The first open company
blog.gittip.com
blog.gittip.com
I love cooperatives. I started one: an organic produce growers' cooperative. I also love Wealth of Nations, and I love capitalism. The company behind Gittip, Zeta Design & Development, LLC, was started in 2002 as a for-profit company and was run that way for a decade. Here's me praising corporations:
http://blog.gittip.com/post/25215503687/corporations-and-ope...
My question is, can we do even better?
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Most advances in human history have been done by individuals who were simply passionate about a topic, and they did not do it for money. Theoretical science.
Although honestly, I think we shouldn't talk about "most" throughout history, because democracy/free trade/capitalism is pretty new, so we need to normalize for that.
Programming language, OSS, and platforms: A few friends or a lone guy/gal know they can do something way better or create a programming language or a database system more powerful than what is out there (Theory). Millions of other programmers use the language, tools and build powerful businesses such as Facebook and Twitter around it(Application). This is probably why you can do a startup today for $0 upfront cost.
I doubt Einstein spent countless hours working his brains off for money, Darwin did not go across continents to study the origin of species for money, Bethoveen did not write symphonies solely for money. Yet many other talented individuals have used their findings and made loads of money along the way.
http://www.nobelprize.org/nobel_prizes/lists/universities.ht...
Bell Lab's had the most Nobel prizes of any for profit institution at 7. There's 13 non-for profit organization that have eight or more. Even if you drop out the political Nobels (Peace and Economics), there's still 11 entities out there besting the best that for-profit institutions have to offer. Also, most of these Nobels have been in the past hundred years, so no need to normalize out the advent of democracy.
It's true that for profit enterprises take these discoveries (e.g. Giant Magnetoresistence, MRI, Fiber Optics, CCDs) and ramp them up for mass production. However, they're still tweaking the major break-through made by people focused on things besides the personal accumulation of wealth.
As much as software patents irk common sense, the notion of IP protection really does seem reasonable here. There are people who do research for reasons beyond personal profit. They actually do deserve licensing fees.
You mean most advances in (very) recent history right? And I am a bit skeptical about the claim that companies are developed for the benefit of the people. Again, I have a problem with your generalizations. At least in our field, a lot of the research is actually publicly funded.
I think most companies exist to make money. However the "invisible hand" often leads to mutual benefit.
Not even close. Also, see the article about how cartels are an emergent property[1] of a free market. Not that there really exists a better system than what we currently have, but don't kid yourself into thinking capitalism is some kind of benevolent savior of mankind. It's just not true.
Way back in the day I decided to become a software developer instead of getting my PhD in economics. Economics didnt make any sense to me. It was all philosophy and religion. As an undergraduate, I read only one article that had even basic calculus in it. Perhaps I should have majored in physics and then got my Economics PhD., but nobody did that sort of thing.
A company that doesn't pay its employees is neither a company, nor does it have employees.
And honestly, why is "cost" for non-employees allowed, but not cost for employees? An "open company" makes sense in terms of radical transparency, but a term like that shouldn't be related in any way to banning monetary compensation.
Cost for non-employees is "allowed" for the practical reason that if it weren't, an open company couldn't participate in the economy as it stands today.
If you want transparency without the non-compensation, look into B Corporations: http://www.bcorporation.net/about
"An open company differs from an open source project in that an open company is a formal legal entity, and needn’t be about software."
The set of employees of an open company is much, much smaller than the set of people working on whatever-it-is that the open company nominally "owns"--really it's a commons. The only reason to have employees at all is to formalize access to private data such as passwords and private user data.
Gittip, for example, has one employee, me. If you counted up everyone who has weighed in on GitHub we'd have maybe 20 or 30 community participants by now? Many more depending on how you draw the lines.
If I understand you right, the "requirements" would apply to the small set of people with access to private data, not to the majority participating in building whatever-it-is together.
I'm actually not clear why this is a company instead of a non-profit foundation. It says:
"An open company differs from a non-profit organization in that an open company does not itself accept donations, and it does not compensate its employees. From the open company’s point of view, whether and how its employees receive money and for what, is undefined."
A non-profit can also not accept donations and not compensate employees, so the only thing that differs might be how employees receive money, which I don't really understand here.
It's fun, and adding/fixing a feature for everyone means they might add or fix a feature for me.
What I can't answer is: Why would someone agree to [do data entry/handle customer support/agree to be legally liable] without any compensation?
Those activities aren't fun, and if I handle customer support for you there's nothing in it for me.
Further, a lot of open-source programmers are getting paid. See [1] for Linux, the Mozilla Foundation for their applications, Joyent for Node.js, &c.
StackExchange is a huge network of volunteers helping to answer other people's questions, for no (real) compensation.
They might not be fun for you, but I think there are plenty of people that just like to help other people.
There's volunteering and charitable organizations that do mundane work, right? I guess this is just a different type of public service.
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http://blog.givewell.org/2007/01/16/which-of-these-boasts-is...
http://www.freakonomics.com/2011/06/09/why-ranking-charities...
Of course, this observation is mostly based on larger charities, with assets and property and non-trivial operating costs. I could see how a tiny charity without these burdens could get along fine without.
1) If all products are priced at-cost, and no employees are paid, is that to be assumed there will be no products sold that aren't at least, in part, developed using third parties?
2) If everything is priced at exactly their cost, what costs are factored in to pricing? Do you factor sunk cost, or only COGS?
2.a) If everything is priced at cost, and there is no added price for value, do you expect that every product will sell past its sunk and production costs? If not, who covers the loss when a product doesn't sell enough to meet its cost of production. (For example, some products require a minimum quantity to purchase/build before they are priced at a point the market will accept, to achieve pure cost parity without loss, you'd have to sell every unit in the same fiscal year.)
2.b) If 2.a can be accepted as some products will fail to meet their objectives, who makes up the difference? I.E. who put their money up-front to manufacture the products, and absorbs the loss?
2) Sunk cost. The intention is to factor out wages and profit.
2.a) Maybe use Kickstarter here?
2.b) The community of people who want the product.
If this model is successful, and people begin to see whit537 as a kind of celebrity (like notch or moot) then how would the other employees work their way into the revenue stream?
https://www.gittip.com/whit537/
;^)
Why are you not calling yourself a non-profit?
RE: non-profits ... from the post:
"An open company differs from a non-profit organization in that an open company does not itself accept donations, and it does not compensate its employees. From the open company’s point of view, whether and how its employees receive money and for what, is undefined."
"Non-profit organizations typically fall into one of two categories: public and private. While a public non-profit organization receives the majority of its funding from the general public, a private non-profit organization receives most of its funds from only a few private sources, such as through donations from a single family or corporation."
http://smallbusiness.chron.com/difference-between-public-pri...
Still accepts donations. Still probably has a staff.
Do you have a better link to what you're talking about?
You mentioned in an off-topic comment here in the discussion about being in the Pittsburgh area. May I suggest contacting the Pittsburgh Community Foundation who might be able to share more information with you? They should be able to tell you with more clarity and reference as to why some non-profits are not able to receive donations and are possibly not members of their "community." There are several hundred Community Foundations around the country if Pittsburgh is not accessible to you.
http://pittsburghfoundation.org/
Is that who you are referring to? They do claim to be a community foundation.[0] However, I'm confused, because they also claim to be "a tax-exempt public charity" and that "donors are central to our mission"[0]. They also have a staff.[1]
I'm having a hard time understanding your point, I guess.
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Yes, that is the organization and your points are spot-on. My point was not about the structure of Pittsburgh Foundation but rather related to part of their purpose.
In this particular example, a non-profit may be part of the geographical Pittsburgh community but is not necessarily a member(participant might be a more appropriate word) of the Pittsburgh Foundation "community" which receive donations/grants through them.
So why would a non-profit not be a "community member?"
Go back to my previous post: They should be able to tell you with more clarity and reference as to why some non-profits are not able to (added: or elect not to) receive donations and are possibly not members of their "community."
I do have some other concern which is why is your ethos/structure is posted on a blog and not a more permanent page? If this is to be a working document then please annotate changes or if your intention is a truly "open" company then how about enlisting feedback from potential users some of whom might be lawers or accountants familiar with small business law and also interested in alternative business structures?
If mmahemoff's quote (http://news.ycombinator.com/item?id=4287308) is direct from your page, it shows a revision from what is currently shown and from what I'm going to presume is the original blog post from Google cache.
Quoted in comment from mmahemoff: "An open company differs from a non-profit organization in that an open company does not itself accept donations, and it does not compensate its employees. From the open company’s point of view, whether and how its employees receive money and for what, is undefined."
Current blog display: An open company differs from a non-profit organization in that an open company is not registered as a charity with a government, and does not itself accept donations. An open company also does not have a paid staff, as most non-profits do in practice. From the open company’s point of view, whether and how its employees receive money and for what, is undefined.
Google Cache (http://webcache.googleusercontent.com/search?q=cache:RwFZLSt...): An open company differs from a non-profit organization in that it does not itself accept donations, and it does not compensate its employees. From the open company’s point of view, whether and how its employees receive money and for what, is undefined.
With all of that said, I really like what you're doing here. I just am not able to see how this would be better than a well-documented non-profit or a B Corporation. But I am open to being convinced if there really is a better way to do things. If you want a real challenge and a start-up idea, I'd love to see you tackle a better non-profit transparency mechanism than we have available today with GuideStar and Charity Navigator.
or he really believes this BS and has narcissistic personality disorder