gittip.com? open companies?

[whit537]

All,

I started a private conversation with Andy Weissman from USV after hearing from him on Twitter and seeing him show up on this list. I then asked if we could move the conversation here in the spirit of openness, to which he graciously agreed. Sorry for not starting it here in the first place.

I'll follow up with further thoughts in a separate message.

chad

----

Andy,

Chad Whitacre here, whit537, gittip.com, open companies, yada yada. I have to admit that I'm really curious what you could possibly see as a venture capitalist in the idea of an open company and crowd-sourced funding. I think there's some interesting possibilities for *translating* the role of venture capitalist but it's definitely not a *transliteration*.

Can I ask what you're seeing here?

chad

----

thanks for writing Chad, I appreciate you taking the time.

the tl;dr anwer to your question is "i'm not sure"

the longer, more nuanced answer is that I believe the network architecture of the internet can result in networks of people, decentralized networks, that mimic that architecture. These networks can be fundamentally transformational because they are generally non-hierarchical, more transparent, decentralized and more efficient. They take advantage of the massive decrease in the cost of sharing information (when that cost was large, institutions were required to manage it - ie, corporations, governments, churchs and temples). In this way these networks are empowering.

Some of them are classic businesses, some less so.

But they are new types of entities because they are comprised of the contributions of the users. At a minimum then, as "companies" they should be exploring new ways to be, new structures.

That's point A.

Point B is that we know have enough data to support the proposition that open source is the most powerful software product development methodology ever. So how those principles get extended to other areas is interesting. We talk about what an open source venture capitalist would look like. We have no idea, but we talk about it. ANd we think it's important to be talking and thinking about it

Point C: we know now through Kickstarter that the misnamed crowdfunding is a new model for new participants to be involved in the "value chain" of creation. Whereas before the value chain of creation was dominated by more traditional, industrial era, hierarchical organizations. That's interesting.

I hope this answers your question, as I said I have no firm thoughts, but I believe we are in a new era of companies that requires some more thought on what and how they do it. We happen to be investors in twitter, etsy, kickstarter etc - so some of those that are IMO at the center, we are involved with.

Also a few years ago I was an investor in a failed company called Tipjoy.

Thx

AW

[Eric Seidel]

I don't really have anything useful to add to this conversation, but wanted to voice my enthusiasm :-)

It's very cool to see VCs interested in platforms like GitTip!

Eric

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[Chad Whitacre]

It's very cool to see VCs interested in platforms like GitTip!

No kidding. :-)

chad 

[Chad Whitacre]

Andy,

We talk about what an open source venture capitalist would look like. We have no idea, but we talk about it.

I love this. :-)

So as near I can figure at this point, open companies have wages and profit factored out. How is the profit motive manifested and satisfied in a system without profit per se?

Personally, I want to dispense with the greed and banality associated with the profit motive. I want to emphasize the thirst for adventure, and the satisfaction of bringing people together to make something real that wasn't before, coupled with an inclusive bon vivancy. I want to kick ass and throw really good parties, and I want to share both with *everyone* if I can. I picture a sort of Gladwellian archetype somehow standing near the center of that, and that's what I imagine an open source venture capitalist to look like. :-)

But they are new types of entities because they are comprised of the contributions of the users. At a minimum then, as "companies" they should be exploring new ways to be, new structures.

It's really gratifying that you identified the open company idea as bigger than Gittip itself. From my point of view this project will be born when someone announces that they're making their living entirely on Gittip. If a second open company is founded, it will have hit adolescence. And if an existing company converts to an open company, it will have reached maturity, and I can move on.

I believe we are in a new era of companies that requires some more thought on what and how they do it.

It's so delicate! We've got this incredibly well-tuned economy with all of these finely balanced incentives in tension with one another and the whole thing has so much momentum, and I'm trying to see if we can tui shou it into something even better. Can we touch it in just the right spot to make it react in just the right way so that nobody gets killed or otherwise squished and we all come out on top together with something even more conducive to human flourishing?

We happen to be investors in twitter, etsy, kickstarter etc - so some of those that are IMO at the center, we are involved with.

To be honest, I dream of Twitter and Etsy and Kickstarter as open companies. Let their products become part of the commons, owned by all. Same with Amazon, Google--all the big systems that our planet now depends on. Some say Twitter is a protocol masquerading as a product. I disagree. I think it *should* be a product but it should be a shared asset. I hate communism. I hate government control and secret police and a gray cinderblock world in which the individual spirit is crushed. I love freedom. I love individuality. I want to reward Steve Jobs and Jeff Bezos and Larry and Sergey. And I want to do that while at the same time throwing the crib doors wide and letting the people crawl inside.

So what does reward look like? We've got daydreams like whuffie and Burning Man, but if this is going to be real we have to keep working with dollars somehow. Hence, Gittip.

Have you considered funding people on Gittip? You could easily put yourself on top of the givers leaderboard:

    https://www.gittip.com/

What's in it for you as an investor? Well, that's the question. Run it for a year and then ask: What new value did I help create? How much fun was it? How did it circle back around? What did it do to my reputation? What did it do to my bottom line? Was it worth it?

Could be an interesting experiment. :-)

Is there anything I could do with Gittip to make such an experiment easier to run or better able to answer the right questions?

chad

 

thanks for writing Chad, I appreciate you taking the time.

the tl;dr anwer to your question is "i'm not sure"

the longer, more nuanced answer is that I believe the network architecture of the internet can result in networks of people, decentralized networks, that mimic that architecture. These networks can be fundamentally transformational because they are generally non-hierarchical, more transparent, decentralized and more efficient. They take advantage of the massive decrease in the cost of sharing information (when that cost was large, institutions were required to manage it - ie, corporations, governments, churchs and temples). In this way these networks are empowering.

Some of them are classic businesses, some less so.

But they are new types of entities because they are comprised of the contributions of the users. At a minimum then, as "companies" they should be exploring new ways to be, new structures.

That's point A.

Point B is that we know have enough data to support the proposition that open source is the most powerful software product development methodology ever. So how those principles get extended to other areas is interesting. We talk about what an open source venture capitalist would look like. We have no idea, but we talk about it. ANd we think it's important to be talking and thinking about it

Point C: we know now through Kickstarter that the misnamed crowdfunding is a new model for new participants to be involved in the "value chain" of creation. Whereas before the value chain of creation was dominated by more traditional, industrial era, hierarchical organizations. That's interesting.

I hope this answers your question, as I said I have no firm thoughts, but I believe we are in a new era of companies that requires some more thought on what and how they do it. We happen to be investors in twitter, etsy, kickstarter etc - so some of those that are IMO at the center, we are involved with.

Also a few years ago I was an investor in a failed company called Tipjoy.

Thx

AW

--

[thomas...@gmail.com]

I'm so exited about these ideas and discussion about open companies you are contributing. So much in fact that my thoughts a racing a bit too much to formulate or see them clearly yet, but I wanted to share some quick thoughts anyway before they get lost.

Even the classical VC fund might benefit/profit from investing at least part of it's resources in open source projects or open companies right? Supporting a certain project or cause that is beneficial/useful to multiple traditional companies in a fund portfolio for example? (e.g. the recent investment in meteor, I may be missing a bigger picture/long term plan related to profitability? )

what do you think of the following analogy:
gittip <-> open source venture capital == individual investing <-> venture capital funds?

There is something of a centralized vs distributed to this whole thing. Ultimately we are talking about allocating the flow of funds between people/networks. I guess for gittip and something like open VC to work, ultimately the people on the outside of the receiving end, must be convinced that investing into this network benefits them. The hard part about that I think is getting over the "but they are already doing it for free/minimal price." Of course we don't know how much more innovative, better, and beneficial the product of open source efforts or open companies would be if we increase the amount of resources/money poured into it until someone tries. And then there is still the question of how to best allocate the funds (which i guess is where gittip or a open VC model would come in).

--
Thomas

[Andy Weissman]

[Andy Weissman]

I think there are attributes of what an open company is or could be. What I am struggling with is, for one to be an open company does one not have to profit?

Or, can one still profit, but with a certain, different sort of principles. Ones that consider and include the community of members of the service as actives parts - constituents - of the company?  What does this mean?  Well, instead of an open company only making its "take rate" (revenues) equal to its costs, can it take some more ("profit"), but only as much as to indicate and uphold its principle as this new for of company. In other words - it can make money! But, its role is to facilitate some other transaction, connection or sharing. And as such, it recognizes that the value the constituents play is equal to or move valuable than any other piece. In this way, the Open Company becomes a new form of trusted intermediary. Trust being the key.

Can you have trust and profit is the question. I dont know the answer. If the answer is yes, how much profit can you have?  Can you even quantify that?

And then to me the other open company principle is transparency.

Gittip feels like it could be orthogonal to all this thinking.

Have you all heard of Cash Mobs?

I will now start playing with Gittip

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[Andy Weissman]

Even the classical VC fund might benefit/profit from investing at least part of it's resources in open source projects or open companies right? 

Yes! In fact there is a long-ish history of this wrt open source, from mysql on.

open companies - too new to tell, I think.

what do you think of the following analogy:
gittip <-> open source venture capital  == individual investing <-> venture capital funds?

this is really interesting. Lets parse it a bit. First, doesnt Kickstarter to some extent work in this analogy too - a group of people can fund a project in an open, distributed way (vs limited set of VCs that are closed).

Someone once told me that tipping is the biggest business in the world.

I dont know if gittip or the like replaces all other forms of funding. I just dont know yet. But it could be an adjunct way.

So then the other question you alude to is the network effects - what value to the decentralized whole is there if I tip you Thomas? Well, what value is there when you put your code up on github?  or write a blog post?  there is something to all this . . .  

[Thomas Hansen]

> Yes! In fact there is a long-ish history of this wrt open source, from mysql on.

I'm not sure MySQL is the best example in terms of what I was thinking about; at least not in terms of how oracle is handling the licensing/profit aspect. Maybe grant really is a better word than investment for what gittip/open companies are about.

As a VC, could you see your fund benefiting from e.g. giving a no-strings attached grant to an open source project (or it's devs) to allow it's core devs to work on it fulltime. Maybe multiple of your portfolio companies use the project as a core piece in their stack, and would benefit from improvements, new features, a direct relationship with the devs and knowing they won't sudednly stop working on the project to get a job somewhere, etc. ?

>> what do you think of the following analogy:
>> gittip <-> open source venture capital  == individual investing <-> venture capital funds?
>
> this is really interesting. Lets parse it a bit. First, doesnt Kickstarter to some extent work in this analogy too - a group of people can fund a project in an open, distributed way (vs limited set of VCs that are closed).

Yes I guess, but there is another important difference I think. The main value proposition of a VC fund is the expertise, experience, team etc. that manages the fund right? This applies both for fund seekers and investors. So one question that I don't have an answer to yet, is how (or whether at all) this management aspect could be performed from an open source / open company perspective. It ties in with the whole thing about how people outside of a certain filed end up 'investing' into it. Although they might benefit directly from work done e.g. on open source software, they might not have the expertise or domain knowledge to even know who to tip for it?!

> So then the other question you alude to is the network effects - what value to the decentralized whole is there if I tip you Thomas? Well, what value is there when you put your code up on github?  or write a blog post?  there is something to all this . . .  

This I think is the crux of the matter. If I receive $X in tips, maybe I end up wiritng Y new blog posts, or put up Z new projects on github because I have time to do what I love instead of having to work on something else to pay the bills. Maybe X programmers spends Y hours less on a problem because I blogged about it. Maybe the code I put on github ends up being used by a X new businesses that ends up hiring Y employees, making new products and $Z of profit... However, we have no objective (or even good subjective) way to quantify the value being generated (especially not ahead of time, and I would argue even in retrospect it's hard if at all possible).

Let me pose the following paradox:
a) The overall value some things (like software/blog posts) is greater (on a macro level) if they are free to share/use/access
b) By making them free, we essentially loose the ability to quantify the value being generated (on a micro level)

> Gittip feels like it could be orthogonal to all this thinking.

You may be right about this. I think one main difference, which we have sort of ignored is that:
* investing --> providing resources in hope anticipation for some future event / outcome / profit
* tipping --> providing resources in exchange for an event / outcome / profit that's already happend

I still think it is interesting to think about how the idea of investing can come into play with regard to open companies / open source, etc.

> --
> Thomas

[te...@fluidinfo.com]

> Someone once told me that tipping is the biggest business in the world.

Well, it might be the biggest business in the US :-)