I read this article by Joel Spoolsky about the first dot-com bust and it help crystallized a series of thoughts about the role of venture capital in the development of technology and software, particularly of Internet technologies. Give it a shot. Also, I think Cory Doctorow’s “Other People’s Money," is a helpful contributor to this train of thought.

The question I find myself asking myself is: to what extent is the current development of technology--particularly networked technology--shaped by the demands of the venture capital market? And of course, what kind of alternative business models exist for new technologies?

I guess I should back up and list the problems I have with the VC model. And by VC model I mean private investment firms that invest large sums of money in “start up” companies. Those issues are:

• Breaking even, even in--say--five years, is exceptionally difficult from a numbers perspective, let alone turning a profit of any note. This is largely because VC funding provides huge sums of money (it is after all really hard to give away 20 billion a year in 60-120k a year tops.) and so seed sums are larger than they need to be, and this has a cascade effect on the way the business and technology develops, particularly in unsustainable ways.
• VC-funded start-ups favor proprietary software/technologies, because the payoff is bigger up front, which is often the case. It’s hard to make the argument that you need seed money for a larger, more slow moving product… Small and quick seem to work better.
• The VC-cycle of boom and bust (which is sort of part and parcel with plain-old-capitalism) means that technology development booms and busts: so that a lot of projects tank when the market crashes, and that the projects that get funded during the booms are (probably mostly) not selected for their technological merit.
• VC firms tend to be very responsive to fads and similar trends in the market. (e.g. dot-com bubble, web 2.0, Linux in the mid nineties, biotech stuff, etc.) which means that VC firms generate a great deal of artificial competition in these markets, which disperses efforts needlessly, without (as near as I can tell) improving the quality of software developed (eg. in the microblogging space, for example, the “first one out of the gate,” twitter, “won” without apparent regard for quality or feature set.)

Venture capital funding provides outfits and enterprising individuals with the resources for “capital outlay” and initial research-and-development costs, and in doing so fills an economic niche that is otherwise non-existent, and this is a good thing indeed. At the same time I can’t help but wonder if the goals an interests of venture capitalists aren’t--in some ways--directly at odds with the technology that they aim to develop.

I also continue to question the ongoing role of this kind of “funding structure” (for lack of a better term). I think it’s pretty clear that the effect of continuing technological development is the fact that the required “capital outlay” of any given start up is falling like a rock as advanced technology is available at commodity-prices (eg. VPSs, Lulu.com), as open source software tightens development cycles (eg. Ruby on Rails, JQuery). Both of these trends, in combination with the long-standing problems with VC funding, means that I think it’s high time we ask some fairly serious questions about the development of this technology. I’ll end with the question at the forefront of my thinking on the subject:

Where does (and can) innovation and development happen outside of the context of venture-capital funded start ups in the technology world?

I think I’ve touched on this question before but with the last technology as infrastructure post it seems like another opportunity to talk about the intersections between this topic--thinking about technology as infrastructure--and about the sort of small scale/cooperative economics that I was writing a lot about a couple of months back.

The question on my mind at the moment is, “What do the business models of technology firms look like, in a software-freedom-loving, non-corporate/cooperative-business way?”

And I’m not sure what the answers to this question are. Not really. I’ve been thinking about business models for the producers of software/technology services during earlier moments.

We have the example of the 70s and 80s when the prevailing technology companies were ATT and IBM. ATT made their money selling phone service, and licensing UNIX. IBM made their money selling mainframes. In the eighties and nineties we had the prevailing Microsoft lead “proprietary software licensing” business models, where consumers paid for the legal write to run code on their computers.

In the nineties and early naughties the successful business models were either from people buying hardware (ie. Sun Microsystems and IBM) or people buying support for operating systems (ie. RedHat). We’ve also seen some more stable business models centered around subscriptions-for-services (this seems to be what all the successful startups are doing), and more of the time honored selling hardware, and there are some support-services based companies that remain successful (eg. RedHat), the support market consolidated a lot recently. And it’s not like the Microsoft-consumer model doesn’t still exist.

So when we look at “infrastructural technology” it sure looks like there are some kinds of businesses that will continue to flourish:

• The people making mainframes/servers and the high level computing systems that provide the infrastructure.
• The people who provide the tools that make low level tools successful and useful to users. (eg. What UbuntuOne provides on top of SSH and rsync; What gmail provides on top of IMAP; What MobileMe provides ontop of WebDAV/CalDAV/IMAP).

These strike me as rather conventional business models, given the history. Does infrastructural computing also:

• further the development of subscription-based businesses?
• create a new kind of challenge in customizing solutions for organizations and groups that translate raw resources into “finished output?” Is this too much like IMAP --> Gmail?
• [other possibilities created by you, here]

I’m trying to approach this by asking myself “what creates value in this market,” rather than “where’s the money.” It strikes me that value exists in making systems “work” in a way that’s customized to the task at hand. It strikes me that value is created when individuals and organizations are able to take ownership of their own data and computing. Gmail is valuable, but running my own IMAP server is more valuable. Running my own IMAP server without the fuss of needing to personally manage the hardware and software of the server is even more valuable.

What else does the hive mind have for us?

I’ve been writing for weeks and weeks about co-ops, authentic exchange and commerce, the practice of openness and business models, and other related topics. Between the crashing economy, my ongoing contemplation of open source, and a new project that I’m almost ready to announce, thinking about the substance of economies and the power of economies to define other aspect of our social experience has seemed really appealing. And it has been.

I came across this article by Jason Stoddard a while back, and I’ve realized that I would be remiss in these posts, if I didn’t somehow tie it into writing and science fiction, and Stoddard’s post provides a great hook into this connection. He’s also, basically spot on right.

Interestingly, the beginning of this series grew out of my experiences reading Kim Stanley Robinson’s “Mars Trilogy,” which spent a lot of time (particularly in the last two volumes) contemplating corporations and capitalism. Indeed, in the Mars books, Robinson posits what some readers (without careful examination) might think of as the typical “evil mega-corporations.”

Though I think he succeeds at avoiding the traps of having as villains “scheming business people in suits,” by making sure that none of the executives appear in the stories. The closest we get to having a “corporate villain,” is a character who allies themselves with the corporations for personal advancement. The result is that, the corporations lumber around, always doing the wrong thing, always getting in the way of the main characters, but they never loose the extra-human nature of being corporations.

Maybe that’s part of the problem with writing fiction about corporations. Fiction tends to revolve around people and social systems of comprehensible complexity and corporations are shaped and steered by a great number of people, and there’s too much complexity in corporations to really capture accurately in fiction.

While Stoddard’s argument (Corporations exist to make money, they’re not evil by nature) is factually true and good advice to anyone writing ‘corporate drama’ fiction, I think writers (and the rest of us) might benefit from thinking about some other “nitty gritty” aspects of corporations. Just because corporations may be “generally a bad thing in the world,” difficult to write about, and “not simply evil for the purposes of fiction” nonetheless I think it is important to think about the social/political effect corporations and to write about them in fiction.

The following list is rough, and incomplete, and I encourage you all to help me out in comments!

• Corporations have a few overriding drives: to grow, to make profit (both by minimizing expenses and by increasing revenue), and to continue to exist. All actions and strategies undertaken by corporations should make sense in context of one or more of these drives.
• Corporate cultures are largely self selecting, so “radicals” in corporate settings are really unlikely, either because they’re likely to leave or because their self-interest eventually falls in line with the company’s interest.
• Corporations employ huge numbers of people, but we can assume that the number of people at any given company doing things that support the main mission of a company but that aren’t “the thing the company does.” Phyisical Plant “things,” clerical tasks, human resources, “infrastructure,” operations/financial tasks, internal legal work, and so forth. Probably as much as a quarter or a third of the staff probably falls into one of these categories.
• Corporations are rarely unilateral. Ever. They have many operations, many projects, many divisions, and thus can be resilient to things changing “around them.” This also means that coorporations are less likely to take umbrage at potentially threatening individuals and companies, than a single individual would in a similar situation.
• Career advancement, in companies or elsewhere, generally happens to some greater or lesser extent by moving horizontally between companies rather than “through the ranks.”
• The bigger the corporation the more specialized the roles of the workforce would tend to be.
• For the most part, I think it safe to assume that most corporations don’t have a great deal of “classified” information, or information that’s heavily embargoed. This comes as a great blow to conspiracy theorists, but secrets are hard to keep with regards to projects that a lot of people need to know about, and if all the other things we know about corporations are true (size, attrition, etc.) “great secrets” are unlikely to remain great secrets for long.

In light of all these things I think there are a lot of opportunities for realistic story telling, but it’s not always so straight forward.

In anycase, I look forward to thinking about this some more with you.

One element that has been largely missing from my ongoing rambling analysis of economies, corporations, co-ops, and institutions has been higher education and universities. Of course Universities are institutions, and function in many ways like large corporations, but, nostalgia notwithstanding, I don’t think it’s really possible to exempt Universities or dismiss them from this conversation.

Oh, and, there was this rather interesting--but remarkably mundane--article that I clipped recently about that addressed where universities are “going” in the next decade or two. I say mundane, because I think the “look there’s new technology that’s changing the rules game” is crappy futurism, and really fails to get at the core of what kinds of developments we may expect to see in the coming years.

Nevertheless… Shall we begin? I think so:

• The expansion of university in the last 60 years, or so, has been fueled by the GI-Bill and the expansion of the student-loan industry. With the “population bubble” changing, and the credit market changing, universities will have to change. How they change is of course up in the air.
• There aren’t many alternatives to “liberal arts/general education” post-secondary education for people who don’t want, need, or have the preparation for that kind of education at age 18. While I’m a big proponent (and product of) a liberal arts education, there are many paths to becoming a well rounded and well educated adult, and they don’t all lead through traditional-four-year college educations (or equivalents, particularly at age 18.)
• Technology is changing higher education and scholarship, already, with all likelihood faster than technology has been and is changing other aspects of our culture (publishing, media production, civic engagement, etc.). Like all of these developments of culture, however, the changes in higher education are probably not as revolutionary as the article suggests.
• There will probably always be a way in which degree granting institutions will be a “useful” part of our society, but I think “The College,” will probably change significantly, but I think forthcoming changes probably have less to do with education and the classroom, and more to do with the evolving role of the faculty.
• As part of the decline of tenure-systems, I expect that eventually we’ll see a greater separation (but not total disconnect) between the institutions which employ and sponsor scholarship, and the institutions that educate students.
• It strikes me that most of the systems that universities use to convey education online (Blackboard, moodle, etc.,) are hopelessly flawed. Either by virtue of being difficult and “gawky” to use, or because they’re proprietary systems, or that they’re not designed for the task at hand, all of the systems that I’m aware of are as much roadblocks to the adoption of new technology in education as anything else.
• Although quality information (effectively presented, even) is increasingly available online for free, what makes this information valuable in the university setting, including interactivity, feedback on progress, individual attention, validation and certification of mastery, are all of the things that universities (particularly “research”-grade institutions) perform least successfully at.
• We’ve been seeing research and popular press stuff on the phenomena of “prolonged adolescence,” where young people tend to have a period of several years post-graduation where they have to figure out “what next,” sometimes there’s graduate school, sometimes there’s odd jobs. I’ve become convinced that in an effort to help fill the gap between “vocational education” and “liberal arts/gen ed.” we’ve gotten to the point where we ask people who are 18 (and don’t have a clue what they want to do with their lives, for the most part) to make decisions about their careers that are pretty absurd. Other kinds of educational options should exist, that might help resolve this issue.

Interestingly these thoughts didn’t have very much to do with technology. I guess I mostly feel that the changes in technology are secondary to the larger economic forces likely to affect universities in the coming years. Unless the singularity comes first.

Your thoughts, as always, are more than welcome.

Recently, Canonical Ltd., the company which sponsors the Ubuntu family of GNU/Linux distributions recently announced the UbuntuOne service, which is at it’s core a service that allows users to synchronize files between multiple Ubuntu-based machines. Having your files sync between multiple machines is a huge feature, and the truth is that there aren’t really good solutions that accomplish this task, for any operating system. At the same time there’s been a lot of hubbub in the community over this release. It’s complex but the issues in the complaint are:

1. UbuntuOne is a non-free project, in that, the software that’s powering the service (on the servers) is not being distributed (in source, or binary) to the users of the service. While the client is being open sourced, the server component is crucial important to users' autonomy.
2. Ubuntu, if we are to believe what Canonical says, is the name of a community developed Linux distribution based on Debian. Canonical, is a for-profit organization, and it’s using the Ubuntu name (the trademark to which it owns) for a non-free software project.
3. Canonical has also gone back on a promise to release the software that powers LaunchPad under the AGPL. While this isn’t directly related to the flap surrounding Ubuntu One, it allows us to (potentially) contextualize the ongoing actions of Canonical with regards to network services.

My response comes in three parts.

Part One, the Technology

File syncing services are technologically pretty simple, and easy to create for yourself. I use ssh and git to synchronize all of my files, data, and settings between machines. I keep the sync manual, but I could automate it pretty easy. It’s not free, I pay a small monthly fee for some space on a server, but it works, and I have total control over the process.

Granted, my solution is a bit technical and requires some babying along, and works because 95% of my files are text files. If I had more binary files that I needed to sync, I’d probably use something like rsync which is a great tool for keeping large groups of files synchronized.

In fact rsync is so good, you can probably bet that UbuntuOne is using rsync or some rsync-variant (because it’s GNU GPL software, and it’s good.) If you’re running OS X, or any GNU or Linux based operating system then the chances are, you’ve already got rsync installed. Pulling together something to keep your files synced between more than one machine just requires a few pieces:

• something that runs on your computer in the background that keeps track of when files change so that it can send the changes to the server. Conversely this component can also just run on a timer and send changes ever x amount of time (five minutes? if the computer isn’t idle.)
• something that runs on the server that can send changes to other computers when the other computers say (“Has anything changed?").

Done. I’m no programmer--as I’m quick to attest--but I think that I could probably (with some help,) pull together a tutorial for how to get this to work in a few hours.

Part Two, Trademarks, Centralization and Community

I think a lot of people feel betrayed by the blurring of this “thing” that a community has built (Ubunutu) with Canonical Ltd.

Which is totally reasonable, but this is largely an orthogonal problem to the problem with UbuntuOne, and I think is a much larger problem within the free software/open source/crowd sourcing world. This is one of the problems when entrusting trademarks and copy rights to single entities. In a very real way, Canonical--by using UbuntuOne--is trading on the social capital of the Ubunutu community, and that leaves a sour taste in a lot of peoples mouths.

But the issue of ceding control over a name or a product to a centralized group, is something that we have a lot of experience with, with varying results. Some thoughts and examples:

Here’s one example: There’s a huge “open source” community that’s built up around the commercial/proprietary text editor TextMate for OS X. While I think TextMate is really great software, and the TextMate community is made up of really great people, TextMate is largely valuable because of the value created by the community, and it exists (tenuously) on the good graces of the owner of the TextMate intellectual property. While Alan is a great guy, for whom I have a great deal of respect, if anything were to happen to TextMate a lot of people would find that they had nothing to show for their energy and efforts in the TextMate community.

Similarly, MySQL AB (and later Sun Microsystems and now Oracle) owns the entire copyright for the MySQL database, which isn’t (or wasn’t) a major issue for most developers in the early days, but now given the sale of that company (and it’s copyright holdings) puts the development of that code-base into some doubt. I’ve seen, as a result, much greater buzz around the PostgreSQL project as a result of this doubt, and I think this kind of fall out serves as a good example of what can happen to a community when the centralized body fails to act in the interests of the community, or even threatens to.

This is a huge issue, in the whole “web 2.0”/mashup/social networking/social media space. The logic for the proprietors of these sites and services is “build something, attract users create a REST API that makes it easy for people to develop applications using our service that add value to our service, attract more users, stomp out competition in the space, profit.” This is basically, the Twitter/Facebook/ning business model, and while it works to some degree it’s all built upon: stable APIs and the enduring good will of the community toward the proprietors of the service. Both of these are difficult to maintain, from what I’ve seen, as the business model isn’t very coherent, and requires the proprietors to balance their own self interest, their community’s interests, and find some way to profit in light of an unstable business model. It’s tough.

Part Three, Business and Free Network Services.

I’ve been treading over ideas related to free network businesses and cooperatives and software freedom for weeks now, but I swear it all fell into my lap here. Some basic thoughts, as conclusion for this already too lengthy essay:

• The UbuntuOne service, like most free network service, is at it’s core providing a systems administration service rather than some sort of software product. The software, is relatively trivial compared to making sure the servers are running/accessible/secure
• The way to offer users' autonomy is to develop easy/free systems administration tools, and to educate them on how to run these systems.
• Corporations, while important contributors to the free software community, also inevitably serve their own interests, while it’s disappointing to see Canonical go down the proprietary track, it’s neither surprising nor a betrayal. Canonical has put on a good show and accomplished a great deal, but in retrospect we can imagine a number of things that they could have done differently from way back that would have changed the current situation. (eg. Worked within the Debian Project, developed a tighter business model, etc.)
• Free software, is very pro-business, but it’s not very pro-big-business, as “native free software business models” are built on personal reputations rather than tangible products. It translates to making an honest living pretty well, but it doesn’t convert very well into making a lot of money quickly.

Anyway, I better get going. Food for thought.

As I mentioned in my link collection post, my thinking about co-operative economics has taken a brief foray into the area of leadership and governance, both on the small scale (eg “How do we organize our project, to acomplish our goals”) and on the larger scale (eg. “How do provide institutional support for the governance of our civilization”). Both are important and relevant questions, but it’s all complicated of course. Also, we should probably start of with a brief interlude of what an individuals labor/work activity might look like in a post-corporate economy, and then I’ll move into two interludes about leadership and government. Seat-belts fastened?

Post-Corporatism and Labor

We’re seeing some post-corporatism in the forum of an explosion of freelance and independent consultancies of various stripes and colors. Some key observations:

• Many if not most people working in this don’t work full time for one employer, splitting their time and energies between a number of projects.
• Freelance work allows people to develop flexible careers where growth isn’t dependent on moving into management careers.
• Traditional “benefits” of employment (eg. health insurance, office resources, data connectivity, etc.) are increasingly procured either through ad-hoc agreements: eg. Marriage for health insurance, Co-working spaces, “Freelancers' Unions” and so forth.

Leadership and Co-Operative Governance

The question that I think I’ve failed to really address in during all of this “co-op” conversation is If corporations are replaced by cooperative organizations, how are projects managed and where does leadership come from? Indeed one of the biggest benefits/strengths of the corporation (top-down) model, is that corporations are really (or at the least reasonably) well organized and constituted, so if we’re doing away with the corporation, how do we remain organized and productive.

I should, as an interlude, reiterate that I’ve advocated for cooperative organizations on the basis that they’re more effective at creating real and authentic value, than the American/multinational corporation as we now know it. Furthermore, I’m totally convinced in the necessity and utility of effective leadership and management, for our productivity. The post-corporate economy isn’t a world without management, but rather a world with a smarter, more distributed system for management.

Part of the distribution of management comes from the fact that labor itself is to be more distributed. Just as we bring on engineers, artists, manufacturing in an often ad hoc way, we might also bring on project management and other “logistical professionals” to promote productivity. (Remember that coops are organizations that are unlikely to involve the direct labor of more than 100 or 150 people at any given time.) Higher level administration and guidance can be provided by small elected/nominated executive councils (a la, the KDE project, the Squeak Project, or the Debian Project) or in the “benevolent dictator” model (eg. Linus' for Linux, Larry Wall for Perl, Guido for Python, Dries for Drupal, Matt Mullenweg for WordPress, Rasmus for PHP, etc.)

Another “inherent” solution for providing management derives from the fact that cooperatives have a more pervasive project-based and goal oriented focus. Cooperatives, then, like open source software development projects, work on making something of value, (or providing valuable services,) don’t need to expend resources maintaining solubility. When a co-op finishes it’s project, the members move on to other projects and co-ops.

I think creative thinking about leadership in new environments requires a few basic assumptions:

• Democracy is created by participation rather than by elections.
• Management/logistical overheads grow geometrically while operations grow arithmetically.
• Co-ops would exist to both create value, and serve the interests of its members. Corporations exist to serve the interests of the investors. The dissolution of a cooperative isn’t antithetical to the purpose of a cooperative in the way that it totally antithetical to the purpose of a corporation.

Land and the Problem of Government

I’m persistently convinced that the “State” (as in the United States) or province (in the Canadian/Australian sense) is probably a really ineffective way to organize and structure a government. A lot of the people who are object to the American government advocate for states-rights and taking power and authority from the federal government and handing it to the states (eg. Libertarians). This has always struck me as sort of foolish.

Not because I think local control is a bad thing, or I have any great love of the institutions of liberal democracy, but rather because States themselves fail to convey meaningful/practical/useful administrative or political units. A co-operative ethos would require (and need, though not--strictly speaking--depend upon,) a system where institutions and governance transpired along meaningful and practical political units.

Greater metropolitan areas make sense as administrative units (including those that straddle existing borders) in a way that states themselves don’t really. Gary Indiana and the City of Chicago have a lot more in common than Chicago and Carbondale Illinois. At the same time there’s a big problem with the city-state, as “the unit of government:” it fails to account for, integrate, capture, and empower people in less urban areas. Which is given the importance of food, is incredibly crucial.

I’m interested in thinking about how, particularly with new technologies, we might be able to conceptualize geographically based political units that integrate populations that fairly represents the interests/needs of people who live in areas with lower population densities.

Here’s another in the train of posts about economics and sustainability. I started with meditations on cooperatives, and openness and martian economics, and then business in network service. And finally, a brief thought on the state of contemporary marriage. This post takes a step back so that I can talk about what I mean by sustainability, which I think requires a bit of a sidestep into thinking about ecology and the environment.

Sustainability, as I’ve come to think about it seems to be more about directing economic activity toward independence, an self sufficiency rather than toward “growth,” (the for-profit model) and charitable/philanthropic goals (the non-profit model).

No sooner do I say this, and I realize that being a proponent of sustainable approaches to economics makes me seem like something of an economic isolationist, and I think that’s the wrong direction. The problem with sustainability isn’t just that it’s hard to accomplish in pragmatic terms, but also hard to think about. We simply don’t have structures or models for people and groups who want to make an honest living creating new things (eg. fiction, computers, cabinets, software, agriculture/comestibles, pharmaceuticals, plumbing, newspapers, etc).

Sure, we know how to make things, and most of us manage to make a living at it, but our economic models rely on lots of growth and expansion in order for capital to be available (cite: current economic crisis). The missing piece--it seems to me--is a more systems-based approach to economic development and corporate organization.

Sustainability is, after all, an ecological idea and in this context. And discussions of the environment and ecology seem way more focused on sentimentality, hydrocarbon intput/output, and humanity’s impact on the environment in the context of our existing (non sustainable) business practices and not enough time thinking about our business practices in environmental terms. But taking an “ecological” approach to economics signifies (in my mind) attention to the economy as a whole, and sustainability as a practice, and that seems like it would be a good thing.

In the Mars books (which have been quite influential in this series) a few characters float the notion of an “eco-economics” where currency (such as it exists), are based on caloric input and output. Which is a nifty way to think about it. The strongest part of the martian government (near the end of the series) is a regulatory “environmental court” that attempts to manage the ecological/economical activities on a global scale. They’re reasonably effective at this.

I return the Mars books because they’re fresh in my mind, and because they present a possibility that’s both radically different from our current system and that attends to the weight of our history. I don’t think that the Robinson-Mars solution is the answer to our economic problems but it does force us to say “20th centry growth-levels are unsustainable, and undesirable,” and that “from a systems-based approach (if no other) capitalism is unstable.” And that’s a useful thought exercise.

As is the project of thinking about economics in environmental terms. Not because it will diminish human impact on ecologies--though it may--but because that sort of systems approach will lead to more sustainable economies and better lives for all parties to that activity--human and environmental.

That’s a worthwhile goal.

A (gay) friend was talking about the ongoing drama of his parents (decades old) divorce. I said, “I don’t get this whole [gay] marriage thing.”

“Right,” he said.

“I mean, whatever, but I think we need to work on convincing straight people to not get married rather than convincing states to let us get married,” I said.

“It’ll never happen,” he said.

“Right, besides we’d need better Corporate law, and good luck seeing that happen,” I said. “I mean what we really need are ways to incorporate sustainable co-operatives without the concepts/burdens for-profit/non-profit entities.”

Which is, if you’ve ever wondered, what its like to live in my head.

When we get down to the heart of the issue, marriage has a lot to do with inheritance, powers of attorney, legal agent-representation stuff (is that different than powers of attorney), relationships and families are orthogonal.

This isn’t to say that either the importance of the combined legal entity of a married couple or the legal recognition of a relationship/family isn’t a valuable institution, but marriage seems to be a poor implementation of either and both.