Open Source Venture

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Description

John Robb:

"One of things I've been working on is a way to organize ventures/businesses on an open source basis. Nearly all of the "open source" businesses today are based on the same hierarchical dictatorship model prevalent since we first created companies at the end of the middle ages.

This new model is called an open source venture. I've worked on the theory behind it and done some practical experimentation. I'll try to explain it as best I can (there's a video out there with me talking about this):

An OSV is a very narrowly defined business. The rules are published up front (as to how it allocates reward and what it does). Very little variation is allowed (by charter) on how these formulas work. IF a new business opportunity is found, a new OSV is formed.

There isn't any classic ownership. The ownership is held in trust once it is set up. It can't be sold.

Open source ventures have a founding team. This team shares a percentage of the revenue based on months of contribution (full or part time).

If the OSV uses crowdsource labor, it shares income with these participants with very specific formulas. Feedback, etc. and other methods are used to prevent people "gaming" this. The use of crowdsourcing has the potential to allow millions of participants (think people that add to an OSV wikipedia) based on simple rules and roles.

External financing doesn't confer ownership, nor is it debt (traditional approaches are focused on gaining ownership control). Instead, financing is provided a percentage of the gross revenue. This persists for a set number of years or until a set return (5x or 10x the investment) is achieved, whichever is sooner or later (depending on your agreement. It's also possible to combine this with crowdsource financing.

My experience with this model (to date) is that it's tough to generate financing using traditional channels. Most capitalist financing is focused on gaining control of the venture. Crowdsource financing using this model is problematic because the laws prevent it (they are geared towards traditional participants/methods and thereby preclude innovation).

I've also found that the project does need a small funded team of people to run it during the early phases. Write the b-plan and do the initial work. A big team, early on, devolves into endless discussions of what to do and how to share the spoils without getting any actual work done.

This model is workable and can provide a way for open source projects to actually pay the participants. Someone is going to get one of these up and then it's off to the races.

...

In short, I believe that it is possible to build an economic system that works like the Internet. Very simple rules of interconnection. Based on these conversations about this, here's a protocol stack that Anthony developed: http://www.miiu.org/wiki/The_economic_stack .

...

Given current levels of venture automation, it's not that hard to form and or operate most ventures. They can be assembled quickly, even virtually. As a result, it's possible to form businesses that focus on a specific task and limit its activities to performing that task (with few degrees of freedom).

Once you update that assumption, the idea of financing a venture with a limited function is not only plausible, but likely superior. It's just that the financial mindset hasn't caught up with reality." (http://www.well.com/conf/inkwell.vue/topics/417/John-Robb-on-War-Peace-and-Resil-page01.html)