Tag Archives: business

Open source is debt

An idea I’d like to throw in the wild.

Open source is software businesses use to shorten time to market and accelerate their product. Some businesses build and collaborate in public because it’s a leverage strategy to get more from less. Most businesses maximize their use of open source software because they get it for “free”.

Debt is the financial term, stolen for the sake of illustrating a concept.

Open source is debt because:

  • Open source software is not a sellable asset. It’s both priceless and devoid of monetary value. What counts is the business value it enables.
  • The liability, and effort required to service this liability, grows as: 1) the software gains users, and 2) those users become more dependent the software. Support is a variable accelerant to the liability (e.g. it can grow the liability at an exponential rate).
  • Maintainers hold the debt liability. Their ongoing labor is required to service the debt. Typically, maintainers can only escape the obligation by declaring bankruptcy: “it’s done” or “I’m done.”

This idea could be helpful framing for:

  • Businesses to understand their dependency on open source in CFO-friendly terms.
  • Communities to understand the debt burden carried by maintainers, and general health of the project.

Another, possibly more correct, way of thinking about this is: “every line of source code, open or closed, is a liability.” Businesses own 100% of their closed source liability. They like open source because they would rather own 0% the liability.

In-person interactions are highly underrated

Casual human interaction gives you lots of serendipitous opportunities to figure out that the problem you thought you were solving is not the most important problem, and that you should be thinking about something else. Computers aren't so good at that. 

Essays from Peter Thiel’s Stanford class on startups

Essays from Peter Thiel’s Stanford class on startups. In a nutshell, freely available material like this is why I am a college dropout. Every essay is worth reading — queue up your Pocket. I particularly appreciated this one on markets, competition, and monopolies. (via Spittle)

A Capitalist’s Dilemma

In the last three recoveries, however, America’s economic engine has emitted sounds we’d never heard before. The 1990 recovery took 15 months, not the typical six, to reach the prerecession peaks of economic performance. After the 2001 recession, it took 39 months to get out of the valley. And now our machine has been grinding for 60 months, trying to hit its prerecession levels – and it’s not clear whether, when or how we’re going to get there. The economic machine is out of balance and losing its horsepower. But why?

The answer is that efficiency innovations are liberating capital, and in the United States this capital is being reinvested into still more efficiency innovations. In contrast, America is generating many fewer empowering innovations than in the past. We need to reset the balance between empowering and efficiency innovations.

Clayton Christensen — A Capitalist’s Dilemma

Everywhere at Once: Chef Geoff Tracy’s Data-Driven Empire

Did Elizabeth bring your Pinot Gris within three minutes of the time you ordered it? Were your appetizers delivered within seven minutes, entrées within ten, desserts within seven? Were these plates described at the table before they were set in front of you? Were napkins refolded when you went to the restroom? Was non-bottled water referred to as “ice water” (correct) or “water” (incorrect)?

Everywhere at Once: Chef Geoff Tracy’s Data-Driven Empire

Matt Haughey’s lessons from a 40 year old

I like to think of funded startups vs. bootstrapped web sites like the split between signed and unsigned bands.

Think about what a band has to do if they sign with a major label. They write music, perform/record it, and play it. Now think about people like Prince, Aimee Mann, etc. that do every single aspect of their music themselves. They have to create and record and distribute music, but also book tours and hotels and hire roadies and even oversee building websites. On the positive side, those going their own way talk about making more money from lower record sales than they did on a label, even though they do a significant amount of work.

So it’s a lot of work, but I would argue it’s totally appropriate for anything that isn’t a huge world-changing idea. And there are a lot of benefits that come from it.

Matt Haughey — My Webstock Talk: Lessons from a 40 year old (now with transcript).

Alex Payne on the process cults

When I look around the world, the businesses that dominate don’t seem to be the ones that formed around process as a rallying cry. Rather, they adapted processes to bolster world-changing, market-creating ideas. The world doesn’t need a lean startup, or a developed customer, or a REWORK’d business; it needs solutions to problems, magic where previously there was darkness. How that magic happens is interesting and maybe even useful as a basis for other people running businesses to compare to, but it’s not a recipe for success.

Alex Payne — On Business Madness