Lunacy as a business explained

Open-process instead of open-source; lean architecture, no exit strategy, and other points for why we will never be sold to anybody.

Amid the news of Figma’s takeover by Adobe, the design community increasingly began to look at Lunacy as an option to transition. People are asking questions about why Lunacy is not an open-source project, how we get the money to fund the product, and how to make sure nobody like Adobe doesn’t buy us.

Why not open-source?

When publishing as open source, we need to explain our way to the community and moderate the contributions. It costs time. Other than that, the community likely doesn’t code as we do. Plus, we should heavily brush up (from secret keys, etc.) to show the code. We are proud of our code quality but don’t want to make it public.

An example that illustrates this model’s negative consequences is Inkscape. It has become too big, and contributors can’t move it much farther. There are many developers among the contributors but almost no designers, so the project has an old UX. It is difficult for the community to agree on where to go. Any new feature must be pulled on a very voluminous frame.

We don’t want to become like that.

Venture Capital

What we see in the market

There is a book, Survival of the richest, that describes the logic of Silicon Valley: VC infrastructure pushes companies like Figma toward rapid growth. They have to:

1. Burn through capital and give away equity
2. Exit.

The venture is good for scaling, but there are nuances. Investors control you. They promote your product and then demand enhanced monetization, following the path of the capitalist approach. The same happens with public companies.

We believe it can be different

We didn’t raise. Icons8 began as a design agency and financed the MVP with service work. After selling icons, we invested profits into our following products. We think about the bottom line, not valuation. We care about product value rather than traction. In the long run, our path is true as we see it.

We don’t have any exit strategy. However, Icons8 has been profitable each year since 2012. How can we live without hundreds of millions of external financing? By being brutally frugal in designing the product architecture.

Architecture matters

Hardware, storage — it all requires a lot of money, especially when the amount of users grows drastically. One way is straightforward: just outsource it, which is expressive and hard to optimize. Another way is to plan the whole architecture beforehand and move step-by-step with it.

How it usually works

All web apps need servers. So usually they:

• Host on expensive servers.
• Have a heavy document structure.
• Store everything in the cloud.

It’s literally a trap of data storage.

1. To keep paying storage bills, they have to recruit new users.
2. For that, they have to grow.
3. For that, they need venture capital.
4. Venture capital needs an exit.

How it works in Lunacy

Lunacy is 1,000-10,000 times cheaper in maintenance than Figma:

• It’s a desktop app, so there are no server bills.
• Lunacy works with offline files. We just introduced the cloud, and it’s frugal too.
• Our cloud is optimized regarding the amount of data and the servers.
• We store super lean incremental changes.
• Instead of common Amazon S3, we use modest VPS’ + cheap backups for that.

More about the cloud: we do not store everything online, the server is a hub for transmitting change messages. When there are more than 100 changes, they are put in cheap storage. This is more difficult to organize but more economical to maintain.

Does it hurt performance? Quite the contrary. We have multiple nodes all over the world, even in Africa. And because we transfer fewer data, performance is even better.

Small team

We want to overtake competitors, but we do not want to increase the team. For us, it is not only about lower costs but also about more efficient, focused, and agile processes and increased accountability.

Our core team is 11 people. We also share support, marketing, and finance with the rest of Icons8. We have only 3 developers, big guys like Figma have 100. Therefore, we are selective in what we take into work.

With all the above, we’re not burning through cash fast. However, we need to earn something to sustain ourselves. Here’s how.

How Lunacy earns

• Lunacy earns by selling the assets from its left panel.
• We charge for upscaling the images.

We need more than that for our sustainability, but it is ok. At least until our user base grows 50x. 1,000 users are 2% of the system’s capability. 100,000 online + 2,000,000 offline users can already pull comfortably. 100 people can enter 1 cloud dock at the same time.

• We’ve introduced our cloud plans in a recent version. Our team users pay for unlimited cloud documents and other perks.
• We don’t plan to charge individual users.
• Neither do we plan to monetize offline use.

What is our path

We did not make investments, although we were offered. Nobody puts pressure on profitability. We think about normal business activities and long-term profitability and not about capitalization.

Speaking of long-term, our servers are located in different countries and are available not only to paying markets. We know how much entering into IT can change lives, and we think that these are the people who will develop the market. A striking example is outsourced support in India. Corporations like Apple started to attract India and made a lot of people involved, so the whole region is now an important market player in IT.

Lunacy’s future plans

Next year, Lunacy will have significant updates: the long-awaited auto layouts, the beta of the browser version, shared libraries, and a dedicated cloud.

In the future, we want to expand the list of import formats. However, we usually plan for a quarter or two, so we are flexible.

We also plan to continue moving along the not open-source but open process. Now we are already in touch with the community via live chat and forum, and soon we will launch a public backlog of tasks directly from the team’s account in Jira on the Lunacy website.

Also, here is our CEO talking about the business model, if you have any questions left, feel free to ask!