I read this post by one of the partners in one of the coolest web services around, you should open that in a new window and then come back.

Back? Great!

Lars, proposes crowd-funding as a way to support free software development. Basically, run a “sponsor me to develop stuff” program, but rather than fund free software as a start-up around a single project or work for a big vendor.

It’s a nifty idea, and it’s got me thinking about micro-entrepreneurship. This would be where you make or do things, but not on a big scale. The businesses you create are small, and probably aren’t completely full-time equivalent, but in aggregate it’s good enough. While this is not the most prominent form of entrepreneurship on the internet, my sense is that it’s way bigger than most people think.

We’re too used to seeing multi-million dollar venture capital fund raising, IPOs, big acquisition deals, to realize the multitude of people who are making a few to several tens of thousands of dollars doing much smaller amounts of work.

I suppose I could write a whole post on good enough economics in the vein of this post on patronage from JamesGovernor but I’ll just leave a place holder link to a wiki page, in case someone else wants to fill things in.

Thoughts:

  • Service-businesses don’t scale particularly well, any individual work can only produce so much work, and it’s hard to make individuals any more productive. In light of that, large service-based firms are unlikely to form.
  • Most people have pretty specialized skills and abilities. Self-employment, particularly full time employment makes it difficult for people to spend most of their time doing what their best at. Specialization and differing skills is also what creates a market for service-based endeavors.
  • Lacking health care and other benefits of traditional employment, it’s hard for people to be more self-employed and less conventionally-employed. Given this, doing entrepreneurial projects on a smaller scale makes more sense.
  • Some kinds of entrepreneurial activities are attractive because, while they may not produce the same level of income as a salaried position, they allow more freedom and flexibility. This is the conventional justification for self-employment, and also the reason that most aligns with the “good enough” policy.

The problem with these kinds of “little businesses,” is that it’s too easy to focus on income earning work (e.g. freelance, and client work,) at the expense of doing basic work (e.g. developing core free software, doing basic research, writing fiction.) While the crowd sourcing notion makes a lot of sense, it requires a lot of faith in the crowd. I’m also unsure of how sustainable it is: while individuals can justify small amounts of money for such purposes, organizations cannot. Without organizational support, revenue is much lower, and it probably puts the larger financial burden on the smaller users, relatively speaking.