Responding to Ben Werdmuller: Open issues: lessons learned building an open source business

Ben Werdmuller posted a great, detailed essay on his experiences building the Known open-source, personal publishing application and turning it into a profitable business, and then asks some tough questions about the viability of open-source as a business. What a read for a Saturday! The entire essay is excellent; I’m sure he rewrote it many times in his head as he continued to push Known forward. If you are in any way interested in the success of open-source, or the avoidance of surveillance marketing, it’s a must read.

Ben’s a friend. I understand his frustration. I sometimes feel the same frustration creating open-source software myself. But I think the picture is a bit more nuanced. So I have three points in response.

1. As Doc Searls once said, “you don’t make money with open-source, you make money because of open-source”. It’s not as glib as it sounds, it’s worth thinking about carefully. What Doc is saying is, and I’m paraphrasing: “if you want to have an open-source business, keep in mind that the open-source software will not just be free as in libre, but also free as in beer. You cannot assume that you will ever derive a dime from it. The better question is: given the existence of certain open-source software, what businesses could you be in that you couldn’t be in if it didn’t exist?”

This means that Google is an open-source business, and Amazon. Neither of them could have gotten started if major amounts of open-source software hadn’t existed already at that time. The licensing fees would have killed them before they got started. So these are amazing businesses that make money because of open-source, not with it. That is the way to make money with open-source.

Of course, us open-source geek types think “there must be a more direct way of monetizing open-source code, than being a search engine or a retailer; that’s not what I want to do, I want to develop open-source code.” But just because we want it to exist, it doesn’t mean that it will exist. As Ben correctly notes, the number of businesses who get close to making money with instead of because of open-source is very small. I would argue, it is actually zero. Red Hat, for example, is not an open-source company, it is an enterprise software company that just happens to sell software (some of which) is open-source. They use open-source as a competitive differentiator, but that’s all. WordPress is a hosting company. IBM a consulting company. And Canonical — I’m not sure they know it themselves; a PC manufacturer sub-contractor perhaps?

Of course if you accept Doc’s view that you can only money using open-source in an adjacent business, the #1 question becomes: why should it be you who writes the open-source software and incurs all that development cost? The management consultants would insist you enter a business that leverages open-source software that exists already! And they are (mostly) correct. In fact, many companies use that strategy. Canonical — which essentially rebranded debian as Ubuntu — is a good example. But of course Google and Amazon are even better ones.

2. Dollars vs the commons. Well-functioning open-source communities are totally amazing. Everybody shares. Everybody answers questions to the best of their ability, and many open-source developers have amazing ability. The kinds of people who answer your (stupid) questions are people that you could never, ever reach, as a customer of a proprietary company, unless you’d bring in millions of dollars in revenue. This kind of thing happens in very few places in the world other than open-source development, and it’s the kind of world I’d like to live in. Not only that, arguably the value that is being created is higher than it would be in a more proprietary setting (because nobody pays attention to or incurs cost from shuffling dollars around.) So what’s not to like?

Unfortunately, there are bills to pay, and that harsh reality decidedly inpinges on one’s lofty aspirations. I’ve had some of the same experiences Ben has had … one day I had a hard time keeping myself from shouting, in e-mail: “really, you think I should fix your terrible PHP so you don’t need to go through the bother of learning how to write code, and you think that somehow is my obligation?” What the …

What I (try to) do is very simple: ignore the leeches. I’ll gladly help anybody who is part of the same cause (say, open-source) and actively produces. Well, within reason and ability. And I try to give back as much as I can to communities that I have benefitted from myself. In other worlds: reciprocity.

I’m sure that back in the days of the Boston Commons, and other common pastures that were the inspiration for more creative commons today, people who benefited from the commons also were strongly encouraged to contribute to the commons. Strangers, I’m sure, would not be allowed to bring their sheep to graze, never to be heard from again. We need to do the same thing in our kind of commons, except our critical resource is time, not grass. Of course, freeloaders will try to freeload. It’s up to us not to let them.

3. The overlord elephant. When reading Ben’s piece, I kept wondering how many of the challenges with Known are actually directly related to it being open-source. I think many of them — particularly thes ones related to money — could just as well apply to a Proprietary-Known.

The question for me here is this, and I do have a very direct personal interest in this question: how can companies/projects fund themselves adequately that do not track, do not surveil, and generally do not screw their customers, like Known is trying to do? If customers, for example, are generally unwilling to pay money for sites that are on the web — e.g. because publishing, or social networking etc does not have enough value for them to be willing to shell out their hard-earned money — and of course because overlord alternatives like Facebook are free — how will we ever create a future that is not positively Orwellian?

I do not have an answer to this one. But I have a hunch: Facebook now generates $10.49 in revenue per user per quarter in North America, mostly from vendors who want to put ads in front of users. This kind of number would more than pay for projects such as Known. What we, as a community, haven’t figured out is how to get a hold of (some of) that money without screwing our users. But, my hunch tells me that it can be done, it’s just a matter of time until we crack the code.

On that positive note, Cheers Ben, and good night!