share the results of the combined efforts.

    The Mozilla project has been building software and communities since 1998.

    The Mozilla Foundation recently completed its financial audit and filed its tax returns for 2005. The tax returns should appear on Guidestar shortly, and in any case these materials are available directly from the Foundation. Because the steady revenue stream is so important to our long term sustainability I’ll give an overview here.

    History

    In 2003 the Mozilla Foundation was established. The Mozilla Foundation is a non-profit organization organized to provide a home for the Mozilla community and stewardship for the assets of the project. The Mozilla Foundation started with around 10 employees. This was just barely enough people to make the Foundation functional and support the community. Still, supporting 10 people is a noticeable financial commitment; doing so consumed most of the funds the Foundation had available to it. (For those interested in historical detail, we had one person for QA, one person responsible for all of our tools and infrastructure, one person for each of the Firefox and Thunderbird front ends, 2 people for all of the rendering, layout and internals, etc, one person responsible for our “build and release” function, one architect, one engineering manager, one person responsible for business development, and me). The employees were stretched extremely thin, struggling to keep up with the opportunities available to the project.

    In 2004 we released the Mozilla Firefox web browser. It was the right product at the right time — an elegant product filling a huge need in the market. Millions upon millions of people began using Firefox. As a result we were able to generate revenue by making it easy for people to find and use Internet search services. We began adding employees. We also began expanding our infrastructure — bandwidth for downloads, modernizing the inventory of equipment used to build the software and provide services to developers, update the public-facing websites, etc.

    In 2005 Firefox became a product with millions of users, a growing significance in the Internet industry and a significant revenue stream. The revenue is from the easy “search” capabilities built into Firefox and the related revenue relationships with the search providers. We found that our users like the easy, customizable search capabilities, and the revenue could provide financial stability without the need for ongoing fund raising requests to our users or community.

    In August of 2005 the Mozilla Foundation established the Mozilla Corporation as a wholly owned subsidiary to guide the development of Mozilla products, including Firefox. Revenue generated by Firefox becomes an asset of the Mozilla Corporation, which is in turn completely owned by the Mozilla Foundation. The assets of the Mozilla Foundation are dedicated to the public benefit. Revenue generated from Firefox is reinvested in the Mozilla project to improve operational capabilities and to provide long-term stability.

    The number of people using Firefox increased steadily through 2005 and 2006. The resulting revenue stream from our search partners allowed us to continue to expand. We did so in both engineering for product development, and in the services we offer our userbase. We hired more people. For example, we started to build a professional IT team to handle increased load. We expanded our infrastructure still more to handle the millions of people who came to get and use Firefox. The improved infrastructure was demonstrated during the Firefox 1.5 release in November when our bandwidth requirements went way up and our service levels remained high. We hired more QA folks to both test and work with the community. We hired more engineers. We launched the Mozilla Developer Center, the first time we’ve had an on-going, successful documentation program.

    Our revenue stream remains steady. We’re hiring a great set of people, with small teams where before we had a single person. We have a Firefox front-end team. We now have a build team instead of a single person. We have an Information Technology team. We have a set of people thinking about features and user experience. We have a platform team. We have people to respond when reporters call. We have a team of people maintaining our websites and webservices. We’ve been able to return to having a small set of people thinking first and foremost about community development. We’re still stretched very thin and still looking for great people.

    Our infrastructure continues to be modernized. We’re upgrading the development infrastructure, in particular the “build” machines and infrastructure, which is a far larger job than it sounds. We’re upgrading the website infrastructure to support easier and more complete localization. Firefox 2 shipped simultaneously in 37 languages. That’s a massive and very rare achievement; I’m not sure who else does this.

    2005 Financial Information

    In 2005 the Mozilla Foundation and Mozilla Corporation combined had revenue from all sources of $52.9M. $29.8M of this was associated with the Foundation (both before and after the creation of the Corporation). The bulk of this revenue was related to our search engine relationships, with the remainder coming from a combination of contributions, sales from the Mozilla store, interest income, and other sources. These figures compare with 2003 and 2004 revenues of $2.4M and $5.8M respectively, and reflect the tremendous growth in the popularity of Firefox after its launch in November 2004.

    The combined expenses of the Mozilla Foundation and Corporation were approximately $8.2M in 2005, of which approximately $3M was associated with the Foundation. By far the biggest portion of these expenses went to support the large and growing group of people dedicated to creating and promoting Firefox, Thunderbird, and other Mozilla open source products and technologies. The rate of expenses increased over the year as new employees came on board. The unspent revenue provides a reserve fund that allows the Mozilla Foundation flexibility and long term stability.

    Strengthening the Mission

    Our financial stability has enabled us to attract and retain world-class talent, people who have willingly turned their backs on the world of startups and stock options in order to work toward our goal of promoting choice and innovation on the Internet for the benefit of all. It enables us to support massive communities of people who contribute their efforts to making the Internet experience better. It allows us to cultivate competitive, viable community innovation.

    The results are significant.

    Our userbase is growing and happy. The Mozilla name represents quality and integrity to ever increasing millions of people. The extended community — volunteers, students, employees, developers, evangelists, extension developers, testers, documentation writers — is vibrant and effective. Internet life is a far better experience for millions upon millions of people that it was before Firefox and than it would be without the Mozilla project.

    The Mozilla community — buttressed by the financial sustainability of the Mozilla Foundation — represents a powerful force for improving Internet life.

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