Coderwall open-sources codebase and business model | Hacker News Reader

Coderwall open-sources codebase and business model

hackernoons.com

116 pointsawwstn28 comments

I'm liking this new trend of completely open source companies (e.g. Code Combat). I feel as though this it will either work immensely well or be a complete failure. It'll be interesting to see where it goes.

On a side note, are the legalities of sharing ownership in the revenues of Coderwall through App Coins clean? Does it exempt Coderwall from SEC regulations?

You bring up great questions, like cfield below. To be clear, Assembly App Coins are not securities. For the moment they only determine an individual's royalty payout when there is revenue. They can't be purchased by outside investors or transferred to other individuals that are not in the product's "partnership".

You can only earn Assembly App Coins when you participate in building the product, and effectively joining the product's partnership. This would be similar to how a law firm partnership is structured.

I think not being able to transfer or to resell is the right thing to do..

The "money generate more money" circle is not possible.. instead it would be always a virtuous cycle of "work generate value that can be convertible into money"

I like that they open sourced the code, although I think the license is a little restrictive.

I try to run all my companies as FOSS companies, as I believe that it's practically impossible to create a competitor just by forking the code. Much of the work in any code base comes not from the programmer, but from the community that interacts with the system as a whole. Even if a part of the community forks there will be different needs and requirements in the different communities which will mean they diverge as they address different niches.

The non-commercial clause indeed violates the Open Source Definition. They are NOT Open Source.

This is a little bit spooky when reading through https://assemblymade.com/help/basics

From the FAQ: Assembly owns the intellectual property on behalf of our members, because that’s the best way to protect your interests. However, Assembly also recognizes that our members should have the right to use their ideas in other contexts. As a result, we give our members a license back to their content to give them the flexibility to use their intellectual property in non-commercial ways.

There really isn't another way to do it for Assembly that I can see. They are the responsible entity that pays for infrastructure, assume the legal liability, provides the platform, provides the payout process.

They need control of the IP as part of that process and serve as an arbiter in the event of disputes.

Is it necessary to only license that IP back in non-commercial ways?

Technically? No.

Practically? Yes.

Otherwise, nothing would stop a contributor from cloning the repo on GitHub and running a competitor without paying any of the other developers.

Wouldn't that also stop the team from moving away from Assembly? It seems to me that the projects are permanently owned and bound to Assembly in perpetuity. That appears to be some serious lock in.

Of course it is. That is how all such business agreements work.

Replace Assembly with any Corporation or LLC in existence, same principle and behavior.

I'm not sure why you find this surprising or spooky.

The standard practice of any Corporation or LLC that provides a service to distribute revenue based on contributions is to own and control the projects entire IP?

What happens if Assembly goes into bankruptcy and has to liquidate its IP? What if Assembly decides to shutdown a project because it has issue with the content/business? Can the project move onto another platform or can Assembly effectively shut it out of existence? What if Assembly decides to sell/transfer the IP to another entity for a fee?

I should add here that Trademarks are IP just as much as source code.

For example in https://assemblymade.com/terms the lawyers decided this needed all caps(in legal terms "conspicuous"). COMPANY is defined earlier with this snippet: Assembly, a Delaware corporation, and its corporate affiliates (collectively referred to herein as “Assembly”, "us", "we" or the "Company"). Section (V) is of particular interest.

THE SELECTION, DEVELOPMENT, AND SALE OF ANY APP IDEA IS SUBJECT TO THE COMPANY’S SOLE AND ABSOLUTE DISCRETION AND THE COMPANY RESERVES THE RIGHT, FOR ANY OR NO REASON, TO (I) REJECT ANY SUBMITTED APP IDEA, (II) REFUSE TO POST ANY SUBMITTED APP IDEA TO THE SITE, (III) TERMINATE THE DEVELOPMENT OR ANY PHASE RELATED TO AN APP IDEA, (IV) TERMINATE THE SALE OF ANY COMMERCIALIZED PRODUCT RELATED TO ANY APP IDEA, OR (V) SELL OR LICENSE AN APP IDEA, AND/OR ANY INTELLECTUAL PROPERTY RELATED THERETO, TO ANY THIRD PARTY.

And some more all caps(aka "conspicuous"):

YOU AGREE THAT COMPANY WILL NOT BE LIABLE TO YOU OR ANY OTHER PARTY FOR ANY TERMINATION OF YOUR ACCESS TO THE SITE, CONTENT OR MATERIALS.

I don't work/use Assembly so...I can't really answer the rest but:

> The standard practice of any Corporation or LLC that provides a service to distribute revenue based on contributions is to own and control the projects entire IP?

That isn't what I said. What I said was if you want the Corporation/LLC to handle legal liability, accounting, etc. the norm is for it to control the IP. I'm not a lawyer, I don't know if its possible to do it differently.

Based on that & your profile saying:

> I don't take HN all that seriously so I wouldn't read into my activity too much.

I'm just going to assume you are a troll at this point.

This is a very neat idea and I hope it works out for you. :)

That said, helpful.io is priced high relative to its competition and I worry that this business model really will only work for advertising/etc supported products rather than SaaS.

(Disclosure: Helpful Core Team) Pricing is always difficult and has been a long ongoing discussion for us: https://assemblymade.com/helpful/search?q=pricing. It's always up for debate and if you have a strong opinion you should jump in and start a discussion :) I'd love to hear more about why you think it wouldn't be good for SaaS.

I'm not a developer working on Helpful [I also don't plan to start since I'm focused on other things] so I don't really feel comfortable debating it and trying to lobby for change.

I mainly look at Assembly as a nice idea I hope works out well for everyone involved.

Since you asked:

You are basically charging $200/month per agent [assuming 160 hrs/month and 1 conversation completed per hour of agent-time].

Random Competitor: http://freshdesk.com/pricing [$70/agent/month for all the features]

Realistically, someone would probably only pay for the $25/agent/month plan.

It seems you've gone the "Well, metered pricing is good for developers" route without considering the competition is priced cheaper and has a real marketing budget. While competing on price is generally what you don't want to do, charging almost 300% to 800% more for a similar product isn't something I see as financially viable as a business model.

Here is to hoping I'm wrong. :)

That's really interesting, you make a great point. I hope you don't mind, but I started a discussion for this: https://assemblymade.com/helpful/688. Really appreciate the feedback!

Thanks!

I don't believe their pricing is final but you should jump in then and let those building Helpful know your thoughts :-D

Jumping into the product's chat (https://assemblymade.com/helpful/chat) is a good place to start

This is so great. Those kind of application are real web app. By reading the code, non RAILS dev like me can understand how thing really done at the company other than reading some book or tutorial Thanks.

> Instead of employment contracts, people should be able to work when they want, how they want, and where they want... We call it crowd-founding.

Investors get to diversify their investments but founders usually are bound to the success of one company. If people could really do "crowd-founding", they could diversify into many different projects.

Q: Successful startup require one group focused just on the startup.

A: Perhaps a startup could have a core team and a larger group of crowd-founders (who could also be crowd-funders) to help with other aspects.

Q: How would equity be allocated fairly?

A: This would need to be dealt with, but as mentioned in the post, it could be "determined by the community" in some way. Also, if the founders are funders, they will be willing help out like advisors do, even without additional equity.

Good points. Each product on Assembly has a Core Team, which takes the lead on vision, quality, etc.

The Assembly Getting Started page (https://assemblymade.com/getting-started) covers a lot of this. Here are some relevant bits from that page:

Collaboration

Assembly apps are built by everyone, and like successful open source products, each app also has a Core Team of contributors. The Core Team influences the vision of the app and the standards for quality, and determines which contributions are accepted. It consists of the most active and respected contributors on the app. The Core Team may comprise the original creator, Assembly staff members, and members of the community who help make the product a reality (that’s you!).

Some people work on Assembly projects for just few hours a month. Some put in 40 hours a week. It’s up to you to work on what you want, when you want, where you want. The best part is that if you step away, the project keeps moving forward.

Ownership

The ownership of an Assembly product is distributed through App Coins. App Coins can be earned primarily by contributing to a product (design, code, copy, etc.). You can also receive “tips” in the form of App Coins when you provide insight, advice – or simply make someone laugh.

When an app launches and starts earning money, the profits are split each month among everyone who helped build it – based on the percentage of ownership each person has.

While the emphasis is on collaborating to create apps with sustainable earnings over the long term, people also occasionally ask about acquisitions. The answer is, if a company offers to acquire an Assembly product and the product’s core team decides to accept the offer, that income would be distributed (after expenses are paid) based on App Coin ownership, just like any other revenue.

Interesting idea. I didn't dig into how App Coins work and how allocation of revenue works. But my instinct is that it could very easily implicate state and federal securities laws.

Thanks cfield! I appreciate your perspective on this and we've spent a lot of time getting the legal structure right.

The App Coins are a way of determining royalty payouts for now. The only way to earn them is by participating in building the product, and effectively joining the product's partnership. This would be similar to how a law firm partnership is structured and is why these are not securities.

Assembly App Coins can't be purchased by outside investors and Assembly App Coins can't be transferred to other individuals not in the "partnership".

With securities laws, substance often trumps form and much ink has been spilled on what constitutes a security. Even a partnership interest can be a security (often turning, in part, on how much real control a partner has).

I have no doubt it is possible to design a system that navigates the treacherous landscape of the securities laws, and perhaps you have done that. I just note that securities laws are one of the design constraints you'll need to account for. It sounds like you've made an effort to do that. I would certainly encourage you to get some expert help in this area when it’s the right time to make that investment.

Good luck!

This is a very interesting idea and the App Coins rewarding system seems to map well with design/development and other one-time activities.

I wonder if it will be a good fit for those continuous tasks required once a product is ready for the market (e.g: marketing, customer support, operations...), or if those roles will involve regular hiring/salaries.

I'm interested to see how this plays out. My gut says it will fail because the risk/reward for contribution mix it incorrect, but I'm glad to see someone trying.

For a more realistic (and legal) approach to crowd-founded companies, take a look at SlicingPie: http://slicingpie.com/

The devil is in the details.

1/ How much Coins per commit will somebody get? It's totally subjective and decided ex post. How do you compare a patch with 300 lines of code to a bugfix that touches just one character? Or to a comment that sheds light on an important issue?

2/ How do business owners submit profits? Even if they are totally honest people - we live in a complex world where it might be very difficult to separate profits of one App from another.

All in all it seems to me that this is a great way to exploit young developers that want to learn but don't know their value yet. The Coins system tries very hard to give impression that it is fair. It's not.

The fact that I don't own my contributions is a total show stopper for me.

I like the overall idea - just not this particular iteration of it.

This is not Open Source by the OSI definition, nor Free Software by the FSF definition. They have a problematic non-commercial license clause. So this is published source with some permissions that remains proprietary.

Reply on news.ycombinator.com