I like the idea behind Gittip, but I think this is bullshit: "company are developed for the benefit of society as a whole, and not just the mutual benefit of the members of the cooperative" Most companies are developed for the society and for people and most advances in human history have been done by for-profit organizations. Even the ideas in capitalism (as stated in e.g. Wealth of Nations) are grounded in benefits for the society and for the people.
My point about benefit to society vs. mutual benefit was a technical one about the definition of an open company vis-a-vis the definition of a cooperative, "an autonomous association of persons who voluntarily cooperate for their mutual social, economic, and cultural benefit"[0]. It wasn't meant to be ideological.
I love cooperatives. I started one: an organic produce growers' cooperative. I also love Wealth of Nations, and I love capitalism. The company behind Gittip, Zeta Design & Development, LLC, was started in 2002 as a for-profit company and was run that way for a decade. Here's me praising corporations:
Most real-life applications of discoveries that advanced humanity have been done by for-profit organizations. Applied science.
Most advances in human history have been done by individuals who were simply passionate about a topic, and they did not do it for money. Theoretical science.
Although honestly, I think we shouldn't talk about "most" throughout history, because democracy/free trade/capitalism is pretty new, so we need to normalize for that.
Google: 2 guys doing a PHD, work on their thesis, not for money (Theory). They later realize they could turn this into a business (Application).
Programming language, OSS, and platforms: A few friends or a lone guy/gal know they can do something way better or create a programming language or a database system more powerful than what is out there (Theory). Millions of other programmers use the language, tools and build powerful businesses such as Facebook and Twitter around it(Application). This is probably why you can do a startup today for $0 upfront cost.
I doubt Einstein spent countless hours working his brains off for money, Darwin did not go across continents to study the origin of species for money, Bethoveen did not write symphonies solely for money. Yet many other talented individuals have used their findings and made loads of money along the way.
Considering Googler guys never even published their thesis... they went commercial pretty quick after hitting their idea, and dedicated the largest portion of their lives to the business end.
Bell Lab's had the most Nobel prizes of any for profit institution at 7. There's 13 non-for profit organization that have eight or more. Even if you drop out the political Nobels (Peace and Economics), there's still 11 entities out there besting the best that for-profit institutions have to offer. Also, most of these Nobels have been in the past hundred years, so no need to normalize out the advent of democracy.
It's true that for profit enterprises take these discoveries (e.g. Giant Magnetoresistence, MRI, Fiber Optics, CCDs) and ramp them up for mass production. However, they're still tweaking the major break-through made by people focused on things besides the personal accumulation of wealth.
Though not necessarily their goal, a side of this story you don't mention is income via royalties. I have worked with multiple Bell labs alumnus who are financially very secure in part because of their work there.
As much as software patents irk common sense, the notion of IP protection really does seem reasonable here. There are people who do research for reasons beyond personal profit. They actually do deserve licensing fees.
> most advances in human history have been done by for-profit organizations
You mean most advances in (very) recent history right? And I am a bit skeptical about the claim that companies are developed for the benefit of the people. Again, I have a problem with your generalizations. At least in our field, a lot of the research is actually publicly funded.
>most advances in human history have been done by for-profit organizations.
Not even close. Also, see the article about how cartels are an emergent property[1] of a free market. Not that there really exists a better system than what we currently have, but don't kid yourself into thinking capitalism is some kind of benevolent savior of mankind. It's just not true.
Way back in the day I decided to become a software developer instead of getting my PhD in economics. Economics didnt make any sense to me. It was all philosophy and religion. As an undergraduate, I read only one article that had even basic calculus in it. Perhaps I should have majored in physics and then got my Economics PhD., but nobody did that sort of thing.
A company that doesn't pay its employees is neither a company, nor does it have employees.
And honestly, why is "cost" for non-employees allowed, but not cost for employees? An "open company" makes sense in terms of radical transparency, but a term like that shouldn't be related in any way to banning monetary compensation.
I daresay the Commonwealth of Pennsylvania disagrees with you about whether Zeta Design & Development, LLC is a company.
Cost for non-employees is "allowed" for the practical reason that if it weren't, an open company couldn't participate in the economy as it stands today.
Didn't realize this was a Pittsburgh area company, are you involved with any of the tech groups in the area? Also, you have my respect if you can pull off something non-standard within the state, I've found PA to be a real PITA to deal with compared to say Maryland or especially Delaware.
More involved with the startup/AlphaLab community then the specific tech groups (going to the RubyConf though), I'm sure we'll cross paths at some point!
How is this different from most open source projects? Because it's a registered LLC? Because they have public policies enforcing transparency? Failing to pay your "employees" combined with an onerous set of requirements for them seems like a non-starter at worst, and unsustainable at best, since it takes all the fun out of volunteering. If I'm being held accountable and even liable for my involvement, I should be getting compensated for it. This just seems like the worst parts of corporate employment and open source projects mixed together for some reason; all the fun of filling out TPS reports, for none of the pay or benefits.
"An open company differs from an open source project in that an open company is a formal legal entity, and needn’t be about software."
The set of employees of an open company is much, much smaller than the set of people working on whatever-it-is that the open company nominally "owns"--really it's a commons. The only reason to have employees at all is to formalize access to private data such as passwords and private user data.
Gittip, for example, has one employee, me. If you counted up everyone who has weighed in on GitHub we'd have maybe 20 or 30 community participants by now? Many more depending on how you draw the lines.
If I understand you right, the "requirements" would apply to the small set of people with access to private data, not to the majority participating in building whatever-it-is together.
Wouldn't this be pretty much like MediaWiki, prior to it having paid employees, or other non-profit foundations?
I'm actually not clear why this is a company instead of a non-profit foundation. It says:
"An open company differs from a non-profit organization in that an open company does not itself accept donations, and it does not compensate its employees. From the open company’s point of view, whether and how its employees receive money and for what, is undefined."
A non-profit can also not accept donations and not compensate employees, so the only thing that differs might be how employees receive money, which I don't really understand here.
I guess my confusion stems from the attractiveness of being an employee of this company. It sounds like these employees will be resolving customer support issues, since they need access to private account information, and they will be legally liable for their use of this private information, since their access is made public. Why would someone agree to do this kind of work without any compensation? How long will these employees stick around? What kind of vetting system could possibly ensure the integrity of these people with access to my account info?
Years ago, I spent a lot of time providing free Mac support on IRC, back when Dalnet was busy. Occasionally there were issues that took a huge amount of effort to resolve; in one of the few cases I still remember, I learned enough Cocoa to answer a newbie programmer's question. There was a small but dedicated group that all did the same thing, and other channels on other networks full of volunteers doing the same.
StackExchange is a huge network of volunteers helping to answer other people's questions, for no (real) compensation.
They might not be fun for you, but I think there are plenty of people that just like to help other people.
I think the issue is more with motives. If people have money incoming from elsewhere then it shows, at least some, that they're not doing it because they just want a paycheck.
The trouble is that ultra-low-overhead charities can be completely ineffective. If a charity doesn't pay for computers, utilities, sorting machines, postage meters, etc. (or pays for only the bargain-basement minimum), then each hour of volunteered time is less effective than if there are sufficient facilities available. Overhead is, in reasonable quantities, a good thing.
Volunteer time is valuable, but it can help to have full-timers in administrative/organizational positions.
Of course, this observation is mostly based on larger charities, with assets and property and non-trivial operating costs. I could see how a tiny charity without these burdens could get along fine without.
I know of one charity that is pretty open and transparent about its operating procedures, scholarly findings and statistics, finances including employee compensation, and pretty much every other bit of data that doesn't compromise patient confidentiality (they operate a hospital in rural Nepal):
I totally agree, which is why I'm working on a startup to make charities more transparent and allowing them to make use of the resources they can get once they do this. (Andrew@brack.in if anyone has any ideas).
1) If all products are priced at-cost, and no employees are paid, is that to be assumed there will be no products sold that aren't at least, in part, developed using third parties?
2) If everything is priced at exactly their cost, what costs are factored in to pricing? Do you factor sunk cost, or only COGS?
2.a) If everything is priced at cost, and there is no added price for value, do you expect that every product will sell past its sunk and production costs? If not, who covers the loss when a product doesn't sell enough to meet its cost of production. (For example, some products require a minimum quantity to purchase/build before they are priced at a point the market will accept, to achieve pure cost parity without loss, you'd have to sell every unit in the same fiscal year.)
2.b) If 2.a can be accepted as some products will fail to meet their objectives, who makes up the difference? I.E. who put their money up-front to manufacture the products, and absorbs the loss?
How will you solve the issue of fair pay among employees? Isn't it likely that public awareness and popularity would determine who gets paid, regardless of who does the work?
If this model is successful, and people begin to see whit537 as a kind of celebrity (like notch or moot) then how would the other employees work their way into the revenue stream?
I had a lot of things to say but now I just have the one question. What's so wrong with making money? I'm really interested. I think a lot of outsiders to our industry would be surprised to know how rampant to anti-money view is or at least against anything other than earning a very modest, and very simple living.
The incentive is the same as open source programmers have to work for free.
RE: non-profits ... from the post:
"An open company differs from a non-profit organization in that an open company does not itself accept donations, and it does not compensate its employees. From the open company’s point of view, whether and how its employees receive money and for what, is undefined."
"Non-profit organizations typically fall into one of two categories: public and private. While a public non-profit organization receives the majority of its funding from the general public, a private non-profit organization receives most of its funds from only a few private sources, such as through donations from a single family or corporation."
With regard to the source you cited, "such as" is not a blanket translation equivalent to "still accepts donations." As a single example, a foundation can be created with a one time funding and a foundation can also receive investment income. A non-profit can also consist entirely of only a Board of Directors. Whether you consider the Board as a staff is open to interpretation.
You mentioned in an off-topic comment here in the discussion about being in the Pittsburgh area. May I suggest contacting the Pittsburgh Community Foundation who might be able to share more information with you? They should be able to tell you with more clarity and reference as to why some non-profits are not able to receive donations and are possibly not members of their "community." There are several hundred Community Foundations around the country if Pittsburgh is not accessible to you.
Is that who you are referring to? They do claim to be a community foundation.[0] However, I'm confused, because they also claim to be "a tax-exempt public charity" and that "donors are central to our mission"[0]. They also have a staff.[1]
I'm having a hard time understanding your point, I guess.
tldr: The Pittsburgh Community Foundation is a great reference to contact who can explain why some non-profits don't accept donations.
Yes, that is the organization and your points are spot-on. My point was not about the structure of Pittsburgh Foundation but rather related to part of their purpose.
In this particular example, a non-profit may be part of the geographical Pittsburgh community but is not necessarily a member(participant might be a more appropriate word) of the Pittsburgh Foundation "community" which receive donations/grants through them.
So why would a non-profit not be a "community member?"
Go back to my previous post: They should be able to tell you with more clarity and reference as to why some non-profits are not able to (added: or elect not to) receive donations and are possibly not members of their "community."
I think you're making a distinction between donations to an operating fund and donations to an endowment fund. The Pittsburgh Foundation (and presumably community foundations in general) do accept donations, but they focus on endowment funds. Am I hearing you correctly?
The Pittsburgh Foundation handles both grants and endowment funds. Due to their presumed expertise in all things non-profit related, the Pittsburgh Foundation should be familiar with the basic categorization of non-profits as either private or public. You commented that the "De facto" non-profit does accept donations. I proffered that the Pittsburgh Foundation is a voice of reason in your own backyward and they would be happy to point out that this is not really the case. It is up to you to pursue that.
I do have some other concern which is why is your ethos/structure is posted on a blog and not a more permanent page? If this is to be a working document then please annotate changes or if your intention is a truly "open" company then how about enlisting feedback from potential users some of whom might be lawers or accountants familiar with small business law and also interested in alternative business structures?
If mmahemoff's quote (http://news.ycombinator.com/item?id=4287308) is direct from your page, it shows a revision from what is currently shown and from what I'm going to presume is the original blog post from Google cache.
Quoted in comment from mmahemoff:
"An open company differs from a non-profit organization in that an open company does not itself accept donations, and it does not compensate its employees. From the open company’s point of view, whether and how its employees receive money and for what, is undefined."
Current blog display:
An open company differs from a non-profit organization in that an open company is not registered as a charity with a government, and does not itself accept donations. An open company also does not have a paid staff, as most non-profits do in practice. From the open company’s point of view, whether and how its employees receive money and for what, is undefined.
Google Cache (http://webcache.googleusercontent.com/search?q=cache:RwFZLSt...):
An open company differs from a non-profit organization in that it does not itself accept donations, and it does not compensate its employees. From the open company’s point of view, whether and how its employees receive money and for what, is undefined.
With all of that said, I really like what you're doing here. I just am not able to see how this would be better than a well-documented non-profit or a B Corporation. But I am open to being convinced if there really is a better way to do things. If you want a real challenge and a start-up idea, I'd love to see you tackle a better non-profit transparency mechanism than we have available today with GuideStar and Charity Navigator.
0 marginal cost goods and organized, free labor test the foundations of capitalism and necessitate the development of new institutions. this project adresses both of these - and the economic possibilities of patronage/tipping. why the hell not?
